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If A U.S. TikTok Ban Goes Forward, Here's Who Will Be Affected

Alex Chan,RHU,CHS,CFP,CPCA,EPC,CFSB,CLU profile photo


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The U.S. House of Representatives' lightning-fast passage of a bill to force TikTok's Chinese owner ByteDance to divest has surprised people from Washington, D.C. to Beijing. It is the latest escalation of a silicon curtain, walling off global technology into separate armed camps.

After passing the House by a vote of 352-65 in a rare moment of bipartisanship, the legislation still requires the Senate approval (where only six senators, all Democrats, maintain a presence on TikTok), as we observed on TikTok, and signature into law by President Joe Biden (who has said he would sign it if passed, despite his own TikTok campaign clips).

Assuming all of that happens, ByteDance would be given six months to arrange for a sale of TikTok's U.S. operations. Otherwise, the app is expected to be deleted from app stores and blocked by internet service providers in the United States.

Some of TikTok’s ardent fans appeared bewildered that the government might eliminate their diet of makeup tutorials, home cooking tips, pranks and quirky dance moves per a Reuters video report. After all, the app engages 170 million American users - a bigger number than those who voted in the 2020 election (155 million) and more than three times the number of registered Democrats (47.7 million) or Republicans (35.3 million) Ballotpedia data shows. Politicians are generally not rewarded for taking such indulgences away from their constituents.

But anything is possible in a U.S. election year, with American lawmakers' anxiety related to China standing as one of the sole remaining points of policy consensus. Many people are striving to figure out who stands to gain, and who stands to lose, if America were to pull the plug on this viral Chinese import.

WASHINGTON, DC - MARCH 22: Congressmen Jamaal Bowman (NY-16), Mark Pocan (WI-2), and Robert Garcia (CA-42) and TikTok creators attend a press conference at the U.S. Capitol in support of free expression on March 22, 2023 in Washington, DC. (Photo by Tasos Katopodis/Getty Images for TikTok)

Getty Images for TikTok

The Potential Fallout

The Influencer Economy

Kids with outsized personalities, good looks, a modicum of talent and commercial ambitions might have previously gravitated toward television or pop music. Now, there is no need to wait on tables in hopes of being discovered – simply pull out your smartphone, select a niche and create content like crazy.

According to a well-timed study by Oxford Economics — underwritten by TikTok, of course — the platform's influencer economy supports 224,000 American jobs and 7,000 small businesses and contributed more than $24 billion to the U.S. gross domestic product in 2023. As Axios , among others, reported, “TikTok was the most downloaded app in the U.S. in 2021 and 2022, per Apptopia. Chinese e-commerce app Temu replaced it on that list in 2023.” This army of influencers could presumably migrate part of its audiences to other social platforms.

However, none of those competitors seem to match the virality of TikTok’s algorithm in forging new stars or the ease of monetizing newfound popularity . It is reasonable to expect howls of anguish if these creatives see their careers fizzle and end up on the digital breadlines.

The Impact on Investors

TikTok’s corporate parent, ByteDance, was most recently valued at $268 billion in a share buyback offered to institutional investors at the end of 2023. Reuters reported that value was based on its estimated $120 billion in revenues in 2023. The U.S. TikTok reportedly generated $16 billion in revenue last year. That would place its valuation somewhere in the range of $36 billion (based on the multiple of the parent) and up to $160 billion if it were valued at 10X sales in line with the slower-growing Meta Platforms ( META ).

According to the company’s website, ByteDance is already 60% owned by overseas international institutions , including General Atlantic, Blackrock, and Susquehanna International Group (SIG). SIG head and Republican megadonor Jeff Yass reportedly has $33 billion of net worth tied to ByteDance per a recent Forbes staff report. The company’s founder, Zhang Yiming, owns 20% of ByteDance’s shares but controls more than 50% of the voting rights.

In theory, a forced divestiture could offer foreign institutions an opportunity to finally get some liquidity after an IPO by ByteDance has been delayed for years amid rising U.S.-China tensions. A TikTok carved off from its Chinese parent would be arguably the fastest-growing social media platform on the planet, with unrivaled access to younger consumers that brands covet and a juicy IPO candidate.

However, the Chinese government can veto any sale of TikTok, given that recommendation algorithms are considered a security-sensitive technology. Initial indications are that approval will be hard to obtain, as The Wall Street Journal reports.

Recently, Wang Wenbin, Chinese foreign ministry spokesperson said, “The U.S. House of Representatives passing this bill lets the United States stand on the opposite side of the principles of fair competition and international trade rules.”

If a TikTok divestment is viewed as a matter of national honor, ByteDance’s international investors may end up owning shares in a China-only social media company with limited voting rights and dim prospects of ever going public.

