BAM Key Details:

  • Late Tuesday, April 23, 2024, the U.S. Senate passed a broad legislative package that could ultimately lead to a nationwide TikTok ban. 
  • Once the bill is signed and goes into effect, TikTok’s Chinese owner will have nine months to sell its stake. Barring that, TikTok could be outright banned in the U.S.
  • President Biden has said he’ll sign the bill on Wednesday (April 24). 

The U.S. Senate just passed a bill that requires TikTok’s Chinese owner ByteDance to sell its stake in the company within a year. Without a full separation from China’s Communist government, TikTok is that much closer to a nationwide ban

Late Tuesday, April 23, the Senate passed a broad legislative package delivering $95 billion in foreign aid to Israel, Ukraine, and other U.S. allies. 

That bill also draws a line in the sand for ByteDance. 

The House of Representatives has already approved the bill. And President Biden has already announced his intention to sign the bill when it reaches his desk. 

Update: President Biden signed the bill Wednesday morning (April 24, 2024), starting the clock for TikTok’s sale. 

Why ban TikTok?

The thing that’s got TikTok in hot water isn’t its reputation as an addictive short-form video app but its ties to the Chinese government. This is why the bill puts the onus on TikTok’s Chinese owner, ByteDance, to sell off its stock in the company, severing TikTok’s ties with China. 

Lawmakers on both sides of the aisle are concerned that China’s Communist government is using TikTok as a means to access personal data of millions of U.S. users. 

Last Sunday, on CBS’ “Face the Nation,” Democratic Senator Mark Warner of Virginia summed it up.  

“The idea that we would give the Communist Party this much of a propaganda tool, as well as the ability to scrape 170 million Americans’ personal data, it is a national security risk.” 

Meanwhile, TikTok is rallying its supporters to fight the ban

For its part, TikTok has asked its millions of users to contact their representatives and argue against a nationwide ban. But their efforts have had little to no effect on the decision-makers in Washington, D.C. 

As Eurasia Group director Clayton Allen told CBS MoneyWatch: 

“It’s a low-cost exercise if you have access to the user base. But it seems like it has backfired.”

In a recent statement, TikTok leadership said it’s “unfortunate” that U.S. lawmakers are “using the cover of important foreign and humanitarian assistance to once again jam through a ban bill that would trample the free speech rights of 170 million Americans, devastate 7 million businesses, and shutter a platform that contributes $24 billion to the U.S. economy, annually.

At least, that’s the outcome they’re describing for us if they fail to sever ties with China before their nine months are up. 

Nine months to arrange a sale—or face a nationwide ban

According to a copy released earlier this month, the bill gives TikTok’s Chinese owner ByteDance nine months to arrange a sale, divesting itself of all stock in the company—with the potential for an added three-month grace period. 

As Allen of Eurasia Group pointed out, that nine-month window would end in mid- to late-January, right around the time of the next U.S. presidential inauguration. 

If President Biden loses the November election, and former President Trump regains the White House, the latter could have other plans for TikTok. 

This might become a question for the next administration. Looking at the language of the bill, I’m not sure Trump would be as bound to pursue what the Biden administration would want. He could use it as a point of leverage with China.

Clayton Allen

Eurasia Group director

Who would buy TikTok vs who would benefit from a TikTok ban

According to Wedbush Securities analyst Dan Ives, if ByteDance does choose to sell TikTok, bidders could include Microsoft, Oracle, or private equity groups. And in March, Steven Mnuchin, the former Treasury Secretary, told CNBC of his plan to assemble an investment group to bid for TikTok. 

That said, Ives said ByteDance is unlikely to sell TikTok with its core algorithms—the software that enables video recommendations based on user interests and viewing habits. 

As Ives said in a research note, 

“The value of TikTok would dramatically change without the algorithms and makes the ultimate sale/divestiture of TikTok a very complex endeavor, with many potential strategic/financial bidders waiting anxiously for this process to kick off.”

If the bill becomes law and TikTok is banned, Meta would most likely benefit. According to Wedbush estimates, about 60% of TikTok users would transition to Instagram and Facebook if TikTok vanished from the social media landscape. Google would also benefit if TikTok users could no longer use the platform as their primary search engine. 

Stay tuned as TikTok’s fate in the U.S. is decided.