On Tuesday, the Senate passed a bill that would force TikTok’s Chinese owner, ByteDance, to sell the app or ban it outright, and on Wednesday, President Biden signed the bill into law.
Now, the process may become more complicated.
Congress passed the measure, citing national security concerns because of TikTok’s ties to China. Lawmakers and security experts have said the Chinese government could use ByteDance to gain access to sensitive data belonging to its 170 million American users or to spread propaganda.
If ByteDance sells TikTok within 270 days (about nine months), the law will allow TikTok to continue operating in the United States, and the president can extend this time limit to one year.
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The measure is likely to face legal challenges and resistance from Beijing, which could block the sale or export of its technology. It is unclear who has the financial resources to buy TikTok, as it would be expensive.
The issue could take months or even years to resolve, during which time the app will likely continue to serve U.S. consumers.
“It’s going to be a huge mess,” said Anupam Chandel, a visiting scholar at Harvard University’s Rebooting Social Media Institute and an expert on global regulation of new technologies.
TikTok has pledged to challenge the law. “Rest assured, we are not going anywhere,” the company’s chief executive, Zhou Shouzi, said in a video posted on the platform. “We are confident that we will continue to fight for your rights in court.”
What happens next?
TikTok’s day in court
TikTok may first challenge the measure in court.
“I think one thing is certain: There will be litigation,” said Jeff Koseff, associate professor of cybersecurity law at the U.S. Naval Academy.
Legal experts say TikTok’s case will likely rely on the First Amendment. The company is expected to argue that a forced sale could infringe on its users’ free-speech rights because a new owner could change the app’s content rules, reshaping what users can freely share on the platform.
“Thankfully, we have a constitution in this country, and people’s First Amendment rights are very important,” Michael Beckman, TikTok’s vice president of public policy, said in an interview with one of the platform’s creators last week.Interview“We will continue to fight for you and every other user on TikTok.”
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Other groups such as the American Civil Liberties Union, which has been a vocal opponent of the bill, could also join the legal fight. An ACLU spokesman said Tuesday that the group is still weighing what role it should play in a potential lawsuit challenging the law.
Legal experts say the government would likely need a strong case that ByteDance’s ownership of TikTok necessitates restrictions on speech for national security reasons.
TikTok already has a good track record of similar First Amendment litigation. Trump’s presidency tried to force a sale or ban of the app in 2020, butFederal judge blocksThe effort was rejected by the government because it would shut down a “platform for expression of activity.”Montana attempts to banTikTok because the app is Chinese-owned, but another federal judge ruled that the state law is invalid for similar reasons.
Only one narrow TikTok restriction has survived a court challenge. In 2022, the governor of Texas banned the app from state government devices and networks because of its Chinese ownership and related data privacy issues. Last year, professors at public universities challenged the ban in court.questionsaying it hindered their research on the app. In December last year, a federal judgeThe state’s ban was upheldarguing that it was a “reasonable limitation” given Texas’ concerns and the narrow scope of affecting only state employees.
Few possible buyers
Analysts estimate that the price of the U.S. portion of TikTok could be as high as tens of billions of dollars.
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ByteDance itselfOne of the most valuable startups in the worldestimated by CB Insights, a firm that tracks venture capital and startups, to be worth $225 billion.
The high price would result in few buyers who could afford it, and tech giants like Meta or Google might be blocked from acquiring it due to antitrust concerns.
Private equity firms or other investors could form a group and raise enough money to buy TikTok. Former Treasury Secretary Steven Mnuchin this yearMarch saidhe hopes to establish such an organization. Moreover, anyone who can come up with this money must be vetted by the US government, and any purchase needs to be approved by the US government.
Few others have expressed interest in buying the app.
The last time the government tried to force ByteDance to sell TikTok, in 2020, the company negotiated with Microsoft and software company Oracle (Oracle and Walmart ultimately appeared to have reached an agreement with ByteDance, but the deal never materialized).
Complex peeling process
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Even if TikTok is close to a sale, the process of separating TikTok from ByteDance could be messy.
The legislation bars ByteDance from having any contact with TikTok after the sale. Yet TikTok employees use ByteDance’s software to communicate, and the company has a global workforce, with executives in Singapore, Dublin, Los Angeles and Mountain View, California.
It is unclear whether ByteDance would consider selling TikTok’s entire global business or just its U.S. operations, where it has nearly 7,000 employees.
Splitting off just the U.S. portion of TikTok could prove particularly challenging. The app’s recommendation algorithm, which figures out what users like and serves up relevant content, is key to its success. But that algorithm was developed by Chinese engineers and is owned by ByteDance.
In 2020, as Trump was trying to force a sale of the app, the Chinese government issued export restrictions that appeared to require ByteDance to obtain regulatory approval before selling or licensing its algorithms to outsiders.
Uncertainty surrounding the export of the algorithm and other Bytedance technologies could also deter interested buyers.
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China’s unpredictable role
The Chinese government may also try to block the sale of TikTok.
In March, the House of Representatives passed a similar bill that Chinese officials criticized, though they have not said whether they would block the breakup of TikTok.expresswill “firmly oppose” ByteDance’s sale of the app.
China’s export regulations appear to cover TikTok’s content recommendation algorithm, giving Beijing a say in whether ByteDance sells or licenses TikTok’s most valuable features.
It’s “by no means a done deal” that China will allow the sale of TikTok, said Lindsay Gorman, a senior fellow at the German Marshall Fund specializing in emerging technologies and China.
China could retaliate against U.S. companies. On Friday, China’s Cyberspace Administration asked Apple to remove Meta’s WhatsApp and Threads apps from its App Store, according to Apple. The Chinese government cited national security concerns in making the request.