After almost four years of debating a law that would force ByteDance, the Chinese company that owns TikTok, to sell the app or be banned in the US, Congress finally passed legislation that does exactly that (I’ve written for CJR a number of times over the years about the back-and-forth in Washington regarding a TikTok ban, including here and here and here.) So what happens now? Before ByteDance either sells TikTok or is banned, there are a number of hurdles, roadblocks, and potential landmines that stand in the way—including the Chinese government, which has made it clear that it will not allow ByteDance to relinquish control of TikTok without a fight.
Just a few weeks ago, a sale-or-ban law looked to be doomed. The House of Representatives voted overwhelmingly in favor of one version of the law on March 13, but then it seemed to lose momentum in the Senate. Some senators said they supported the ban, but Maria Cantwell—a Democrat who chairs the Senate Commerce Committee—seemed skeptical of the law, saying she wasn’t sure that it could withstand a legal challenge. She also criticized the House bill for only giving ByteDance six months to find a buyer or face a ban, but when the House introduced a new version of the TikTok bill that increased the length of time that ByteDance had to find a buyer to as long as a year, Cantwell and others changed their minds and voted in favor.
Washington sources believe that ByteDance made a “series of miscalculations” in its attempts to forestall the passage of such a law. They told the Wall Street Journal that Shou Zi Chew, TikTok’s CEO, failed to build support on Capitol Hill, and instead relied on negotiations with the Committee on Foreign Investment in the U.S. over “a complex restructuring that never panned out.” Chew testified before Congress and ByteDance felt that he did well, and the company got support from the Club for Growth, a group backed by Jeff Yass, a major TikTok shareholder. But despite these successes, the Journal wrote, opinion on Capitol Hill was “already shifting against” the company.
Note: This was originally published as the daily email newsletter for the Columbia Journalism Review, where I am the chief digital writer
The idea of selling TikTok to an American company as an alternative to a ban was first proposed in 2020, after Donald Trump tried to ban the app. The New York Times reported at the time that ByteDance was discussing a potential deal with investors, including Sequoia and General Atlantic, two US investment firms that already own shares in the company. Under that plan, TikTok would have received new cash from existing investors, with ByteDance retaining a minority stake. When those discussions took place, the company’s market value was estimated at a hundred billion dollars, roughly the same as it is now. But talk of a sale cooled after Joe Biden became president and reversed Trump’s ban.
As talk of a sale-or-ban bill started to ramp up over the past year or so, a number of parties expressed interest in buying TikTok—not surprising, given that it is one of the most popular social apps in the world, with almost two billion monthly users. Among the prospective buyers are Steven Mnuchin, an investment banker and former treasury secretary under Trump. who said that he has assembled a group of investors who are interested. According to the Journal, Bobby Kotick, the former CEO of gaming company Activision Blizzard, is also reportedly looking for partners to join him in a potential TikTok acquisition. The Journal reported that Kotick spoke to Zhang Yiming, the co-founder of ByteDance, about a possible TikTok deal, although ByteDance denied this.
Other potential acquirers might include Microsoft and Oracle. After Trump tried to ban TikTok, Microsoft expressed an interest in buying the app, according to an NBC News report. Oracle started working with ByteDance as part of Project Texas, which was designed to wall off the data that TikTok had on American users of the app, and thereby defuse concerns about China’s ability to use the data for nefarious purposes. Under the deal, personal information about Americans was to be stored on Oracle’s servers in the US, and Oracle also monitored the behavior of TikTok’s recommendation algorithms, to ensure that China was not manipulating them. Some believe that this kind of knowledge and integration makes Oracle an obvious buyer.
The biggest hurdle standing in the way of a TikTok acquisition is the Chinese government. After Trump proposed banning the app, Beijing passed a new law covering the export of technology, including algorithms such as the one that powers TikTok (I wrote about this for CJR.) Arthur Dong, a business professor at Georgetown University, told The Verge that China likely would not agree to a TikTok sale if it included the algorithms, because “it probably feels at this point that they’ve got a gun to their head.” ByteDance could theoretically sell everything but the algorithms, but Dan Primack, who writes for Axios, has said that this would be like McDonald’s “selling a Big Mac without the meat.” The Information reported that ByteDance was holding discussions about a sale without the algorithms, but the company denied this.
If a sale is not possible, then a ban becomes inevitable. But some observers believe that banning TikTok could face significant challenges in the courts. TikTok itself has suggested that a First Amendment challenge is likely: In a video addressing TikTok users, Shou Chew, the CEO of TikTok, called it “a ban on you and your voice,” and a spokesperson for the company said the ban was unconstitutional and would be challenged in court. In a prepared statement following the law’s passage, Jameel Jaffer, executive director of the Knight First Amendment Institute at Columbia University, agreed that the law is unconstitutional, because the First Amendment means that the government can’t restrict access to ideas, information, or media from abroad “without a very good reason for it—and no such reason exists here.”
An analysis of TikTok’s dangers published by the US State Department argued that the Chinese government uses its influence over the app to “reshape the global information environment,” just as it uses its control over Chinese media to manipulate information, intimidate critics of the government and promote the Communist Party’s interests. And some members of Congress have supported a ban on TikTok due to concerns that the app might turn over private data on American users to the Chinese government. A number of critics of this position, however, have noted that Beijing doesn’t need access to TikTok to get such information, since it could just buy it from online data brokers the same way lots of other non-Chinese companies routinely do.
Seth Stern, a First Amendment lawyer and the director of advocacy for the Freedom of the Press Foundation, wrote for CJR that the First Amendment doesn’t allow for censorship “just in case” there might be some repercussions for national security. Congress may be afraid of potential risks, he said, but the government has provided no proof that TikTok poses an “imminent and grave threat” to the security of the US, which is what the constitution requires in order to allow for an exemption from the First Amendment.
Not everyone is convinced that a First Amendment challenge by ByteDance would be successful. Matt Schettenhelm, a senior litigation analyst at Bloomberg Intelligence, told The Verge that the DC circuit court, where such a challenge would be heard, would likely defer to Congress. He said he thinks there is a 70 percent chance that the US could overcome such a suit, since the court would tend to “tread carefully before it overturns a policy decision that was adopted by an overwhelming bipartisan majority of Congress.”
As Stern noted, the courts went in the opposite direction with the Pentagon Papers, which were also seen as a clear national security threat, but were ruled to be protected by the First Amendment. Whether the courts today would make the same decision is an open question, but regardless, there is a lot of ground left to be covered before a TikTok ban becomes a reality.