TikTok is now facing an urgent challenge as it seeks to stave off a potential ban in the United States.
Legislation mandating the sale of the popular social media app, which is owned by the Chinese company ByteDance, has cleared Congress, with the Senate approving the measure late Tuesday as part of a broader foreign-aid package. President Joe Biden signed the bill into law on Wednesday, initiating a 270-day period for either a divestiture or a ban on the app.
In response, TikTok and ByteDance have pledged to counter the legal action vigorously. They assert that the new law violates the free-speech rights of its 170 million monthly users in the U.S. and plan to file lawsuits aimed at overturning the legislation or at least postponing its enforcement.
“We believe the facts and the law are clearly on our side, and we will ultimately prevail,” TikTok stated in an announcement on X.
The president’s signing of the bill concludes a prolonged period of scrutiny over TikTok, as U.S. legislators from both parties have expressed growing concerns regarding the app’s implications for national security. Advocates of the legislation allege that the Chinese government could use TikTok for propaganda and could require ByteDance to submit user data, claims that both the company and Chinese officials deny.
As the legal proceedings get underway, TikTok’s American users are left in a state of uncertainty regarding their ability to share videos, earn money as influencers, or conduct sales through TikTok Shop. “If a TikTok ban were to be enacted, it would disrupt a vital channel for engaging with younger demographics and enhancing brand visibility,” remarked Damian Rollison, director of market insights at SOCi.
Rollison further explained, “TikTok’s distinctive format has allowed businesses to creatively showcase their products and services, utilizing trends and user-generated content to connect with potential customers.”
TikTok has voiced economic concerns regarding the legislation, highlighting the potential financial impact on content creators and sellers reliant on the app for their livelihoods. Many lawmakers who supported the federal bill believe it will withstand judicial scrutiny, though civil rights groups argue that the First Amendment poses significant legal challenges.
David Greene, civil liberties director at the Electronic Frontier Foundation, elaborated in an interview, “While the U.S. government can prohibit a foreign entity from operating within its borders, challenging a foreign business that serves as a communication platform used by U.S. residents is considerably more complex.”
The recent passage of a Montana law to ban TikTok prompted a lawsuit from the company alongside several content creators, who argued the state’s action infringed on First Amendment rights. In that case, the judge issued an order blocking the ban from taking effect.
According to insiders, ByteDance views divesting TikTok as a last resort. The company intends to seek a restraining order against the legislation and engage in a protracted legal battle, potentially lasting over a year, as reported by Bloomberg.
“We’ll continue to fight,” said Michael Beckerman, TikTok’s head of public policy for the Americas, in a memo to the company’s U.S. staff last week. “This is just the beginning of a lengthy process.”
If TikTok is unable to halt enforcement through court action, a new administration could provide another opportunity to avert a sale. Biden’s signing of the bill sets the divestiture deadline for January 19—just a day before the upcoming presidential inauguration.
The legislation allows the president to extend the deadline for an additional 90 days if progress towards a sale is evident, which could delay a ban further into the next presidential term.
In a notable turn, Trump’s position on a TikTok ban has shifted; he has recently spoken against such a measure, arguing it could benefit rival Meta Platforms Inc.—a company that had previously suspended him from its platforms. This marks a stark change from his earlier attempt to ban the app through an executive order during his presidency, which was ultimately overturned by federal courts.
The political implications of targeting a social media platform beloved by younger users during an election year were not overlooked by supporters of the bill. “This is not an effort to take your voice away,” Senator Mark Warner, a Virginia Democrat and chair of the Intelligence Committee, stated prior to the vote. “To young Americans, I want to assure you we understand your concerns. We hope TikTok will continue under new ownership.”
This legislative passage represents a significant setback for ByteDance, which invested $2.7 million in federal lobbying during the first quarter and $8.7 million the previous year, according to congressional filings. TikTok CEO Shou Chew made several personal appeals to lawmakers in an attempt to halt the bill.
Simultaneously, the app has allocated over $2 billion towards securing sensitive U.S. user data, partnering with Texas-based Oracle Corp. to demonstrate the platform’s safety.
Amid the evolving regulatory landscape, many TikTok users are staying put for the moment. However, those who derive income from the app are beginning to assess their options.
For instance, Educational Insights, the company behind the popular Kanoodle puzzle game, has effectively utilized TikTok videos for product marketing. It was among the first merchants to participate in TikTok Shop during its early testing phase.
“At this point, we are definitely keeping a close eye on developments,” noted Alyssa Weiss, senior marketing manager at Educational Insights. “We are prepared to make changes if necessary, but for now, we are actively implementing our TikTok strategies.”
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