The US House of Representatives has passed a significant bill which, if enacted, might result in TikTok being outlawed in America. The proposed legislation stipulates that ByteDance, the parent company of the social media behemoth, has six months to sell its predominant stake, failing which, the app will be terminated in the US.
Although this House bill passed with a bipartisan vote of 352-65, it yet requires Senate approval and the US president’s signature to become law. There have been long-standing concerns among lawmakers about China’s sway over TikTok. ByteDance, headquartered in Beijing, is obliged by a national security law to exchange data with Chinese officials.
The co-author of the bill, Mike Gallagher, a Republican from Wisconsin, declared that the US cannot risk having a leading news platform controlled or owned by a company obligated to the Chinese Communist Party. TikTok tried to appease regulators by assuring that they have taken measures to protect its users’ data, which amounts to at least 150 million in the US, from access by ByteDance employees in China.
However, a Wall Street Journal investigation in January revealed that the system was not watertight, citing instances of unofficial data exchange between the US TikTok branch and ByteDance in China. This concern was further amplified by several high-profile cases, including one where a journalist’s data was accessed by ByteDance employees in China to identify their sources.
Hakeem Jeffries, the leading Democrat in the House, praised the bill before the vote. He expressed the belief that the legislation would reduce “the possibility of TikTok users’ data being misused and their privacy being compromised by a hostile foreign adversary.”
The legislation will now be reviewed by the Senate, according to Majority Leader Chuck Schumer. However, its fate in the upper house is uncertain following opposition to the bill expressed by Donald Trump, the Republican White House candidate.
Trump, who had once tried banning the app during his presidency, reversed his stance following a meeting with Jeff Yass, a Republican donor who allegedly has a small stake in ByteDance. This opposition was mirrored by some House members, with Georgia Republican, Marjorie Taylor Greene, expressing concerns about the potential for such a bill to force the sale of other corporations under the guise of protecting US data.
Several Democrats also oppose the ban, voicing apprehensions about alienating TikTok’s young user base at a time when the party is struggling to maintain its appeal to younger voters.
The Senate’s intelligence committee leaders praised the House vote. Mark Warner, a Democrat, and Marco Rubio, a Republican, declared their resolve to guide the bill through the chamber. In a statement, they agreed on their unease about the national security threat TikTok could pose and emphasized the platform’s extensive power to potentially influence and divide Americans, considering ByteDance’s lawful obligation to cater to the Chinese Communist Party’s interests.
President Joe Biden has vowed to sign the bill rapidly if it gains endorsement in the Senate, an action that risks sparking a diplomatic discord with China.
Following the vote, TikTok seemed to revitalize its bid to rally users to lobby Congress by dispatching another notification urging users to reach out to their representatives. This action mirrors a similar move made last week which resulted in a surge of calls to congressional offices; according to some staffers, this tactic notably intensified the opposition to the company.
A few supporters protested against the bill outside the White House on Wednesday. One of them, Tiffany Yu, a young disability advocate from Los Angeles, states that the platform is crucial to her work. “Fifteen years ago, I only dreamed of reaching 30 or 40 people,” she says. Presently, she reaches millions. Another protester, Ophelia Nichols, underscored the negative business implications the bill would have in the US. “Shame on them, at the House,” she remarked.
Content creator, Mona Swain, 23, revealed that the app’s earnings funded her mother’s mortgage and her siblings’ college education. “To potentially lose work during such a chaotic time in my life and in many other creators’ lives, it’s extremely frightening right now,” Ms Swain told Reuters.
For a mandatory divestiture to occur, ByteDance would need to obtain consent from Chinese officials. Beijing has pledged to resist any imposed sale. Responding to this development, Foreign Ministry spokesperson Wang Wenbin warned on Wednesday that such a move would have repercussions for the US.
“Despite no evidence found to suggest that TikTok poses a threat to US national security, the United States has continuously suppressed TikTok,” he remarked to journalists.
Wang condemned this type of oppressive conduct that disrupts companies’ regular operations, deters international investors’ confidence in the investment climate, and damages the normal international economic and trade order, especially when they can’t win in a fair competition.
Even if ByteDance manages to get approval to sell off its stake in TikTok, doubts remain about whether any of its rivals are financially prepared to bid for the platform. The company has previously estimated the app’s worth at approximately $268 billion, a figure that might deter some investors.
Analysts commented that there would likely be numerous prospective buyers in the US despite the cost and the tech sector’s ongoing concerns about monopoly. Focusing on the issue, Emarketer analyst Jasmine Enberg noted, “All the big social media companies would be interested but they would face a lot of anti-trust hurdles… There are other firms in the social media space that are smaller like Snapchat that would be interested but wouldn’t be able to afford it.”
In 2020, when the Trump administration ordered a sale, several significant US corporations considered bids, valuing the company around $50 billion at the time. Microsoft, however, lost to a consortium that incorporated Walmart and software behemoth Oracle, steered by Larry Ellison and Safra Catz with ties to the Trump administration. However, the deal collapsed amidst legal issues and transitioning administrations.
TikTok’s influence and advertising revenue have notably risen since then. According to research company Emarketer, TikTok is predicted to generate approximately $8.66 billion in ad revenue from the US this year, a significant increase from under $1bn in 2020.