The Bidders in a TikTok Sale

The prospect of a forced sale has attracted eager would-be bidders, including former U.S. Treasury Secretary Steve Mnuchin, who helped oversee the Trump administration’s failed effort to force divestment of TikTok in 2020, and Bobby Kotick, former Activision chief executive officer. Presumably, they expect to be able to scoop up an incredibly valuable digital juggernaut at a fire sale price.

But even if ByteDance and the Chinese authorities were to consider approving a TikTok carve out, it is unclear what would be up for sale and how that sale would proceed. While the 170 million Americans scrolling through the app each month is impressive, that’s a mere fraction of the one billion users TikTok has amassed worldwide. A U.S. version of TikTok walled off from the rest of the world is inherently less valuable to brands and creators seeking the broadest possible influence and would be at a competitive disadvantage.

More fundamental to any sale would be the status of TikTok’s recommendation engine, the secret sauce algorithm that makes the app so addictive. But according to China critics — like Media Research Center Founder Brent Bozell, who recently spoke with Fox Business — it has the potential to manipulate Americans' informational diet. It seems inconceivable that ByteDance would agree or that China would allow the underlying source code to be handed over to a potential foreign competitor. Yet without this, TikTok platform would be an empty shell.

TikTok’s would-be acquirers will likely spend vast amounts of energy and fees trying to untangle the host of legal and technical complexities only to end up with the prospect of a failed deal in six months.

The U.S. Capital Markets

The NASDAQ and the NYSE will likely feel turbulence from China because of the TikTok fracas.

This year, fast-fashion giant Shein was expected to be the marquee IPO that excited investors about new listings. However, Shein is reportedly shifting its ambitions to London following delays in the U.S. Securities & Exchange Commission review of its registration statement and calls by lawmakers to block an American IPO.

TikTok and Shein are companies with roots in China that have been able to out-innovate and outcompete their entrenched Western competitors. The U.S. capital markets will be hard-pressed to attract the best global companies to list if an unwelcome air hangs over Wall Street.

In this photo illustration the social media application logo for TikTok is displayed on the screen of an iPhone in front of a US flag and Chinese flag background in Washington, DC, on March 16, 2023. China urged the United States to stop "unreasonably suppressing" TikTok on March 16, 2023, after Washington gave the popular video-sharing app an ultimatum to part ways with its Chinese owners or face a nationwide ban. (Photo by OLIVIER DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images)

AFP via Getty Images

Big Winners From A TikTok Ban

A TikTok ban in the United States would undeniably create some big winners.

Big Tech

While Meta and Google have remained conspicuously quiet during the latest debate over TikTok’s ownership, they are likely salivating at the prospect of recapturing lost ad revenues and eyeball time from their fiercest competitor. Much of TikTok's video content could be adapted to Google’s YouTube Shorts or Meta’s Instagram Reels. However, neither platform is poised to replicate the infectious, attention deficit-inducing trance that TikTok produces in young consumers.

While Big Tech would likely become even bigger and more consolidated, some lawmakers are talking about the TikTok divestment as simply a first step toward more far-reaching reforms to social media’s reach. Those could include tight restrictions on access by young users and strict controls on the harvesting and marketing of behavioral data. For example, the Kids Online Safety Act, which would require that users younger than 18 have the highest level of safety and privacy applied by default.

If lawmakers find a new enthusiasm for regulating online media, Big Tech will come to regret it.

Big Law

Lawyers, lobbyists and anyone else who bills by the hour will have the opportunity to make a fortune as the TikTok ban wends its way through the court system and various suitors attempt to become the app’s next owner. Any potential deal would need to meet the requirements of regulators in both Washington D.C., and Beijing. At the same time, the company will simultaneously contest the ban's constitutionality on free speech grounds. Expect a big, messy, expensive shootout with hundreds of billions of dollars in value at stake.


Perhaps the biggest winners of a TikTok U.S. ban scenario would be parents desperate to get their children to engage in dinnertime conversation, pick up a book or play outside.

According to Gallup , the average 17-year-old spends 5.8 hours per day on social media, with TikTok, YouTube and Snapchat vying for the position of top attention vacuums. Most parents who I know, and speaking from personal experience, this level of screen addiction contributes very little to children’s emotional, physical or educational development. Yet many parents have to engage in daily conflict to redirect their kids’ energies.

If Congress can summon the resolve to unplug TikTok’s U.S. presence, America’s parents finally might be able to get their kids to put down their phones.

By Drew Bernstein, Contributor

© 2024 Forbes Media LLC. All Rights Reserved

This Forbes article was legally licensed through AdvisorStream.

Alex Chan,RHU,CHS,CFP,CPCA,EPC,CFSB,CLU profile photo


Certified Financial Planner & Chartered Life Underwriter
Belvedere Financial Solutions Limited
Cell : 604.649.3829
Langley Office : 604.513.1177
Vancouver Office : 604.689.8289