The House voted this week to force TikTok’s parent company to sell the massively popular short-form video app, or face a U.S. ban. But a sale is most likely long off and could prove difficult for both owner, ByteDance, and Washington, D.C.
The bill, called the “Protecting Americans From Foreign Adversary Controlled Applications Act,” goes to the Senate next, where its fate is unclear. Senate lawmakers have indicated they’ll move more slowly after the bill’s breakneck speed through the House. Senate Majority Leader Chuck Schumer (D-NY) has been noncommittal on whether he’d bring forward the bill and said he will consult with relevant committee chairs. That said, if Congress passes the measure, it’ll go to President Joe Biden’s desk to sign (which he said he would do).
There are a ton of lingering questions. Here’s what you need to know.
What’s the argument for a sale?
Certain politicians are deeply concerned about the national security implications over Chinese ownership of the highly popular app. The app has about 170 million U.S. users alone. The fear is that China could access U.S. users’ data or influence opinions by seeding content through the platform.
Didn’t we already go through this?
Kind of! Former president Donald Trump’s administration waged a similar campaign in 2020 against TikTok. That, of course, was blocked in the courts and faded away as his presidency ended.
Who would buy TikTok?
It’s likely going to be difficult for TikTok to find a buyer—for a myriad of reasons.
Let’s first consider its hefty price tag. Analysts and investors once valued TikTok at $50 billion or more. The Wall Street Journal reported a price tag estimated to be more than $100 billion. ByteDance itself is estimated to be worth north of $225 billion. That type of cost is extremely limiting, narrowing options down to likely the largest corporations or, potentially, a group of private equity firms or investors. (Not to mention, buying a social media company also comes with all the issues of content moderation, free speech, and online safety.)
Some companies that could afford the deal could also be shut down over antitrust concerns. Regulators could possibly prevent a large company like Meta or Alphabet from acquiring TikTok. When Trump was pushing for a sale, ByteDance selected Oracle for a deal, which then brought in Walmart as a partner before the entire thing fell apart. Former Treasury Secretary Steven Mnuchin also told CNBC this week that he was working on putting together a group to buy TikTok. He said he had spoken with a “combination of U.S. investors.”
It’s also not clear how TikTok would also separate itself from ByteDance. Could the company still use ByteDance’s algorithm? The Chinese giant itself is likely to try and block a sale in the courts. And the Chinese government has indicated it will fight any sale, wanting to protect Chinese technology. Any deal will likely require Chinese government approval, since Beijing added content-recommendation algorithms to an export-control list, the Wall Street Journal reported. “At the heart of the issue, China/ByteDance will never allow the source code to be sold to a U.S. tech company in our view, which makes this all a spider web issue for any potential strategic buyer,” Wedbush analysts said in an industry note on Thursday.
When would this all happen?
A timeline on if and when the Senate brings a vote forward is not clear at all. If it passes, it would then have to go to Biden’s desk. TikTok would have six months to find a buyer before it would be banned from operating within the U.S. And all that’s if everything moves forward without any legal challenges (which doesn’t seem likely). This is all to say, don’t expect TikTok to be taken off the App Store tomorrow.
Has a forced sale like this happened before?
Yes! The U.S. once forced Grindr’s Chinese parent company to sell the gay dating app over concerns that Beijing could use data, like HIV status, against American users. A group of investors bought Grindr in 2020, and the company went public in 2022.
What do we do if TikTok is banned?
TikTok competitors have popped up in recent years, once social media companies realized that users were invested in short-form video content. YouTube Shorts, Instagram Reels, etc. are all options that could prove successful. Look to India, which banned TikTok in 2020. Both YouTube and Instagram said that their TikTok competitors saw strong initial user growth in India.
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