China-based ByteDance is holding internal talks about selling a majority stake of TikTok's business in the United States but without the algorithm that drives users to the video-sharing platform that is used by more than 170 million Americans, according to a report.

The discussions come after President Joe Biden signed legislation on Wednesday that would require ByteDance to divest itself of TikTok in the United States in nine months or be banned.

ByteDance plans to challenge the law, which was tucked into a bill providing foreign aid to Ukraine and Israel, under First Amendment grounds, The Information reported.

But one scenario being explored would involve ByteDance selling more than 50% of TikTok U.S. but keeping a minority stake of 20%, the limit allowed under the law, the report said.

So far, ByteDance has not contacted potential buyers, the report said.

The team discussing the possible sale is headed up by Zhao Pengyuan, who reports to ByteDance CEO Liang Rubo.

"This is categorically untrue. Pengyuan's team doesn't have that responsibility and has not worked on any plans for the scenarios discussed," a ByteDance spokesperson told The Information.

Company executives want to avert a TikTok ban in the U.S., which generates a substantial portion of the $20 billion the company received last year in revenue, mostly from advertising.

They see shutting down TikTok in the U.S. as a last resort, saying that it would create a dangerous precedent for other Chinese technology, the report said.

The sale would include the TikTok brand but not the algorithm, the report said.

And the executives are looking at companies outside the tech sector, meaning companies like Oracle and Microsoft, which both made offers in 2020, would be excluded.