The Chinese Government has expressed a strong stance against complying with the U.S. government’s demand for TikTok’s sale, indicating a preference for shutting down the platform instead.
Despite this, reports suggest that TikTok and its parent company, ByteDance, are exploring scenarios where they could be acquired by a U.S. entity following the passing of a bill mandating separation from Chinese ownership.
President Joe Biden’s approval of the TikTok sale bill has prompted TikTok and ByteDance to contemplate their next moves, although Chinese officials are critical of the U.S. Government’s insistence on a sell-off.
Chinese Foreign Ministry spokesperson Wang Wenbin has accused the U.S. of unjustified behavior in compelling the app’s sale without evidence of data misuse or propaganda, the reasons cited for the forced sale.
Wenbin condemned this “bullying behavior” as disruptive to companies’ normal business operations, damaging investor confidence in the investment environment and international economic order. China perceives the U.S. sell-off mandate as detrimental to its international trade reputation and has pledged to oppose a complete divestment of the app.
One critical aspect potentially affected by the sale is Tik Tok’s powerful recommendation algorithm, its proprietary system that quickly identifies user interests in real-time to deliver a compelling stream of videos.
However, China’s export-control regulations govern the sale of algorithmic systems, potentially excluding TikTok’s back-end systems even if the app is sold, significantly diminishing its overall value.
Reports estimate TikTok’s value between $20 billion and $100 billion, contingent on included assets. Some sources value TikTok at five times its advertising and livestreaming revenue, approximating $110 billion based on last year’s earnings.
The algorithm’s absence could substantially lower this valuation, as Tik Tok without its key feature poses increased risk and diminished performance.
ByteDance is unlikely to relinquish full algorithmic access, not solely due to proprietary concerns but also based on knowledge of potentially controversial aspects within the code base.
Reports have raised concerns about Tik Tok’s algorithms suppressing certain user-generated content based on specific traits, though such parameters were allegedly confined to the Chinese version.
The implication of TikTok’s algorithms in identifying and highlighting specific visual elements raises broader questions about the platform’s influence and user engagement tactics. The platform’s capacity to pinpoint and leverage such traits for user retention underscores ethical concerns regarding content curation.
The secrecy surrounding Tik Tok’s algorithm poses a key question: how sustainable is this secrecy if TikTok is to be sold? The algorithm’s fate will undoubtedly be a pivotal factor in TikTok’s future development and market value.
