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After years on the brink, TikTok’s clock has run out as the U.S. Supreme Court today upheld a lower court ruling that the app owned by China’s ByteDance must sell itself or be banned in the U.S. on Jan. 19 due to national security concerns.
“There is no doubt that, for more than 170 million Americans, TikTok offers a distinctive and expansive outlet for expression, means of engagement, and source of community,” the justices wrote. “But Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok’s data collection practices and relationship with a foreign adversary.”
The ban would take effect under a new bipartisan law, the Protecting Americans from Foreign Controlled Applications Act, signed by President Joe Biden last year.
When the law goes into effect, the onus will not be in TikTok, but on app stores to stop making the social media platform available to users. Presumably, those who already have the app installed would be able to continue to use it, but they would not be able to receive routine updates, something that eventually would make it unworkable. The Information reported that TikTok was preparing to go dark in the U.S. on Sunday, a move that would send a message to users of the impact of the law. But the AP reported that the Biden administration does not plan to enforce the law, leaving it up to incoming President Donald Trump, who takes office on Monday.
Trump tried to force a sale of TikTok in his first term, but opposes the new law, even though it passed with huge majorities of Republicans and Democrats. He cannot stop the law, short of new congressional legislation, but he could ask the Justice Department not to enforce it. There were reports that he is considering an executive order to suspend enforcement for 60 to 90 days. TikTok CEO Shou Zi Chew met with Trump in Mar a Lago and plans to attend his inauguration.
Trump wrote on Truth Social this morning that he spoke with China’s president Xi Jinping, and TikTok was among the items discussed.
The massively popular app with 170 million U.S. subscribers is a staple of the massive creator economy, which will now be thrown into turmoil, a potent advertising tool and a cultural phenomenon.
Trump’s original efforts to force a sale, via an executive order, were sidelined in the courts. Microsoft emerged as a bidder back then, as did Oracle and a consortium of U.S investors. That attempt fizzled. TikTok had been migrating information on its U.S. users to Oracle servers but failed to convince Congress that was enough.
Potential suitors this time around include the Frank McCourt- founded Internet advocacy group Project Liberty that submitted a formal bid with partners including Shark Tank’s Kevin O’Leary to buy TikTok without its current algorithm and “preserve the platform’s vibrant community, while also giving 170 million American TikTokers the ability to control, protect, and benefit from their data.”
TikTok denied reports that China was considering options, including having ByteDance selling TikTok to X owner Elon Musk.
One issue is TikTok’s algorithim, which is what makes it so appealing. The Chinese government would have to approve that sale and is unlikely to do so.
The ban is aimed at U.S. app stores like Apple and Google, making TikTok impossible for new users to download. It will keep working for a bit for users that have it already installed but ByteDance won’t be able issue updates, eventually rendering it just a shell.
A ban would be great news for rivals led by Google’s YouTube Shorts and Meta’s Instagram Reels. Many users have been posting on all three. They have also been mobbing a smaller Chinese app called RedNote in protest.
The law applies specifically to ByteDance, TikTok and all related companies. Action against any others would be at the discretion of the president.
During oral arguments, TikTok’s attorney Noel Francisco told the justices that short of a pause on the law, TikTok would go dark in the U.S. on Sunday. He said that the law was an infringement on the company’s First Amendment rights, as well as that of its creators.
The government’s lawyer, U.S. Solicitor General Elizabeth Prelogar, noted longstanding foreign ownership restrictions on U.S. broadcast television assets and said there’s no reason they shouldn’t also apply to social media.
Nor is there an inherent impossibility in selling a social media company, she added. Musk acquired Twitter in six months, she said, and ByteDance “has been on notice since 2020.”
She said the Chinese company has been engaged in a game of chicken and a forced shutdown might be what’s needed for it to take the sale mandate seriously.
A ban would be great news for rivals like YouTube Shorts and Instagram Reels. Many users have been posting on all three. A ban also would only be temporary until a sale. Nothing is “irrevocable” said Prelogar at the Supreme Court.
