Oliver Johnson
TikTok users may soon find that the popular social media service is under new ownership or, although it won’t happen immediately, has been banned entirely in the US.
The Senate approved on Tuesday a broad legislative package that delivers US$95 billion in foreign aid to Ukraine, Israel and other US allies. The bill, which had already passed the House, also includes a provision that could lead to a ban on TikTok in the US if the Chinese owner of the popular platform does not sell its stake within a year.
President Joe Biden signed the bill into law on Wednesday.
TikTok has attracted unwanted scrutiny not only because of its reliance on constantly scrolling videos, but also because of its Chinese owner, ByteDance. This has raised concerns among lawmakers and security experts that the Chinese government could exploit TikTok’s trove of personal data on millions of US users.
Meanwhile, TikTok asked its users to contact their lawmakers to argue against the bill’s passage, an effort that failed to sway opinions in Washington, D.C., noted Eurasia Group director Clayton Allen.
“It’s a low-cost exercise if you have access to the user base,” Allen told CBS MoneyWatch. “But it seems the plan backfired.”
In a statement, TikTok said it is “unfortunate” that lawmakers are “using the cover of important foreign and humanitarian assistance to once again pass a ban bill that would trample the free speech rights of 170 million Americans, devastate 7 million companies and would destroy 7 million companies.” shut down a platform that contributes $24 billion annually to the U.S. economy.”
In an internal memo obtained by CBS News, TikTok executive Michael Beckerman called the legislation “unconstitutional” and warned that the company will mount a legal challenge once it is signed by President Joe Biden.
“At the stage when the bill is signed, we will go to court for a legal challenge,” wrote Beckerman, head of public policy for the Americas at TikTok. “We will continue to fight, as this legislation is a clear violation of the First Amendment rights” of TikTok users.
Here’s what you should know about what could happen with the TikTok bill.
Why does Congress want to ban TikTok?
In fact, lawmakers want ByteDance to sell its stake in TikTok. Barring such an agreement, the legislation would, in effect, ban the social media app in the U.S.
Lawmakers are increasingly concerned about the company’s ties in China, with fears that ByteDance or TikTok could share data about US users with China’s authoritarian government.
“The idea that we would give the Communist Party a propaganda tool as well as the ability to extract personal data from 170 million Americans is a national security risk,” said Senator Mark Warner, a Democrat from Virginia. said on CBS’s “Face the Nation,” on Sunday.
What is the timeline for a possible sale or closure of TikTok?
The bill would give TikTok’s owner nine months to organize a sale, with the potential for an additional three-month grace period, according to a copy of the bill released earlier this month.
But, Eurasia Group’s Allen noted, that would put the nine-month mark between mid- and late-January, which could also coincide with the U.S. presidential inauguration. If former President Donald Trump wins in November, he could very well take a different approach with TikTok, the analyst noted.
“This could become an issue for the next administration,” Allen said. “Looking at the language of the bill, I’m not sure Trump would be as obligated to pursue what the Biden administration wants. He could use this as leverage with China.”
If TikTok is sold, who can buy it?
Likely bidders include Microsoft, Oracle or private equity groups, according to Wedbush Securities analyst Dan Ives. Former Treasury Secretary Steven Mnuchin also told CNBC in March that he planned to set up an investment group to bid for TikTok.
However, Ives believes that ByteDance is unlikely to sell TikTok on its core algorithms, the vital software that provides video recommendations to users based on their interests and viewing habits.
“TikTok’s value would change dramatically without algorithms and would make the ultimate sale/divestment of TikTok a very complex undertaking, with many potential strategic/financial bidders anxiously waiting for this process to begin,” Ives said in a research note.
Could other social media platforms benefit from the law?
Rivals like Meta could benefit from the bill if it becomes law, Ives noted.
Wedbush estimates that about 60% of TikTok users would switch to Meta’s Instagram and Facebook if TikTok were shut down in the US. Google would also benefit, he added.
