For TikTok, the clock has started running on its existential fight to avoid a US ban.
Legislation requiring Chinese owners of social media apps to divest their apps passed Congress and was capped by a Senate resolution behind schedule Tuesday as part of a larger foreign aid package. President Joe Biden signed the bill into law on Wednesday, starting a 270-day countdown to a sale or U.S. ban of the popular video-sharing platform.
TikTok and Beijing-based ByteDance have vowed to do everything in their power to stop it. They say it violates the free speech rights of the app’s 170 million monthly U.S. users and plan to file lawsuits to invalidate the law or at least delay its enforcement.
“We believe that the facts and the law are clearly on our side and that we will prevail in the end,” TikTok said in an X post on Wednesday.
Biden’s signature capped years of scrutiny in Washington, where regulators and lawmakers from both parties have expressed heightened concerns that Chinese ownership of TikTok poses a risk to U.S. national security. Supporters of the bill say the Chinese government is using TikTok as a propaganda tool and may require ByteDance to share U.S. user data – something the company and officials in Beijing deny.
With a legal battle looming, TikTok users in the U.S. face a wave of uncertainty about where they can express themselves through video, make money as an influencer or sell goods on the TikTok store. If the TikTok ban is implemented, it risks disrupting “a key channel for engaging with younger audiences and building brand visibility,” said Damian Rollison, director of market intelligence at SOCi.
“TikTok’s unique format has enabled companies to creatively showcase their products and services, leveraging trends and user-generated content to engage with potential customers,” Rollison said.
TikTok has cited economic arguments against the law, saying content creators and sellers who make a living by posting videos and selling merchandise would suffer financial losses. While many U.S. lawmakers who supported the newly passed federal law believe it will withstand court scrutiny, some human rights groups say the First Amendment will be harder to dismantle.
“The U.S. government can say a foreign company can’t do business in the U.S. — it’s just more arduous when the foreign company is the communications system that American users utilize to communicate with each other,” David Greene, the company’s director of civil liberties Electronic Frontier Foundation – she said in an interview. “It just raises all sorts of legal issues.”
When Montana passed a law in 2023 that banned TikTok in the state, the company and a group of content creators filed suit in separate motions, arguing that the state measure violated free speech rights under the First Amendment to the U.S. Constitution. According to the Novel York Times, the company financed the users’ lawsuit. The judge hearing the case blocked the ban before it could take effect.
ByteDance considers divesting TikTok as a last resort, according to people familiar with the matter. According to Bloomberg, TikTok’s parent expects it could obtain a restraining order over the regulations and then start a legal battle that could last more than a year.
“We will continue to fight,” Michael Beckerman, TikTok’s head of public policy for the Americas, said in a memo to U.S. employees last week. “This is the beginning, not the end, of this long process.”
If TikTok is unable to snail-paced down enforcement in the legal system, a modern administration may be its next chance to avoid separation. Biden’s signing of the bill on Wednesday sets the deadline for the company’s divestment at January 19 – the day before the next presidential inauguration.
Under the bill, Biden has the option to extend that deadline an additional 90 days if he sees progress in sales. This would postpone a possible ban well into the next presidential term.
Biden’s November election opponent, Donald Trump, recently came out against the TikTok ban, saying it could strengthen rival Meta Platforms Inc., which previously suspended Trump from its platforms. For Trump, it meant reversing a decision he made under president to ban the app in a 2020 executive order that was later invalidated by federal courts.
The political sensitivity of targeting a social media platform popular with younger users during a US election year was not lost on the bill’s supporters.
“This is not an attempt to take away your vote,” Sen. Mark Warner, a Democrat from Virginia and chairman of the Intelligence Committee, said Tuesday before the vote. “I want to tell juvenile Americans that we hear your concerns. We hope that TikTok will continue to operate under modern ownership.”
Passage marks a significant setback in Washington for ByteDance, which, according to congressional filings, spent $2.7 million on federal lobbying efforts in the first quarter after spending a record $8.7 million last year. TikTok CEO Shou Chew made personal appeals on Capitol Hill in an unsuccessful attempt to quash the legislation.
Meanwhile, the company spent more than $2 billion protecting sensitive user data in the U.S., with lend a hand from Oracle Corp. based in Texas to try to demonstrate that its platform is secure.
With the app once again in regulatory and legal limbo, many TikTok users are not on the run just yet. But those who make money with the app are looking at the options available.
Educational Insights, the owner of the popular puzzle game Kanoodle, has been using TikTok videos to promote its products for several years. The company was one of the first sellers to join TikTok Shop as part of early testing ahead of its official launch.
“We are definitely monitoring the situation closely at this time,” said Alyssa Weiss, senior marketing manager at Educational Insights. “We will be ready to pivot if necessary, but for now we continue to actively implement our TikTok plans.”
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