TikTok faces a critical juncture in the U.S. as Congress pushes a bill that could force its parent company, ByteDance, to divest within 180 days or face a ban. With bipartisan support and growing security concerns, TikTok's future in the U.S. hangs in the balance.
TikTok, a global social media powerhouse, is currently navigating through turbulent waters in the United States. A bill requiring TikTok's parent company, ByteDance, to divest the app within 180 days to avoid being banned from app stores has been swiftly moving through Congress.
Introduced by Mike Gallagher, the Republican chair of the House committee on China, and his Democratic colleague Raja Krishnamoorthi, the proposal has garnered unanimous support in the House Energy and Commerce Committee, with a decisive 50-0 vote in its favour.
The debate over a proposed TikTok ban has sparked a flurry of reactions from lobbyists and diplomats, underscoring constitutional and international trade implications.
Michael Beckerman, TikTok's chief lobbyist, raised alarms about the bill's swift movement through Congress, stating it proceeded at "unprecedented speed" and harbored "serious constitutional concerns."
Beckerman further refuted the idea that TikTok operates under the indirect influence of the Chinese government via its parent company, ByteDance.
Adding an international perspective, Wang Wenbin, a spokesperson for the Chinese Foreign Ministry, criticised the legislation, asserting,
“The bill passed by the US House of Representatives puts the US on the opposite side of the principle of fair competition and international economic and trade rules.”
This criticism comes against the backdrop of China's longstanding policy of blocking most US social media platforms, including Google, YouTube, X, Instagram, and Facebook, for non-compliance with its data and content regulations.
The narrative also revisits Google's 2010 exit from mainland China, highlighting the tech giant's refusal to censor search results on Google.cn after experiencing cyber attacks originating from China.
This historical context adds depth to the current tensions, illustrating the complex interplay of digital policy, international trade norms, and the principles of free speech.
This stance is juxtaposed against fears from U.S. officials that ByteDance might be coerced into sharing American users' data with Beijing, given China's national security law that mandates companies to submit information upon request. Echoing these apprehensions, FBI Director Christopher Wray affirmed before Congress,
"ByteDance would have to hand over the data that made TikTok’s algorithm so successful if so ordered by Beijing."
The legislation arrives amidst TikTok's dominance in the digital arena, having amassed an audience exceeding a billion.
The platform has outpaced competitors, compelling giants like YouTube and Instagram to develop similar short-video features.
A protester opposed to the bill that could ban app stores from distributing TikTok demonstrates outside the US Capitol © Reuters
According to a late 2023 Pew Research Center survey, the percentage of U.S. adults favouring a TikTok ban has dropped from 50% in March to 38%.
Opposition or uncertainty about such a ban has increased compared to earlier in the year. Additionally, a separate survey conducted this fall on U.S. teens aged 13 to 17 revealed only 18% support a government-imposed TikTok ban.
Based on information from TikTok's own advertising resources, as of October 2023, brands have the potential to engage with over 1.218 billion TikTok users aged 18 and older.
Additionally, a 2023 report by Business of Apps indicates that TikTok's overall user count has surged to 1.7 billion people worldwide.
In February 2023, American TikTok users allocated 32% of their social media time to the platform, making it a leading choice for short-video content.
Meanwhile, Meta's Facebook and Instagram each captured 20% of these users' social media engagement.
By comparison, the YouTube mobile app accounted for 15% of the total time spent on social media by these individuals.
Given its vast user base and pioneering initiatives, TikTok has emerged as an attractive acquisition target, with its valuation potentially surpassing $180 billion, reported by the Financial times (March 14,2024)
However, the implications of a forced divestiture are manifold. Prospective acquirers, possibly including tech giants like Microsoft and Oracle, face a regulatory and operational maze.
"If the US did order ByteDance to cut ties, the possible pool of buyers for a company this size could include consortiums or big tech companies," the Financial Times suggests.
This points towards the complexities involved in navigating such a significant transition.
While the "Protecting Americans from Foreign Adversary Controlled Applications Act" has made rapid strides through initial legislative phases, its ultimate fate remains shrouded in political and procedural uncertainty.
The House's approval sets the stage for the Senate to either deliberate on the proposed bill or devise its own strategy to address the TikTok issue. Previously, a Senate initiative stumbled as certain members felt it endowed the administration with too much power over various apps.
Nonetheless, the House's decisive vote urging ByteDance to divest TikTok might intensify the pressure on the Senate to take the proposal under serious consideration.
Demonstrating the growing momentum, Mark Warner, the Democratic chair of the intelligence committee, alongside his Republican vice-chair Marco Rubio, expressed their endorsement of the proposal, saying they
“look forward to working together to get this bill passed through the Senate and signed into law”. ."
Sens. Mark Warner and Marco Rubio tell "Face the Nation" that while they have "slightly different ways" on how to address TikTok, they agree that the social media platform's presence in the U.S. is a "national security issue."
Despite this support, Chuck Schumer, the Democratic Senate majority leader known for his tough stance on China, remained cautious post-vote, declaring the Senate would "review the legislation when it comes over from the House."
Surprising opposition from figures such as Donald Trump, who has previously supported similar measures, adds another layer of unpredictability to the bill's trajectory.
In the economic landscape, ByteDance's reluctance to publish sales and profit figures adds to the speculative nature of TikTok's valuation.
The strategic and financial implications of a potential sale, especially under duress, are complex.
The platform's intrinsic value, deeply tied to its global content and user engagement, could face significant dilution in the event of a partitioned sale, impacting the negotiation dynamics and final valuation.
As lawmakers move forward with a bill, TikTok and its parent company ByteDance are at a crucial juncture that could significantly change how they operate in the United States.
If the bill passes, ByteDance will have to make a tough decision: either sell TikTok to someone else within six months or face a ban throughout the country.
Even though ByteDance suggests it views the bill as leading to a direct ban and seems hesitant to sell, their strategy may involve more than just choosing between these two options.
ByteDance is expected to use all possible legal arguments to fight this situation, aiming to turn the issue into an important debate about free speech rights.
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