Fight, Sell, or Shut Down: What's Next for TikTok?
Congress passed a bill this week that forces TikTok to be sold or face a nationwide ban. President Biden signed it into law Wednesday, starting a 270-day timer for TikTok to decide its future in the United States. There’s been talk about a ban like this for years, but now it’s actually happening.
Bytedance, the owner of the app, has three paths available: It can fight the bill in court, and if it wins, then nothing changes; Bytedance could sell TikTok US to a local owner, though probably without its addictive algorithm; or, TikTok could just shut down and give in to the ban. Here’s how each option would play out.
Bytedance Fights the Bill in Court
A TikTok spokesperson told Gizmodo, “This unconstitutional law is a TikTok ban, and we will challenge it in court,” likely arguing these measures infringe the First Amendment. Legal experts say banning TikTok would impact the free speech of its 170 million American users, the app stores that carry it, and TikTok itself. If Bytedance wins on this argument, then the law is nullified and things go back to normal.
However, there’s no guarantee that Bytedance wins in court. While the company has a decent case to make, the United States has plenty of laws that infringe on constitutional rights for the sake of “national security.” That’s exactly the argument the United States is making here. Lawmakers have reportedly received classified briefings that show how TikTok is a “spy balloon in Americans’ phones,” alleging the app shares that information with the Chinese Communist Party. If the US can prove that in court, they might win. Then Bytedance will be left with two options for the app.
Bytedance Sells TikTok to a U.S. Owner
The next most likely option is that TikTok is sold to a U.S. owner. The Information reported Thursday that Bytedance was internally discussing how to sell TikTok US without its addictive algorithm. However, Bloomberg and Reuters also reported on the same day that Bytedance absolutely would not sell TikTok under any circumstances. So, take what you will from these contradictory reports. Bytedance doesn’t want to sell, but it’s considering it if the other option is shutting down
It’s estimated that TikTok could be worth anywhere from $20 billion to $100 billion. If the app doesn’t come with that sweet, sweet algorithm then it’s probably worth closer to $20 billion. But really, is the app worth anything without the algorithm? Sure, it’s a good name, and it has lots of users, but if it sucks to use then people will just leave (See Twitter, now X).
If a sale does include the algorithm, the sky is the limit – how can you put a price on something that has 170 million Americans addicted? Former Treasury Secretary Steven Mnuchin told CNBC he’s putting a band together to buy TikTok. Mnuchin did not indicate who the other investors would be, and he has no experience running a social media company. His basic qualifications are that 1) he’s rich, 2) he has rich friends, and 3) he likely still has ties with the U.S. government. That makes him a pretty strong front-runner.
In a sale scenario, it’s possible that Meta, Snapchat, Alphabet, or some other big tech company will buy TikTok. However, that probably opens them up to monopoly concerns. TikTok by itself is so dominant, so owning it and another social media platform might be a non-starter. There are very few people who could afford TikTok, and if Bytedance refuses to sell it, that leaves just one option.
TikTok US Shuts Down
If TikTok’s legal challenge fails, and a sale doesn’t go through, TikTok could just shut down in the United States. This would separate the most popular social media app ever from the wealthiest user base on Earth (Americans), so many people see this as unlikely. It would force Bytedance to walk away empty-handed and lose tens of billions of dollars, but you have to remember, this is not just business, it’s political as well.
It’s a real possibility that TikTok could simply be banned, one I don’t think is being taken seriously enough. China has already banned American social media apps for roughly a decade, most recently Threads and WhatsApp. American tech companies lose out on the entire Chinese market, but they don’t sell their precious algorithms and name brands to companies overseas. That would strip America of its competitive advantage around the world.
I think TikTok is in a similar position. Selling its algorithm to the United States would be disastrous for Bytedance, and even selling the name could be problematic. TikTok is the first Chinese app to have a meaningful presence in the United States. An outright TikTok ban would sow the United States with frustration, which could be exactly what China wants.
