The TikTok Ban: How we got here, and what might happen next
It might be time for TikTok to go the way of the dinosaurs. President Biden signed a bill in April 2024 that would remove TikTok from app stores starting January 19th, 2025, unless it was spun-off and acquired by an American company.
The original idea of a TikTok ban actually stems from President Trump back in 2020. He claimed that the Chinese social media platform was a security concern for American citizens, under the rationale that the CCP had visibility into TikTok owner ByteDance’s sensitive data that it collects on users. This data includes all kinds of user identification and user preference data that ByteDance uses to algorithmically curate a personal feed for every user on their “For You Page”. The algorithm that ByteDance has developed is basically perfect at pointing the right eyes to the right content. The algorithm is so effective at curating content, that gangs even use it as a recruiting platform, knowing that their videos will reach the right audience. There’s a myriad of different ways a foreign government could leverage the user data obtained from TikTok, but at its core giving a foreign government the ability to keep precise track of Americans’ location and preference data opens up a threatening can of worms.
Trump’s initial attempt at banning TikTok was not a success. He tried to sign it into law under an executive order, which was later ruled unconstitutional. However, with the passing of the Huawei ban, and the media attention that Trump’s attempted ban on TikTok received, America began waking up to the notion that data being in the wrong hands could be a security threat. Fast forward a few years, and by 2024, a matter that had initially been seen as an alt-right Trumpist agenda, had shifted into a bi-partisan movement. It began with President Biden banning TikTok on all government devices, but it later escalated into a bill with bi-partisan support that would remove TikTok from app stores, unless it were to be acquired by an American company. It passed with overwhelming support, and Biden signed it on April 24th, 2024. By January 19th, 2025 if no American company had bought the platform, users would no longer be able to access it on the internet, and the app would have to be removed from app stores.
ByteDance has publicly stated that they have no intention of divesting the app to an American company. On social media, the company posted “ByteDance doesn't have any plans to sell TikTok”. Giving up TikTok’s US operations would also mean giving up their secret sauce, the algorithm. Their algorithm is the one thing that has let them maintain their relevance in a world where platformers like Meta and YouTube can vertically integrate short-form media with products that their consumers already like. Sure, one can argue that the network effect that TikTok built out for itself in the initial years of its incumbency is formidable, it was the platform with the most creators and viewers, which incentivizes both parties to stay. If you are a creator, why migrate to a platform with less eyeballs? And if you’re a viewer, why migrate to a platform that doesn’t have the creators you already love so much? These two qualms have largely been resolved by main competitors like Instagram Reels and YouTube shorts. Due to the non-exclusive nature of these platforms, creators can cross-post content on all platforms, and it is not uncommon to see the same video on a creator’s Instagram and TikTok. If anything, the vertical integration of Instagram Reels should have killed TikTok. Not only did they copy TikTok’s core product, but they did it in a way in which it is now in the same place as your friends’ posts, direct messages, and stories. Why go to TikTok when you can just hop on Instagram for everything social? If you see a funny reel, you no longer have to text it to your friend for them to see it, just send it to the Instagram DM group chat with you and your friends, they already check the platform daily. On paper, Instagram was a more convenient and useful platform, that even had more axes of data for their algorithm to work off of. Still, TikTok has survived for years, there are reports that the app has 170M monthly active users just in the United States. TikTok’s sustained success can only be attributable to their golden algorithm.
That leads up to the present day. An ever-flourishing social media platform that is a staple on many Americans’ phone screens, about to be banned by the legislation in a month. Parent company ByteDance has tried to appeal the decision, and has successfully obtained the right to an oral argument in the presence of the supreme court. From ByteDance’s point of view, a law banning an entire social media platform violates the first amendment, freedom of speech. From the government’s point of view, consumers have other platforms they can use to leverage their freedom of speech, notably X, which has advertised itself as a place for just that—and the national security concerns would be too grave if the platform were to continue to be operated by a Chinese company. Nevertheless, the oral arguments will happen on January 10th, 2025, just 9 days before TikTok is supposed to go dark.
Even with the clock winding down, all hope is not lost for TikTok. Trump has changed his stance on the TikTok ban. He went from pedaling the national security concerns, to stating that “There are a lot of young kids on TikTok who will go crazy without it.”. The President-elect might just come in and save the day. This is thanks to Trump donor and ByteDance investor Jeff Yass, who was one of the largest republican donors in the 2024 election. Jeff Yass, who owns 7% of ByteDance, would stand to lose billions in the event of a tiktok ban. Mr. Yass donated $100 Million to the republican party this election. As such, Trump has found himself in a place where he is now championing the preservation of TikTok. Trump will be inaugurated on January 20th, 2025, one day after TikTok would have gone into effect, which rules out the possibility of him somehow reverting the ban. However, if the President-elect were adamant enough about the survival of TikTok, he might be able to sway some justices on the supreme court into ruling his way. There are 9 justices, 6 of which lean republican, a figure that most definitely would be able to rule the original bill unconstitutional and overturn its effects. ByteDance CEO Shou Zi Chew recently met with the President-elect at his Mar-a-Lago estate, which may have won him further goodwill and brownie points.
Another way TikTok could be saved is through a merger with an American company. Even though ByteDance has stated that they do not want to sell TikTok, everybody has a price. In this case, that might not be better. Some value TikTok’s US operations in the range of $50-100B, which would automatically cross out any potential acquirers that are worth below that mark, like X and Snapchat. Second, the strategics that would want to acquire the company likely can’t, due to antitrust. Meta would rationally pipe up any price that ByteDance names, likely up to multiple hundreds of billions of dollars, as it would eliminate their foremost competitor and also give them access to the golden algorithm.
It is unlikely Lina Khan would ever let TikTok fall into the hands of Meta or Google, and new FTC chair Andrew Ferguson is not only averse to big tech, but he also wouldn’t be in power until the day after the ban goes into effect. There is realistically only one way for TikTok to find its way out of this without the help of the courts, which would take place under a unique clause included in the original bill. It states that if there were to be an in-process transaction at the time of the ban, the date on which the ban goes into effect could be delayed by up to 90 days. This means that a company could express interest in buying TikTok, kicking off the M&A process, which would delay the ban date into Trump’s presidency, during which he could find a way to revert the ban. The flaw in this plan is that in order for a deal to be deemed “in-process”, the current president must deem it so, which would still be President Biden all the way to the ban date.
This leaves ByteDance and TikTok users in the US with one option, hope that Trump can work his magic with the Supreme Court, and that the justices rule in their favor.
