SINGAPORE—The Chinese government is signaling that it won’t allow a forced sale of TikTok, limiting options for the app’s owners as buyers begin lining up to bid for its U.S. operations.
Chinese officials have criticized the U.S. for its moves targeting the short-video-sharing app. They have also sent signals to TikTok’s owner, Beijing-based ByteDance, that company executives have interpreted as meaning the government would rather the app be banned in the U.S. than be sold, according to people familiar with the matter.
That leaves ByteDance in a bind as TikTok faces the most serious threat yet to its existence in America, its biggest market where it has 170 million users.
In Washington, the House voted overwhelmingly to approve a bill on Wednesday that requires ByteDance to sell off TikTok or face a ban, contending that collection of American user data by its owners poses a national security risk. TikTok has said it won’t share the data with the Chinese government even if Beijing demands it.
The bill faces a showdown in the Senate, where lawmakers have signaled a more cautious approach. President Biden has said he would sign a bill if it reached his desk.
During a routine news conference on Thursday, a spokesman for China’s Ministry of Commerce said the U.S. should “stop unreasonably suppressing” TikTok, adding: “The relevant party should strictly abide by Chinese laws and regulations.”
The comment was seen by some ByteDance executives as reinforcing Beijing’s message to the company that it would face regulatory hurdles if it sought to divest TikTok, the people said. Last year, China warned that a sale or divestiture of TikTok would involve exporting technology and would have to be approved by the government .
Internally, ByteDance founder Zhang Yiming, who holds a significant stake in the company, hasn’t indicated that he is engaging in any conversations with external buyers about selling TikTok, people familiar with the matter said.
Former Treasury Secretary Steven Mnuchin said Thursday that he is putting together a consortium to try to buy TikTok. The Wall Street Journal has reported that Bobby Kotick , the former chief executive of videogame publisher Activision, has approached Zhang .
Any price tag is estimated to be more than $100 billion. TikTok’s revenue was around $20 billion last year, but it hasn’t made a profit, people familiar with the matter said.
TikTok is back in the crosshairs of geopolitical tensions between the U.S. and China, having survived several regulatory challenges in the past. In 2020, then-President Donald Trump tried to ban the app via an executive order, but it was blocked by the courts .
Since then, TikTok is struggling to implement an operation code-named Project Texas to fence in American user data. Company executives were once confident that it could reach a deal with U.S. regulators to operate in the country. But scrutiny has grown, leading its CEO to appear before Congress twice in the past year. Montana also passed a law to ban the app, a move that is being disputed by TikTok in the courts .
Last year, ByteDance’s spending on lobbying efforts in the U.S. rose 77% to $8.74 million, according to OpenSecrets, a nonpartisan platform tracking political spending. It has turned the lobbying focus to the Senate since the legislation is expected to face a steeper path there than in the House.
TikTok’s global success is seen in China as a rare triumph for a country that has for decades been the world’s factory floor but struggled to build its own tech brands .
“Policymakers in Beijing view the bill as an attempted robbery of this prized asset, and they won’t stand for it,” said Tom Nunlist, a Shanghai-based tech policy analyst at Trivium China, a consulting firm.
TikTok’s aggressive push to rally U.S. users to call their House representatives to complain about the bill sparked a backlash in the U.S. but has won praise from Chinese state media and on China’s internet. The hashtag #TikTokUsersBombardUSCongressOfficesWithCalls went viral on China’s X-like social platform Weibo over the weekend.
Some Weibo users said the U.S. attempt to force a sale amounted to theft and they wanted ByteDance to fight back harder.
“Just like Huawei, TikTok didn’t do anything wrong,” one user posted. Telecoms giant Huawei Technologies has faced years of restrictions from the U.S. over allegations it can share sensitive information with the Chinese government, which the firm denies.
Other Weibo users, however, likened TikTok facing a ban in the U.S. with Western apps including Facebook and X being unavailable in China. TikTok also isn’t available inside China, where ByteDance operates Douyin, a sibling app that uses a similar algorithm structure to recommend content but is subject to Communist Party censorship.
If TikTok is banned in the U.S., it will pave the way for more such actions against Chinese companies on national-security grounds, Trivium’s Nunlist said.
President Biden last month ordered the Commerce Department to open an investigation into foreign-made software in cars, citing Chinese technology as a potential national-security risk.
As long as ByteDance remains firm, willing to shut down TikTok rather than give up ownership, it will create pressure on lawmakers and the Biden administration over the political risks of removing the app, Hu Xijin, the former editor in chief of the Communist Party-backed Global Times, wrote in a Sunday column published by the nationalist tabloid.
China has a say in any TikTok sale because it added content-recommendation algorithms, a secret sauce of TikTok’s success, to an export-control list in 2020 when the Trump administration was pushing for a sale of its U.S. operations.
“China’s top leaders will likely prioritize national dignity ahead of ByteDance’s financial interests,” Gabriel Wildau, managing director of advisory firm Teneo, wrote in a note to clients Thursday.
TikTok might have a stronger hand in the U.S. now that it has beefed up efforts to engage users and businesses there, which company executives and analysts say could make a ban more difficult to enact. President Biden’s election campaign joined the app on Super Bowl Sunday.
TikTok Chief Executive Shou Zi Chew has posted more frequently on his personal TikTok account, which has 3.8 million followers. In September, TikTok rolled out its e-commerce business, TikTok Shop , in the U.S. and has around 200,000 vendors.
It also faces stronger rivals, with Instagram’s Reels and YouTube Shorts providing popular alternative platforms for short videos.
Write to Raffaele Huang at raffaele.huang@wsj.com
