TikTok has declared its intention to challenge a new US law that orders the popular video-sharing app to break away from its Chinese owners or face an outright ban in the United States. The bill, signed into law by President Joe Biden, provides TikTok with a 270-day grace period (approximately nine months) to secure a non-Chinese buyer or face a ban within the United States. The White House possesses the authority to grant a one-time extension of 90 days. During this interim period, the app will remain operational for its vast user base of roughly 170 million individuals in the United States.
TikTok has expressed its determination to contest the law in US courts, asserting that it constitutes a gross violation of free speech rights. The company’s confidence stems from its successful defense against a similar order issued by then-President Donald Trump in 2020. The new legislation spearheaded by Biden was meticulously crafted to address prior legal obstacles. Nevertheless, some experts posit that the US Supreme Court might be inclined to prioritize national security considerations over free speech protections, although this outcome is far from certain.
Acquiring a buyer for TikTok will be a formidable undertaking, given the substantial financial resources required to purchase one of the world’s most popular apps. Prominent players in the tech industry, such as Meta or YouTube’s parent company Google, will likely be prohibited from acquiring TikTok due to antitrust concerns. Their dominance in the social media market already raises red flags. Even Microsoft, the owner of the more specialized LinkedIn platform and currently the world’s largest company by market capitalization, would face intense scrutiny from competition regulators.
Oracle might consider renewing its interest in participating in a deal. Following its initial attempt during the Trump administration, the company led by Larry Ellison collaborated with TikTok to devise a solution that would address US national security concerns. Project Texas, as it was known, essentially established a separate US-based entity to handle US data, while ownership remained with ByteDance.
In the absence of any judicial intervention, the deadline for TikTok to divest would be approximately one year from April 24, assuming the 90-day extension is utilized. Around that time, TikTok would cease to be available on US Apple or Android app stores, and critically, software updates and bug fixes would no longer be provided. In essence, TikTok would gradually deteriorate as Bytedance would lack the ability to update the app, although it could opt to shut it down entirely.
Beijing is wary of establishing a precedent where a Chinese company is coerced into selling one of its most valuable assets, including an algorithm that is the envy of competitors. Additionally, there are widespread concerns that this law could set a dangerous precedent, potentially leading to similar fates for other Chinese companies operating in the United States.
The potential beneficiaries of a TikTok ban are Meta and Google, which have introduced their own TikTok-inspired platforms: Meta’s Reels and YouTube Shorts. Both alternatives have gained traction in the US market, coinciding with TikTok’s apparent stagnation, possibly influenced by the uncertainty surrounding its future.
