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TikTok Parent ByteDance Won't Sell Underlying Algorithm, China Paper Says

The move would limit potential US buyers interested in the company valued at $20 billion


TikTok’s parent company, ByteDance, says it won’t sell the underlying algorithm behind the popular social media site, potentially dealing a serious blow to attempts to sell the site to an American company.

The South China Morning Post reports that the ByteDance board of directors wants to keep the site’s source code under its ownership, though a potential new owner for the site would be able to devise a new source code and sharing algorithm. As a source described it to the SCMP, “The car can be sold, but not the engine.”

“The company [ByteDance] will not hand out source code to any US buyer, but the technology team of TikTok in the US can develop a new algorithm,” the source told the South China Morning Post.

This new condition to a deal with a U.S. company comes as the Trump Administration has given ByteDance until Tuesday to sell TikTok. If President Trump rejects the “no algorithm” condition, making the divestment of TikTok impossible, the app could go dark for its users in America after the Sept. 15 deadline.

The withdrawal of the algorithm from any sale is in large part in response to the Chinese government’s new regulations regarding tech trade, requiring official permission to trade certain tech property such as source codes.

Numerous U.S.-based technology companies have queued up to express interest in buying TikTok, including Microsoft, OracleWalmart and competing social video app Triller. As the president’s deadline looms, each of these companies appears to be far from cutting a deal. A technology source told South China Morning Post that the elimination of the algorithm would compel prospective buyers to rethinks its plans.

“In theory, the US team can copy the algorithm, but it takes time for users to get used to the copied algorithm,” the source said. “With competition among similar apps heating up, it would be hard to catch up if you needed extra time [to make the algorithm work well].”

Officials in the U.S. have criticized the app, which is immensely popular among younger millennials and Gen Z users, saying that TikTok collects too much user data and may be passing that data on American consumers back to the Chinese government.

Trump has even said that he believes the U.S. government should receive a cut of whatever agreement is eventually made to sell TikTok’s American assets, a move that tech experts say could set a dangerous precedent for future international tech deals.

Jeremy Fuster contributed to this report.