Neither a sale nor a ban of the app seem likely in the 270-day timeline given the firm’s pledge to challenge the measure in court
President Biden signs law requiring ByteDance’s divestment from TikTok or face a full ban in the US
On 23 April 2024, the US Government adopted the Protecting Americans From Foreign Adversary Controlled Applications Act, a law which bans the hosting of “foreign adversary controlled applications” in the US. While the law applies to any platform controlled by a country deemed to be an adversary of the US, the text specifically names ByteDance and TikTok as subject to its provisions given the Chinese Government’s ownership stake in the companies. Under the provisions of the law, ByteDance has 270 days to divest from TikTok through a qualified sale before web hosting and app store services are prohibited from distributing or hosting the platform. While the adopted version of the law passed both chambers of the US Congress with uncharacteristic speed, some form of a national TikTok ban has been an agenda item for both Republicans and Democrats since as early as 2020 when President Trump first attempted to ban the app but was blocked temporarily by a legal challenge. The Trump-era ban, issued by executive order, was later revoked by the Biden Administration, meaning the case against the legality of a ban was never tried.
Legal action is likely to delay any ban from taking place, for now
While the law sets a clear deadline for divestment (15 January 2025) with the option for only a 90-day extension at the discretion of President Biden, it is unlikely that any ban on TikTok will be implemented in that timeframe. The platform has pledged to “exercise its legal rights” by bringing a lawsuit challenging the constitutionality of the measure. Legal arguments are expected to hinge on questions of freedom of speech and whether banning the platform infringes on the rights of users to share and access information through the service. Given the way in which ByteDance and TikTok have mobilised influencers, content creators and other commercial accounts which conduct business through the app in their earlier lobbying efforts, separate legal action filed by business users of the app is also likely, making the argument that the ban would infringe on their commercial rights. TikTok won an injunction against a state-level law banning the app in Montana in November 2023, but the federal government’s authority in matters of national security will likely provide the US Government with a stronger case to uphold its national ban. Regardless, ByteDance and its owners have repeatedly stated that they do not intend to divest from the platform. The US only accounts for a fraction of its revenue, and the algorithm on which TikTok’s success is largely based is considered too valuable, suggesting the qualified sale route offered by the law is an unlikely conclusion to a saga that appears destined for a court date.
TikTok’s potential exit from the market would be a boon for American-based tech giants and their attempts to emulate the app’s format
Not unlike debates also swirling around Chinese vendor restrictions in networks and data localisation policies, claims of national security concerns in banning TikTok have garnered some accusations of US protectionism from the law’s critics. Even as the Biden Administration has prioritised ex-post competition regulation of American tech giants, the exit of TikTok from the social media market in the US would open up additional market share for firms such as Meta, with its Facebook and Instagram Reels products, and Google, as the owner of video sharing platform YouTube. Both of these firms currently face antitrust lawsuits from the US Federal Trade Commission (FTC), including a suit against Meta that alleges an illegal monopoly in the social media market. However, examples from elsewhere of restrictions on the video sharing app (such as India) show an increased market share, including greater ad revenue, for Meta and Google. This collision of public policy objectives – be they competition, privacy, online safety, security or resilience – has underlaid the fast-paced development of digital economy regulation around the world.
The law was passed in tandem with strengthened rules on the sale of personal data to foreign adversaries
As part of the broader package of national security which included the TikTok legislation, President Biden also signed the Protecting Americans’ Data from Foreign Adversaries Act. The related law prohibits data brokers from selling personally identifiable information to countries considered foreign adversaries. The law, which extends provisions set out in an executive order issued by the President in February 2024, empowers the FTC to enforce its provisions under its authority over unfair or deceptive business practices. Though the data protection measure was introduced in its finalised form in tandem with the TikTok ban, there was earlier speculation that a law codifying the executive order was a compromise or scaled-back alternative to passing more restrictive legislation on the foreign ownership of TikTok, given the primary concerns of Chinese Government access to Americans’ data through the app. However, legislators appeared more apt to discuss concerns with the power of the app’s algorithm to dictate the content served to users and ultimately influence American public discourse in recent weeks, a matter which could not have been addressed by data protection alone.
