For TikTok, the clock is ticking on its existential struggle to avoid a US ban.
Legislation forcing Chinese owners of the social media app to divest moved through Congress, capped by Senate approval late Tuesday as part of a larger foreign aid package. President Joe Biden signed the law into law on Wednesday, starting a 270-day countdown to a US sale or ban on the popular video-sharing platform.
Beijing-based TikTok and ByteDance have pledged to do everything possible to stop the move. They have argued that it violates the free speech rights of the app's 170 million monthly US users and plan to file lawsuits to overturn the law or at least delay its implementation.
“We believe the facts and the law are clearly on our side and we will ultimately prevail,” TikTok said in a post on X on Wednesday.
Biden's signature capped years of scrutiny in Washington, where regulators and lawmakers from both parties have expressed increased concern that Chinese ownership of TikTok poses a risk to U.S. national security. Proponents of the bill claim China's government uses TikTok as a propaganda tool and could require ByteDance to share data on US users, allegations the company and Beijing officials have denied.
With the legal battle about to unfold, US TikTok users are facing a wave of uncertainty about a place to express themselves through video, earn money as influencers or sell products on the TikTok Shop. If implemented, a ban on TikTok would risk disrupting “a critical channel for engaging with younger audiences and building brand visibility,” said Damian Rollison, SOCi's director of market intelligence.
“TikTok's unique format has allowed businesses to creatively showcase products and services, leveraging trends and user-generated content to connect with potential customers,” said Rollison.
TikTok has raised economic arguments against the law, saying content creators and merchants who make a living posting videos and selling goods would be financially harmed. While many US lawmakers who supported the recently passed federal bill think it would survive judicial review, some rights groups say the First Amendment will be a harder hurdle to clear.
“The US government can say a foreign company can't do business in the US; it's harder when the foreign business is a communications system that US users use to communicate with each other,” David Greene, director of civil liberties from the Electronic Frontier Foundation, he said in an interview. “That just has different legal issues.”
When Montana passed a law in 2023 that would ban TikTok in the state, the company and a group of content creators sued in separate filings, saying the state measure violated free speech rights under the First Amendment. the US Constitution. The company funded the users' lawsuit, according to the New York Times. The judge reviewing the case blocked the ban before it could take effect.
ByteDance sees a TikTok divestment as a last resort, according to people familiar with the matter. TikTok's parent hopes it can get an injunction to stay away from the legislation and then fight a legal battle that could last more than a year, Bloomberg reported.
“We will continue to fight,” Michael Beckerman, TikTok's head of public policy for the Americas, said in a memo to US staff last week. “This is the beginning, not the end, of this long process.”
If TikTok can't stop the app through the legal system, another chance to avoid a split may lie in a new administration. Biden's signing of the bill Wednesday pushes the divestment deadline to Jan. 19, a 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 toward a sale. That would push for a possible ban well into the next presidential term.
Biden's opponent in the November election, Donald Trump, has recently spoken out against a ban on TikTok, saying it could boost rival Meta Platforms Inc., which previously suspended Trump from its platforms. For Trump, this represented a reversal of his decision while president to ban enforcement through a 2020 executive order that was later overturned by federal courts.
The political sensitivity of targeting a social media platform popular with younger users during an election year in the United States was not lost on the bill's supporters.
“This is not an effort to take your voice away,” Sen. Mark Warner, D-Virginia and chairman of the Intelligence Committee, said Tuesday before the vote. “To young Americans, I want to say, we hear your concerns. We hope TikTok continues under new ownership.”
Passage marks a major setback in Washington for ByteDance, which spent $2.7 million in the first quarter on federal lobbying efforts after paying a record $8.7 million last year, according to congressional documents . TikTok CEO Shou Chew made personal appeals on Capitol Hill in an unsuccessful attempt to squelch the legislation.
Meanwhile, the company spent more than $2 billion protecting sensitive US user data, with the help of Texas-based Oracle Corp., to try to prove its platform is secure.
With the app back in legal and regulatory limbo, many TikTok users are still on the run. But those making money from the app are reviewing their options.
Educational Insights, owner of the popular puzzle game Kanoodle, has been using TikTok videos to market its products for several years. The company was one of the first merchants to join TikTok Shop as part of an early test before the official launch.
“At this point, we're definitely monitoring closely,” said Alyssa Weiss, senior director of marketing at Education Insights. “We're ready to pivot if the need arises, but for now, we're still actively rolling out our TikTok plans.”
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