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TikTok CEO Shou Zi Chew will appear later Thursday before US lawmakers, many of whom want the app banned in the United States because of the risk they say it presents to national security. The clamor for a sale is growing louder again.
But an outright divestment isn’t in the cards, according to analysts and legal experts, not least because the Chinese government views TikTok’s technology as sensitive and has taken steps since 2020 to ensure it can veto any sale by its Beijing-based owner, ByteDance.
At issue is who owns the keys to TikTok’s algorithms and the vast troves of data collected from the 150 million people in the United States who use the app each month.
“Beijing will have no say in the US decision to mandate the sale of TikTok, but it will retain the ultimate approval authority over such a sale,” said Brock Silvers, chief investment officer for Kaiyuan Capital.
“It also seems extremely unlikely that Beijing will accept any deal that removes TikTok’s algorithm[s] from its direct control and regulatory authority,” he said.
TikTok’s algorithms, which keep users glued to the app, are believed to be key to its success. The algorithms give recommendations based on users’ behavior, thus pushing videos they actually like and want to watch.
Chinese regulators first added algorithms to the restricted list of technologies in August 2020, when the Trump administration threatened to ban TikTok unless it was sold.
Back then, Chinese state media published a commentary by a professor of trade at the University of International Business and Economics who said the updated rules meant ByteDance would need a license from Beijing to sell its technology.
The intended sale of TikTok in 2020 to Oracle and Walmart hit a snag after Beijing added algorithms to its export control list.
