The passage of a bill to force ByteDance, the Chinese owner of TikTok, to divest has caused a stir in Washington, D.C. and Beijing. The legislation, passed by the House in a rare bipartisan moment, must still go through the Senate and be signed by President Biden. If approved, ByteDance will have six months to sell U.S. TikTok, or the app will be removed from app stores and blocked by ISPs in the United States. This move has left TikTok fans bewildered and politicians wondering about the potential impact of cutting off access to the app.
TikTok, with its 170 million American users, plays a significant role in influencing the internet space. It has a strong influencer economy that supports thousands of jobs and small businesses in the United States. The app’s popularity and ease of monetization have made it a successful platform for content creators. The potential removal of TikTok could have a significant impact on these creators and businesses, leading to concerns about their future.
ByteDance, the corporate parent of TikTok, is a major player in the tech world, valued at billions of dollars. A forced divestiture of TikTok could provide an opportunity for foreign investors to gain liquidity, especially as ByteDance’s IPO has been delayed due to tensions between the U.S. and China. However, the Chinese government could veto any sale of TikTok, citing security concerns over algorithms. This could leave international investors with shares in a China-only company with limited prospects of going public.
With the prospect of a forced sale, potential bidders, such as Steve Mnuchin and Bobby Kotick, are vying for a chance to acquire TikTok. However, the complexities of the sale, including the status of TikTok’s recommendation engine, could pose challenges. TikTok’s worldwide reach and popularity make it a valuable asset, but a U.S.-only version may not be as competitive in the global market. This uncertainty could lead to a failed deal in six months.
The TikTok ban could have ripple effects in the U.S. capital markets, with implications for companies looking to list on Wall Street. The loss of TikTok and other Chinese companies could deter global companies from listing in the U.S., impacting investor excitement. However, some players, including Meta and Google, could benefit from TikTok’s removal, gaining back ad revenues and user engagement. Further regulations on social media could impact Big Tech and lead to more reforms in the sector.
While lawmakers, Big Tech, and other players stand to gain or lose from a potential TikTok ban, parents may emerge as some of the biggest winners. With children spending significant time on social media, a TikTok ban could lead to more meaningful interactions and less screen time for young users. If Congress proceeds with the ban, parents may finally see a shift in their children’s online habits. As the TikTok saga continues, the future of the app and its impact on various stakeholders remain uncertain.
