
Dear readers,
The TikTok legal saga in the United States has reached a turning point after a federal appeals court upheld a law requiring its Chinese parent company, ByteDance, to divest its US operations by 19 January 2024 or face a nationwide ban. With 170 million American users and billions in ad revenue at risk, the conflict highlights concerns over national security, free speech, and economic fallout. While the Biden administration defends the law as necessary to counter China’s potential misuse of TikTok’s vast data troves, critics, including the ACLU, argue the ban infringes on First Amendment rights and suppresses a platform used for creativity and communication.
TikTok plans to appeal the ruling to the Supreme Court, but even a divestiture faces severe obstacles. China’s classification of TikTok’s algorithm as a protected technology export makes it nearly impossible for ByteDance to sell the app without Beijing’s approval. This key component of TikTok’s success, responsible for its highly personalised user experience, has turned the sale into a geopolitical dispute between the USA and China, with ByteDance caught in the middle.
A ban would have far-reaching economic consequences, particularly for advertisers, influencers, and small businesses, and it would also touch on the First Amendment, which means freedom of speech. Brands that have poured billions into TikTok are already developing contingency plans to shift their budgets to rivals like Meta’s Instagram, YouTube, and Snap, all of which stand to gain significant market share. TikTok Shop, which recently generated $100 million in Black Friday sales, has become a vital e-commerce channel for merchants. A ban would sever a critical revenue stream for these businesses, leaving restricted alternatives in the marketplace.
The conflict also reflects a broader US-China tech rivalry. Washington has tightened restrictions on Chinese technology to safeguard national security, while Beijing has retaliated with bans on critical exports, which we examined in detail in the last weekly newsletter. TikTok has become the most visible flashpoint in this struggle, representing China’s technological ambitions and America’s fears of data misuse. Beijing has condemned the forced divestiture, framing it as a ‘commercial robbery’, signalling that any sale would be politically and logistically challenging.
The Biden administration, which has led the charge against TikTok, could extend the 19 January deadline by 90 days if meaningful progress toward a sale is shown. The legal move would push the final decision to President-elect Donald Trump, who has shifted his stance, now opposing the ban out of concern it would benefit rivals like Facebook. However, reversing course would be politically difficult with bipartisan support for the legislation.
As TikTok’s future hangs in the balance, its fate will ultimately shape the global tech landscape, digital commerce, and cyber diplomatic power dynamics in the near future.
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Upcoming
The 19th annual Internet Governance Forum will be hosted by the Kingdom of Saudi Arabia in Riyadh on 15-19 December 2024. Stakeholders are encouraged to submit thematic inputs by Januaryu0026hellip;