A bill that would force China's ByteDance, which owns TikTok, to sell the company or ban it entirely was passed by the Senate on Tuesday and is expected to be quickly signed into law by President Biden.
In the future, the process may become even more complex.
Congress passed the bill citing national security concerns due to TikTok's ties to China. Lawmakers and security experts alike say there is a risk that the Chinese government could rely on ByteDance to access sensitive data of its 170 million U.S. users and spread propaganda.
The bill would allow ByteDance to continue operating TikTok in the United States if it sells it within 270 days (about nine months), a period that the president could extend for up to one year.
The move is likely to face legal challenges and resistance from the Chinese government, which could block the sale or export of the technology. It's also unclear who has the resources to buy TikTok, given its hefty price tag.
The issue could take months or even years to resolve, and the app will likely continue to work for U.S. consumers in the meantime.
“It's going to be a huge mess,” said Anupam Chander, a visiting fellow at Harvard University's Social Media Reboot Institute and an expert on the global regulation of new technologies.
Here's what you can expect next.
TikTok's day in court
TikTok will likely start by challenging this measure in court.
“I think the only thing that's certain is that there will be litigation,” said Jeff Kosseff, an associate professor of cybersecurity law at the Naval Academy.
Legal experts say TikTok's lawsuit will likely rely on the First Amendment. The company said a forced sale could violate users' free speech rights, as the new owner could change the app's content policies and restructure what users can freely share on the platform. It seems that there is.
“Thankfully, we have a constitution in this country, and people's First Amendment rights are very important,” Michael Beckerman, TikTok's vice president of public policy, said last week with creators on the platform. said in an interview. “We will continue to fight for you and all other users of TikTok.”
Other groups, including the American Civil Liberties Union, which has vocally opposed the bill, may also join the legal battle. An ACLU spokesperson said Tuesday that the group is still evaluating its role in a potential lawsuit challenging the law.
ByteDance's ownership of TikTok will likely force the government to argue that national security concerns necessitate restricting speech, legal experts said.
TikTok already has a strong track record in similar First Amendment battles. Donald J. Trump tried to force the sale or ban of the app in 2020 when he was president, but a federal judge blocked the effort, saying it would have the effect of shutting down a “platform of expression.” Last year, Montana tried to ban TikTok in the state because of the app's Chinese ownership, but another federal judge ruled it violated state law on similar grounds.
Only one narrower TikTok restriction has survived a court challenge. The governor of Texas announced he would ban the app from use on state government devices and networks in 2022, citing Chinese ownership and related data privacy concerns. Professors at public universities challenged the ban in court last year, saying it prevented them from conducting research on the app. A federal judge upheld the state's ban in December, ruling that it was a “reasonable restriction” given Texas' concerns and its narrow scope affecting only state employees.
small group of buyers
Analysts estimate that the U.S. portion of TikTok could be worth tens of billions of dollars.
ByteDance itself is one of the world's most valuable startups, with an estimated value of $225 billion, according to CB Insights, a firm that tracks venture capital and startups.
A high price would limit the list of people who can buy TikTok. Big tech companies like Meta and Google will likely be blocked from making acquisitions due to antitrust concerns.
Private equity firms and other investors could form a group to raise enough money to buy TikTok. Former Treasury Secretary Steven Mnuchin said in March that he wanted to create such a group. And those who can pony up the money still have to go through talks with the U.S. government, which must approve any purchases.
Few other people have expressed public interest in purchasing this app.
The last time the government tried to force ByteDance to sell TikTok in 2020, the company held talks with Microsoft and software company Oracle. (Oracle and Walmart finally appeared to reach an agreement with ByteDance, but the deal never materialized.)
complex sale
Even if TikTok comes close to being sold, the process of separating TikTok from ByteDance is likely to be difficult.
The law prohibits any post-sale connection between ByteDance and TikTok. But TikTok's employees use ByteDance software to communicate, and the company's workforce is global, with executives in Singapore, Dublin, Los Angeles and Mountain View, California.
It's unclear whether ByteDance will consider selling TikTok's entire global footprint or just its U.S. operations, which have about 7,000 employees.
Separating just the U.S. portion of TikTok could be particularly difficult. An app's recommendation algorithm that understands user preferences and serves content is key to an app's success. But Chinese engineers are working on that algorithm, which is owned by ByteDance.
When Mr. Trump tried to force a sale in 2020, the Chinese government issued export controls that required regulatory approval before ByteDance's algorithms could be sold or licensed to outside parties.
Uncertainty surrounding exports of algorithms and other ByteDance technology could also deter interested buyers.
China's unpredictable role
There is also a possibility that the Chinese government will try to block the sale of TikTok.
Chinese officials criticized a similar bill after it passed the House of Representatives in March, but have not yet said whether it would block divestments. About a year ago, China's Ministry of Commerce said it “firmly opposes” ByteDance's sale of the app.
China's export controls appear to target TikTok's content recommendation algorithm, giving the Chinese government a say in whether ByteDance can sell or license the app's most valuable features.
Lindsey Gorman, a senior fellow at the German Marshall Fund who specializes in emerging technology and China, said it's “not a foregone conclusion” that China would allow the sale.
China may retaliate against U.S. companies. On Friday, the Cyberspace Administration of China asked Apple to remove Meta's WhatsApp and Threads from the App Store, the iPhone maker said. The Chinese government cited national security reasons in making this request.
