• ByteDance would rather close down TikTok in the US than sell it, Reuters reported, citing four unnamed sources.
• President Joe Biden recently signed into law legislation that could see TikTok banned in the US.
• ByteDance has nine months to a year to divest itself of the company under the legislation.

ByteDance, the Chinese parent company of TikTok, would rather close down TikTok in the US than sell it if legal means to fight a proposed US ban fail, Reuters reported, citing four unnamed sources.

A sale is unlikely as the algorithms powering the short-video app are key to ByteDance’s overall operations, the sources told Reuters, also noting that TikTok made up only a small part of the company’s total revenues and active users.

Closing down the app would, therefore, limit the impact on ByteDance’s business and allow it to retain control of its algorithm, they said.

President Joe Biden recently signed into law legislation that would see TikTok banned in the US unless ByteDance divests itself of the app over the next nine months to a year.

The move stems from fears among US lawmakers that China could use the app for surveillance activities and to gather data on US citizens.

TikTok’s CEO, Shou Zi Chew, said he was confident the company would win the legal challenge, however.

“We are confident and we will keep fighting for your rights in the courts,” he said. “The facts and the Constitution are on our side and we expect to prevail.”

The deadline to sell the app is set for January 19, 2025, but an extension is possible if ByteDance demonstrates progress toward a sale.

It follows a report in The Information earlier this week that said ByteDance was exploring options to sell a majority stake in TikTok’s US business.

The report, which cited three people with knowledge of the situation, said ByteDance would prefer to sell to a non-tech industry company and without giving up the algorithm that recommends videos to app users.

ByteDance has said that the rumors that it plans to sell TikTok “are untrue.”

Business Insider has reached out to ByteDance for comment.