TikTok’s future uncertain, now that the US Senate has approved an exceptionally strict approach

An exciting transition situation is emerging on the market for major social media, now that the US Senate approved an exceptionally strict approach to TikTok on Tuesday evening. This has cleared the most important hurdle for a bill that will force the Chinese parent company of TikTok to sell the popular social medium with its ultra-short videos to an American company within a year.

If that sale does not occur, American app stores will be prohibited from offering the app any longer – which would ultimately amount to a ban of the app. Immediately after the vote, President Biden stated that he will sign the bill this Wednesday, which was already adopted by the House of Representatives this weekend – just like in the Senate with a large majority.

Surprisingly quickly, a political majority of Republicans and Democrats has formed in Washington in recent weeks that want to restrict TikTok. The driving force was the fear that the Chinese state can influence American users through the app and its Chinese parent company ByteDance, for example with disinformation, and gain access to their personal data. Nothing less than national security would be at stake.

The House of Representatives already passed a similar bill in March, but the Senate was in no hurry to consider it. The current bill was linked by the House of Representatives to a package of financial and military aid to Ukraine, Israel and Taiwan, in order to prompt the Senate to quickly approve it.

American investors

TikTok could be an attractive target for American investors. The rapidly growing app, which has been on the international market for less than seven years, is already in fifth place in the rankings of the most popular social media in the world, after Facebook, YouTube, WhatsApp and Instagram.

In the United States, TikTok, with 170 million users, is a widely used source of entertainment, information and popular culture. It can develop into a formidable competitor in the advertising market to the apps of billion-dollar companies Meta (especially Instagram, but also Facebook) and Google (YouTube). That is why TikTok could be an interesting takeover candidate for major players in the American technology sector – although the price could potentially reach tens of billions of dollars.

The prospect of TikTok being for sale can also be very tempting for investors who see not only financial but also political opportunities in acquiring the app. Former Treasury Secretary under Donald Trump Steve Mnuchin has been trying to assemble a group of financiers for the takeover of TikTok, according to American media.

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Once Biden has signed the law and the law is in force, a transition period will first begin during which the continued existence of TikTok is uncertain. Parent company ByteDance will have nine months to find a buyer, a period that the president may extend by another three months. If ByteDance is willing to sell TikTok, which is not certain, it is still unclear whether the powerful Chinese state will allow this to happen and the successful TikTok and its associated technology to end up in American hands. The New York Times even speculates on Chinese retaliation against American technology companies.

TikTok called the new legislation “unconstitutional, not based on facts” in a response on Wednesday morning. Chinese parent company ByteDance appears to want to challenge the legislation in court. “Previous attempts to ban TikTok failed in courts, and this time too we are not avoiding the fight.” A spokesperson also points out that ByteDance is 60 percent owned by “mainly American investors.” Allegations that TikTok is a Chinese propaganda channel are “completely unproven,” according to the spokesperson.

Influencers

If, for whatever reason, TikTok is not sold, the app is in danger of disappearing from American app stores and from American phones and computers. But even then the situation remains uncertain. Because it is expected that not only ByteDance and TikTok will go to court to challenge the measures, but influencers who depend on TikTok for their income, other users and freedom of expression organizations will also take legal action.

Even the Supreme Court may have to rule on whether the measures against TikTok do not violate the First Amendment to the US Constitution, which guarantees freedom of expression. In 2020, a lower court already blocked an attempt by then-President Trump to force a sale of the app to American companies under the threat of a ban.

Digital civil rights organizations have already pointed out in recent weeks that the United States’ measures against TikTok are undermining its position as an advocate of a free and open internet. Washington would thus give autocratic regimes an excuse to in turn ban apps that they do not like. The Kremlin could use it as an excuse, Russian opposition blogger Aleksandr Gorboenov recently suggested, for example to block the use of YouTube in Russia.

Addition (24-4-2024): This article has been updated with a response from TikTok.

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