Mr. Biden signed a law requiring TikTok to divest capital in the US, what’s next?

Experts predict there will soon be a legal battle between the US government and the application TikTok after the US passed a law aimed at banning this application in the US.

What happens to TikTok?

On April 24, US President Joe Biden signed a foreign aid bill worth $95 billion into law, which includes a provision forcing the Chinese owner of the social network TikTok, ByteDance, to divest its capital. from TikTok otherwise this application will be completely banned in the US.

The TikTok provision along with the provision for using Russia’s frozen assets to aid Ukraine are considered accompanying provisions to make the aid bill more easily approved by conservative Republicans, according to the newspaper. The New York Times.

According to arguments by US lawmakers (who drafted the bill), TikTok causes US national security concerns because it allows the Chinese government to access US users’ data – an allegation that TikTok has repeatedly denied it.

The bill gives ByteDance 270 days to divest capital from TikTok, otherwise TikTok will be banned in the US. Thus, the deadline for ByteDance is January 19, 2025 (can be extended by 3 months if ByteDance shows that the company is making progress in divestment).

TikTok reaction

Immediately after President Biden passed the bill, TikTok said it would pursue a lawsuit against this law.

“Rest assured – we’re not going anywhere. The truth and the Constitution are on our side and we hope to prevail again,” said Mr. Chau Thu Tu, CEO of TikTok, in a video posted on the platform.

Commenting on upcoming developments, Mr. Jeff Kosseff – Associate Professor of cybersecurity law at the US Naval Academy said that there will certainly be lawsuits in the near future because TikTok has won a similar legal battle. in 2020 under US President Donald Trump.

Mr. Kosseff said that TikTok will continue to use the First Amendment right to free speech as a main argument in court.

Last week, TikTok’s vice president of public policy, Michael Beckerman, confirmed that the company would pursue a legal battle.

“Thankfully, in America there is a Constitution and people’s First Amendment rights are very important. We will continue to fight for all users on TikTok,” Mr. Beckerman said.

Legal experts told The New York Times that to win against TikTok, the US government may need to present strong evidence that ByteDance’s ownership of TikTok would raise national security concerns and that restrictions on free speech are necessary.

According to experts, this legal battle could take months or even years.

Complicated divestment

Analysts estimate TikTok’s price in the US could reach tens of billions of dollars.

ByteDance itself is one of the world’s most valuable startups, estimated at $225 billion, according to CB Insights, a firm that tracks venture capital.

Such a high price will limit the list of people who can buy TikTok because technology giants like Meta (Facebook) or Google may be blocked from buying due to antitrust concerns.

One suggestion for a sale of TikTok is that private equity firms or other investors could form a group to raise enough money to buy the social network.

However, even if there is a buyer for TikTok, the process of separating TikTok from ByteDance could be very messy.

According to The New York Times, the law prohibits any connection between ByteDance and TikTok after the completion of the transfer. However, ByteDance is a global company, so it is difficult to separate the US part from the rest because the employee and technology networks are closely linked.

China’s potential response

It’s possible that the Chinese government will try to block ByteDance’s sale of TikTok.

China may issue export restrictions to prevent TikTok’s algorithm from being sold to foreign countries if TikTok US is no longer part of ByteDance.

In March, after the US House of Representatives passed a similar bill, Chinese officials fiercely criticized the House’s move.

In 2023, China’s Ministry of Commerce said it would “resolutely oppose” ByteDance’s sale of TikTok.

China could also target US companies in response.

On April 19, the Cyberspace Administration of China asked Apple to remove two social networks WhatsApp and Threads, both owned by Meta, from the App Store in China.

The Chinese government cited national security reasons for this request.