TikTok Parent Company ByteDance Must Sell US Business Within 270 Days Under New Law
If Not, Service Ban Expected
TikTok Announces Immediate Legal Action
US Big Tech Anticipates Spillover Effects
U.S. President Joe Biden officially signed the so-called 'TikTok Ban Act,' which requires ByteDance, the parent company of the Chinese video-sharing platform TikTok, to sell its U.S. operations. However, Biden's presidential campaign plans to continue using TikTok for election activities.
Even after the TikTok Ban Act takes effect, controversies are expected to continue over the constitutionality of the bill and the entity that will acquire the business. There are also predictions that U.S. big tech companies will benefit from a spillover effect.
Fear of the 'TikTok Ban Act' Following Biden's Signature
According to Bloomberg News on the 24th (local time), President Joe Biden officially signed and promulgated a bill that bans TikTok's service in the U.S. if ByteDance, TikTok's Chinese parent company, does not sell its U.S. business within 270 days (with a possible 90-day extension at the president's discretion).
TikTok immediately announced plans to file a lawsuit. Legal experts in the U.S. have pointed out that the TikTok Ban Act likely violates the First Amendment, which protects freedom of speech, suggesting that TikTok has a good chance of winning. TikTok CEO Shou Zi Chew said in a video message that day, "We are not going anywhere," adding, "Facts and the Constitution are on our side."
The TikTok Ban Act is also expected to have a significant impact on the upcoming U.S. presidential election in November. This is because TikTok holds a strong position among young people, with over 170 million users in the U.S. President Biden did not mention the TikTok Ban Act when signing the bill. However, his campaign plans to continue using TikTok accounts for election campaigns. The Biden campaign told Bloomberg, "We are using TikTok with enhanced security measures as part of a strategy to reach as many voters as possible."
Challenges Expected in TikTok Sale
The sale of TikTok's U.S. operations is expected to be difficult. It is hard to find a company with enough cash to acquire the social media giant TikTok. U.S. Senator Ed Markey, a Democrat, said, "The TikTok sale will be one of the most expensive deals in history."
The Chinese government, which has the final approval authority over the sale, appears unlikely to back down easily. With Chinese apps like Ali, Temu, and Xueyin exerting influence in the U.S., there is concern about setting a bad precedent. Bloomberg explained that China will fiercely oppose TikTok falling into American hands, especially since the sale would include technology transfer. Citing sources familiar with the matter, Bloomberg reported, "The Chinese government will not stand by and watch TikTok's valuable algorithms and data fall into American hands."
Predictions of Spillover Effects Benefiting U.S. Big Tech
Ultimately, the remaining option is to ban TikTok's service in the U.S. The New York Times (NYT) predicted that if TikTok is banned in the U.S., the ultimate winners will be U.S. big tech companies. Citing data from analysis firms, the NYT forecasted, "If TikTok's service is blocked in the U.S., Meta Platforms could capture up to 60% of TikTok's advertising revenue, and YouTube could take 25%."
The Wall Street Journal (WSJ) reported that some speculate if TikTok fails to be sold and is expelled from the U.S. market, American users might secretly use it through virtual private networks (VPNs). Alf Tucker, director at cybersecurity firm NetBlocks, said, "In that case, American data would be transmitted to TikTok through servers located in other countries, which could become an even bigger headache for the U.S. government."
Meanwhile, on the same day, President Biden signed a $95 billion security aid budget passed by Congress for Ukraine, Israel, and others. The U.S. Department of Defense plans to immediately provide Ukraine with $1 billion worth of weapons, including missiles and shells. President Biden said, "We are not moving away from our allies but standing with them," adding, "We will not let dictators win and will oppose them."
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