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TikTok’s time is up. Can Donald Trump save it?

The imperilled app hopes for help from an old foe

Photograph: Imagn

Photograph: Imagn

The campaign to ban TikTok has been going for almost as long as the viral video app has been operating in America. Now, after six years of fending off security investigations, executive orders and legal threats, the Chinese-owned company faces being outlawed within days. On January 17th the Supreme Court upheld a law which prohibits social networks controlled by “foreign adversaries”, singling out TikTok and China. The ban will take effect on January 19th.

The Supreme Court’s ruling represents the end of TikTok’s legal fight for survival. Its faint hopes now rest on a political solution. Donald Trump, who is due to become president on January 20th, the day after TikTok’s banishment, has said he wants to “save” the app. China’s government, meanwhile, is anxious to forestall a trade war with America, which Mr Trump has threatened. Can a deal be done?

The Protecting Americans from Foreign Adversary Controlled Applications Act (pafaca) makes it illegal to “distribute, maintain or update” proscribed apps, so Apple and Google are expected to remove TikTok from their app stores and stop offering updates or fixes. American companies hosting TikTok’s data or serving its ads will probably also pull the plug. Rather than letting its app die a slow death, TikTok has indicated that it may switch off its service on day one of the ban, to maximise the outcry from its 170m American users.

To avoid permanent prohibition, TikTok is banking on an unlikely ally. Mr Trump, who tried to kill off the app during his first presidential term, in 2020, has become a fan of TikTok, reportedly inviting its chief executive, Shou Chew, to his inauguration. Mr Trump’s change of heart reflects a change in public opinion. Whereas in early 2023 half of American adults wanted to ban TikTok, by last summer the figure had fallen to one-third, according to the Pew Research Centre, a think-tank. Mr Trump, who joined the app last year and has 15m followers, has credited it with helping him win votes from youngsters, as well as providing competition to social-media incumbents such as Mark Zuckerberg’s Meta. “If you get rid of TikTok, Facebook and Zuckerschmuck will double their business,” Mr Trump warned last year.

The incoming president has few options, however. His allies have suggested he might issue a stay of execution using a clause in pafaca that lets the president delay TikTok’s ban by 90 days. But that would require evidence of “significant” progress towards a sale of the app, which does not seem to exist. Mr Trump could instruct his attorney-general not to enforce the law, as past presidents have done regarding the federal ban on marijuana. (White House officials have suggested that Joe Biden, who signed the law banning TikTok but apparently does not want it to define the last day of his presidency, may not enforce the ban on January 19th.) But tech firms would surely be nervous of flouting the rules. “Trump changes his mind a lot. If I were a lawyer at Apple or Google, it’s not obvious to me that I would say, ‘It’s okay, we can break the law, Trump gave us his word that he’s not going to prosecute us’,” says Evelyn Douek of Stanford Law School.

pafaca gives the president latitude to let TikTok off the hook by declaring that a divestiture of its ownership has allayed national-security concerns. A rejig of TikTok’s corporate structure, perhaps bringing in an American partner, might provide cover for Mr Trump to make such a judgment. But past efforts to distance TikTok from its Chinese owners—involving Oracle, an American tech firm, processing American users’ data on home turf, for instance—have failed to persuade hawks in Congress that a meaningful separation has taken place. Loud objections would follow if Mr Trump tried such a sleight of hand. pafaca could, in theory, be repealed altogether. But it was passed with such a large, bipartisan majority (360 to 58 in the House of Representatives, 79 to 18 in the Senate) that Mr Trump would struggle to overturn it.

TikTok’s surest route to survival would be for its Chinese owner, ByteDance, to sell up. The company has long said that TikTok is not for sale; even if ByteDance were willing to give up its prized possession, TikTok’s acquisition is opposed by China’s government, which has links to ByteDance via a stake in one of the company’s subsidiaries. Chinese officials have described America’s efforts to buy the app as “plundering” and classified TikTok’s recommendation algorithm as a sensitive technology that cannot be exported.

The return of Mr Trump to the White House may make a deal of some kind more likely. The president-elect said that he had discussed TikTok with China’s president, Xi Jinping, in a phone call on January 17th. China is keen to avert the trade war that Mr Trump has promised, and TikTok is one card that it could play from the limited hand it has when it comes to broader talks about tariffs. China’s government is said to be considering Elon Musk as a potential buyer of TikTok (according to Bloomberg) or as a broker of a deal with other companies (according to the Financial Times). Mr Musk, an ally of Mr Trump, already owns a social network in the form of X. His large investments in China, via his car firm, Tesla, may persuade Chinese officials that he is a reliable partner—or, perhaps, someone over whom they have leverage.

One offer has been put forward by a consortium calling itself the People’s Bid, led by Frank McCourt, a wealthy former owner of the la Dodgers baseball team. The last time TikTok’s potential sale came up, during Mr Trump’s first term, possible buyers included Oracle, Microsoft and Walmart. Wedbush Securities, an investment firm, believes any sale is unlikely to include the prized algorithm, and estimates TikTok’s resulting value at $40bn-50bn. That is a hefty discount for an app whose ad revenue in America this year is forecast to reach nearly $16bn, according to eMarketer, a research firm. When Mr Musk paid $44bn for Twitter three years ago, its global ad business was worth just $4.5bn a year.

If none of these gambits works out and TikTok vanishes for good in America, the race will be on to capture the attention of its users, who spend an average of nearly an hour a day on the app. Most analysts believe that the main beneficiary would be Meta, whose Facebook and Instagram would get perhaps half of those minutes, with Google’s YouTube the runner-up. The biggest winner in relative terms may be Snapchat, a smaller app. If it were to inherit 10-20% of TikTok’s lost American viewers—and the ad dollars that would follow them—its domestic revenue would increase by 25-50%, according to Madison and Wall, an advertising consultancy.

The wider consequences of a TikTok ban could be profound. China would surely respond. American social-media apps such as Facebook and YouTube are already banned there, but other American companies may be vulnerable. Apple has been hastily moving production to India, but still makes most of its gadgets in China. Tesla has a giant factory in Shanghai. (Mr Musk is rare among social-media bosses in having spoken out against the TikTok ban.)

China has an arsenal of new laws it can deploy against foreign firms. In recent months it has used them to disrupt the local operations of American companies including Skydio, a drone-maker, pvh Group, which owns fashion brands such as Calvin Klein, and Intel, a chipmaker.

There may be aftershocks in America, too. TikTok is not the only Chinese app to prove popular there. Social networks such as Lemon8, also made by ByteDance, and Xiaohongshu, China’s privately held answer to Instagram, have risen up the download charts recently. Chinese e-commerce platforms like AliExpress and games such as Whiteout Survival have likewise proved international hits. How America tackles its TikTok problem is a sign of how it will manage the many dilemmas yet to come. 

Author: Editors Desk

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