TikTok’s Fate Rests on Trump After Supreme Court Upholds Law
(Bloomberg) -- The US Supreme Court has ended TikTok’s nine-month legal battle, forcing leaders both within the company and in Beijing to consider a dwindling set of alternatives for keeping the popular video-sharing app alive.
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TikTok’s China-based parent, ByteDance Ltd., can agree to sell the app’s US operations — a path the company has said it has no interest in pursuing — or wait to see if President-elect Donald Trump makes good on his promise to orchestrate a solution. No matter the scenario, Trump promises to be at the center of the process, either by successfully stalling the ban set to take effect Sunday or approving a deal that addresses the US government’s national security concerns.
“The Supreme Court decision was expected, and everyone must respect it,” Trump wrote Friday in a social media post. “My decision on TikTok will be made in the not too distant future, but I must have time to review the situation.”
Trump’s potential role in any plan to save TikTok remains both intriguing and complicated. The ban is set to take effect just one day before his inauguration, and while it has been reported that President Joe Biden won’t enforce the ban on day one, the decision on what to do long-term will become Trump’s problem almost immediately.
If the new president is hoping to find a buyer, doing so will be a challenge, and not just because ByteDance has balked at the idea of selling. The expected price tag is also a barrier. Few companies or individuals could likely afford TikTok, which is estimated to be worth $40 billion to $50 billion.
Perhaps TikTok will find a billionaire acquirer, like Elon Musk – whom the Chinese government is already evaluating as a potential new owner – or a team of investors, like Frank McCourt and Kevin O’Leary, who have been publicly trumpeting their desire to take control of the app. TikTok could also strike a deal with an American tech giant like Oracle Corp. or Amazon.com Inc., both of which TikTok already does business with. Many of the other logical buyers, like Meta Platforms Inc. and Alphabet Inc.’s Google, are already mired in antitrust litigation, making them unlikely suitors.
After the high court’s ruling, TikTok said it will be forced to “go dark” in the US on Sunday unless there is a clear statement from the Biden administration to service providers that are maintaining its availability.
Chief Executive Officer Shou Chew posted a video to the service a few hours after the Supreme Court ruling. “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States,” he said. “This is a strong stand for the First Amendment and against arbitrary censorship.”
Geopolitical Rivalry
ByteDance can also let the ban take effect and leave the market rather than accept a deal, further complicating an already fierce geopolitical rivalry between the US and China. It can wait to see if Trump will step in to save the app, though it’s hard to predict what levers the new president will have at his disposal.
Failing to do anything could mean watching TikTok gradually deteriorate for its 170 million American users until it eventually fades away, as people become unable to download software updates. The service could also disappear overnight if TikTok elects to remove it entirely rather than watch the app slowly falter.
“This is a pretty unprecedented case,” TikTok lawyer Noel Francisco told the Supreme Court justices last week in a packed courtroom that included ByteDance Chief Financial Officer Julie Gao, TikTok top lobbyist Michael Beckerman, and communications chief Zenia Mucha. “I’m not aware of any time in American history where the Congress has tried to shut down a major speech platform.”
TikTok has transformed the way we shop, build businesses, consume news, search for information and dive down internet rabbit holes. Still, two presidents, Congress, federal regulators and now the Supreme Court have warned about the app’s potential for abuse. There is fear the Chinese government could use TikTok to manipulate public discourse and undermine democracy, or collect sensitive data on generations of Americans that could be used for espionage or blackmail.
“Whether this law will succeed in achieving its ends, I do not know,” Supreme Court Justice Neil Gorsuch wrote in a concurring opinion. “A determined foreign adversary may just seek to replace one lost surveillance application with another. As time passes and threats evolve, less dramatic and more effective solutions may emerge. Even what might happen next to TikTok remains unclear.”
Trump’s Role
One question floated during the Supreme Court hearing was whether Trump can extend the sale deadline or put the law on hold after taking office, perhaps with an executive order. Trump could certify that a “qualified divestiture” is in motion to grant a 90-day extension, but that could take time: He’d need to prove to Congress that there’s a viable path forward, that “significant progress” has been made and that legal agreements are in place to close a deal with ByteDance in that new time frame.
It was also speculated during the Supreme Court hearing that Trump could direct his Justice Department not to enforce the law, though that scenario poses its own issues. Technology companies charged with implementing the ban, including Apple Inc., Google and Oracle, which must stop hosting and distributing TikTok on their app stores or servers, will need to decide if they trust Trump’s order. As the law is written, companies that fail to enforce the ban risk heavy fines that could climb into the billions. Apple and Google didn’t respond to requests for comment.
See More: TikTok Ban Thrusts Apple, Google Into US-China Geopolitical Fray
If those companies follow the law as written, people in the US will no longer be able to download TikTok from Apple and Google’s app stores come Jan. 19. Those who already have the app installed will no longer be able to update it. In that scenario, TikTok wouldn’t instantly disappear off people’s phones; it would still be usable for some time until software bugs start to pile up. But TikTok may shut the service off on its own on the day of the deadline, according to a report in The Information, a move aimed at mobilizing users to push Trump to resuscitate the app.
Of course, TikTok could still come back online if ByteDance agrees to a divestiture deal after the deadline has passed. “There’s nothing permanent or irrevocable that happens on Jan. 19,” the Biden administration’s top Supreme Court lawyer, US Solicitor General Elizabeth Prelogar, told the justices last week.
In the meantime, TikTokers are scrambling to find workarounds that will keep TikTok alive, even if just temporarily. Creators have spent weeks teaching their audiences how to try to circumvent a ban, recommending they change their phone settings or get VPNs to make it appear as though they’re logging in from countries where TikTok is permitted. They’ve also suggested using TikTok on a web browser, or downloading TikTok from outside Apple and Google’s official app stores. None of these attempts at sidestepping the blockage are guaranteed to work, though individual citizens won’t get in legal trouble for trying.
Some content creators are mobilizing to pressure Trump to deliver on his campaign rhetoric to save TikTok. The company is hosting an inauguration party Sunday headlined by conservative influencers.
ByteDance’s American investors are also eager for a resolution, but the fortunes they’ve committed to TikTok’s parent company are unlikely to take a major hit even if US TikTok goes away. Most of ByteDance’s profits come from its business in China – namely TikTok’s counterpart there, Douyin – so while the outcome for shareholders would no doubt be better with US TikTok, they may simply want some closure no matter the outcome.
(Updates with comment from TikTok in the seventh paragraph.)
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