It’s panic stations at TikTok. Last week’s lightning-fast creation of a bill that would force the platform’s divestiture or bar it in the US, and the legislation’s almost instantaneous passage by the House Energy and Commerce Committee, has the Chinese-owned app scrambling to avoid a ban that could be only months away.
The full House will vote on the bill on Wednesday. With President Joe Biden indicating he would sign the legislation should it reach his desk, TikTok’s dwindling hope is that it can get the bill held up in the Senate or stop it in the courts on the argument that it violates users’ First Amendment rights.
The other outcome is for ByteDance Ltd to do what the bill suggests and sell. This is realistically the only path forward. There is no future for a Chinese-owned TikTok in the US. The threat of data harvesting, and propaganda, has proved so great that a notoriously divided Congress has (so far at least) found complete bipartisanship.
Over the weekend, a TikTok source told me the company regards it as infeasible to separate US TikTok from the product globally because it’s all one big community. I’m not sure I buy that — American users are mostly trying to reach other Americans, and the same can be said for advertisers. But if the company truly thinks a US-only TikTok can’t work, it must then turn its attention to selling the entire global business (excluding China, where ByteDance owns a separate TikTok-like app, Douyin). A full sale of TikTok makes more sense considering that if lawmakers were to force the sale of TikTok in the US, other Western markets could feel compelled to follow suit.
Finding a buyer for TikTok, one of the hottest apps in the world, should not be a problem, even at a price tag that would run to several hundred billion dollars. Already this past weekend, the Wall Street Journal reported that Bobby Kotick, the former chief executive officer of video game company Activision Blizzard, expressed interest in forming a coalition of buyers and had approached ByteDance co-founder Zhang Yiming with the idea.
The company was quick to strenuously deny the report, but it would be foolish not to explore such options with haste. Even a brief shutdown of TikTok would be cataclysmic to its value. There is strong loyalty toward
TikTok from its user base which, runs to 170 million in the US alone. But at the South by Southwest Festival in Texas this week, it’s clear that while TikTok would be sorely missed, social media creators are an adaptable bunch, ready to shift their attentions to competing platforms like YouTube’s Shorts and Meta Platforms Inc’s Instagram Reels, where many of them already post already.
“A lot of TikTokers’ primary goal on that platform is to move their followers to a different platform,” said Luke Thorssen, who was at the festival to promote his company, Vlogmi, a new software platform for social media analytics. He says leading creators “are now seeing that they get more money by posting on YouTube Shorts” and elsewhere. The plethora of other platforms on which to share content will likely undercut TikTok’s First Amendment argument against the bill, though it has gained the influential support of the American Civil Liberties Union.
At South by Southwest, TikTok has put on a brave face and is out in force. At one panel I attended, TikTok executive Krystle Watler spoke to a packed room of ad agency professionals about the platform’s jaw-dropping ability to reach millions of eyeballs in an instant. Not mentioned once in the hourlong session was the quite real possibility the app might no longer be on US consumers’ smartphones by this time next year. But it is on people’s minds. “I hope to God it doesn’t happen,” said John Dempsey, an executive with Wieden+Kennedy, one of the largest global advertising agencies. For advertisers, he told me, TikTok, in just five years of existence, has become “the new television.”
Popularity isn’t enough. Isolated among its tech peers and backed into a corner, TikTok last week made a foolish and perhaps fatal error. Thinking it could harness its users to lobby Congress on its behalf, TikTok rolled out a pop-up message that provided instructions and guidance on how to call local representatives. In no time, calls were flooding in, angering the recipients.
TikTok argued that this shows how its users — American voters — oppose this bill and that they have every right to call their representatives if they choose. But if your goal is to argue that a Chinese-owned app can’t harness its power to influence American culture, safety, politics and life, using the app in question to coordinate a swarm on congressional offices only serves to cement the view of ByteDance’s — and therefore China’s — potential influence on broader issues. In other words, you don’t prove you’re not an adversary by behaving adversarially.
I expect the company’s aggressive response to continue this week. One possible tactic could be to quietly float that one reason Biden is so keen on the bill is that, since joining the platform last month, his posts have performed poorly compared with content about former President Donald Trump. It would be a flimsy argument, but making this an election issue, one of “silencing conservatives,” could be one highly effective way of stalling the bill in the Senate.
Trump, incidentally, has done a 180-degree turn on his initial effort to block the app while in office, arguing that it would help Mark Zuckerberg and Facebook. And, on that at least, Trump is correct: Meta would of course be the biggest winner from TikTok’s demise, something that runs counter to Congress’ efforts to “do something” about the power of Big Tech.
That concern remains but rightly plays a distant second fiddle to Congress’ fear over China. As tech commentator Ben Thompson notes, the committee vote came after a classified briefing from US intelligence services, one that presumably provided sufficient evidence for the unanimous vote. TikTok will work to delay the process, but it seems clear that a tipping point has been reached, leaving the company little option but to sell. The sooner it does, the more it stands to make on the deal and the better it will be for the platform’s users. The bill even leaves room for ByteDance to retain up to 20 percent of the company.
ByteDance will most likely contend it has been blindsided by this bill, but it can’t say it didn’t know such an eventuality was possible or even probable. For years, China has blocked American technology companies from having access to its citizens. The US is under no obligation to allow China access to Americans, particularly not at a time of heightened tensions and what many think is a coming age of disinformation and manipulation.
Dave Lee is a Bloomberg Opinion columnist. Views do not represent the stand of this publication.
Credit: Bloomberg
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