What a TikTok Ban in the US Would Mean for the App

TikTok’s future in the US is heading toward its moment of truth.

The US House of Representatives passed legislation on April 20 that would force the social media platform’s Chinese parent, ByteDance Ltd., to divest its controversial ownership stake or face a US ban. The Senate is expected to vote on the bill in the coming days, and President Joe Biden has said he’d sign the legislation promptly.

If the bipartisan measure becomes law, it would give ByteDance as long as a year to divest its ownership before a ban would set in. Speaker Mike Johnson included the TikTok divestiture legislation — already passed overwhelmingly by the House in a stand-alone bill — in a fast-moving aid package for Ukraine and Israel.

TikTok said it was planning a lawsuit over the measure. “This is an unprecedented deal worked out between the Republican Speaker and President Biden,” Michael Beckerman, TikTok’s head of public policy for the Americas, said in a memo to TikTok’s US staff. “At the stage that the bill is signed, we will move to the courts for a legal challenge.”

The concern among lawmakers is that TikTok poses a security threat to US users because China requires its companies, upon request, to share any national security-related data with the government. There are fears that the Chinese government could abuse the data of TikTok’s users, for example by developing profiles of them and subjecting them to blackmail, and that it could influence the content American users see on the app. TikTok has pushed back vehemently on these concerns and spent more than $2 billion in a project it says cordons off US users’ data.

So what could happen next? And who stands to benefit from a potential TikTok divestiture? Here are some of the biggest questions about the popular video app’s future in the event the bill becomes law.

Would ByteDance actually sell TikTok?

A demand that ByteDance sell its incredibly valuable (and growing) business would get tremendous pushback. ByteDance doesn’t want to sell TikTok and will do everything in its power to avoid such a scenario, including fighting it in US courts. The Chinese government would also need to approve any divestiture plan and has said publicly that it would oppose a forced sale. It’s conceivable US lawmakers could be placated by something short of a full sale; possibly TikTok could become its own individual entity headquartered in the US, with ByteDance remaining an investor.

Complicating matters further is that former President Donald Trump, the presumptive Republican nominee for president, has said he is against a sale, reversing the stance he took when he was in office. Trump’s opposition could play a factor if he ends up winning the election before a sale process is finalized.

Who would buy TikTok?

Anyone buying the company would need a very fat pocketbook. ByteDance, which is privately traded, has an estimated valuation around $268 billion, and while TikTok’s US business would certainly be much smaller, it could still fetch a price around $40 billion to $50 billion. For comparison, Elon Musk paid $44 billion for X, the social media platform formerly known as Twitter, in 2022.

A price tag that high eliminates most potential buyers right out of the gate. Meta Platforms Inc. and Alphabet Inc. might seem like logical acquirers, but they are mired in regulatory concerns over monopolization, which would essentially rule them out. Oracle Corp. is often seen as a likely landing spot as the enterprise software company is already a TikTok partner in the US. It houses the app’s US user data and considered a bid for it in 2020, when then-President Trump tried to force a sale. However, Oracle’s more than $87 billion in debt, including from another large acquisition in 2022, makes it unlikely the company could afford TikTok on its own. Microsoft Corp. was one of the other leading candidates to buy TikTok’s US business in 2020, but that deal ultimately fell apart. Former Treasury Secretary Steven Mnuchin said, without giving specifics, that he’s assembling a group of investors to purchase TikTok’s US operation, calling it a “great business” in an interview with CNBC.

Could TikTok survive without the US market if it’s ultimately banned?

Possibly. On its website, TikTok boasts that it is the number one downloaded app in more than 40 different countries. Even though the US is a very big audience — more than 170 million monthly users — that’s still a fraction of the billion-plus total TikTok users. ByteDance already operates a TikTok clone in China, called Douyin, with hundreds of millions of followers.

Still, as other platforms have learned, the US is the most valuable market for social networks because of the prevalence of large advertisers willing to pay to reach US audiences. And ceding the US to a competitor would put the rest of TikTok’s global markets at risk, as there would be real concern that the network effects in the US could lure people away from TikTok to other US-focused alternatives.

A ban would also likely kill TikTok’s big ambition to expand the US version of TikTok Shop, which combines online entertainment with impulse buying. The company predicts that business could grow tenfold in 2024.

Who stands to benefit from a TikTok divestiture?

The most obvious answer here is Meta, which owns Instagram, an app that is already incredibly popular and features a TikTok rival product known as Reels. If TikTok was sold to another company and mishandled, or banned for any significant amount of time while the logistics of a divestiture were worked out, Reels would be the most obvious alternative for US users. Trump said he now opposed forcing TikTok’s sale because it would benefit Meta, which suspended him from its platforms for two years in January 2021 after concluding that some of his posts encouraged his supporters to violently riot at the US Capitol.

It’s possible other video-focused services could also benefit, including YouTube, which is owned by Alphabet. In addition to gaining users, Meta and YouTube would likely capture advertising dollars from TikTok if the app is no longer able to operate. The value of both Meta and Alphabet shares leaped upward after the divestiture bill passed the House of Representatives. X could also see an uptick in users and advertising if TikTok disappears or struggles.

What are the politics involved?

The US debate over TikTok’s future promises to get messier with the general election approaching. Trump’s flip-flop on what to do about TikTok has complicated matters for Republicans. They were traditionally in favor of a ban and now need to decide whether to move forward despite their presidential candidate’s change of heart. One wealthy Republican donor, venture capitalist Keith Rabois, posted on X that he will “never fund” any Republican candidates who vote against the bill. At the same time, voting for the bill could hurt some politicians with young voters who love the app and will be very upset if it’s banned.

Then of course, there’s China’s reaction to consider. It’s unclear how the Chinese government would respond to a forced sale, but US-China trade and diplomatic relations would likely be affected. When the Trump administration pressed for TikTok’s sale years ago, China’s foreign ministry said that the precedent of acquiring a company under the pretense of protecting national security could lead to foreign countries targeting American companies, calling it the opening of a “Pandora’s box.”