Exploring TikTok's Next Steps Post-Approval of the US Sell Off Bill

So what comes next with the TikTok sell off? Earlier today, U.S. President Joe Biden signed the proposed TikTok sell-off bill into law, meaning that TikTok now has 270 days to be sold to a U.S.-based owner, or be banned in the nation.

TikTok has vowed to fight the bill in the courts, with TikTok CEO Shou Xi Chew labeling it an unconstitutional attack on the app. Despite this coming from the desk of the U.S. President, as noted by Chew, TikTok’s confident that it will be able to defeat the bill in court, by arguing that the proposal is fundamentally unconstitutional.

As per TikTok: “We believe the facts and the law are clearly on our side, and we will ultimately prevail. The fact is, we have invested billions of dollars to keep U.S. data safe and our platform free from outside influence and manipulation.”

The Government will most likely seek to defend the bill on national security grounds, which would provide the government with broader powers above and beyond the technicalities that TikTok may seek to highlight.

The evidence around data misuse and manipulation may not be enough to convince the court of their case, but under the national security banner, it does seem more likely that the bill will hold up under scrutiny. So TikTok could challenge, and potentially defeat it in the courts.

But it does seem like that won’t ultimately be a pathway to maintaining the situation as is. Under the bill, TikTok will now have 270 days to divest, though there’s also an additional provision which could see TikTok apply for an extra three months under certain conditions (e.g. if it’s negotiating with buyers and needs more time to finalize the deal).

So a year, TikTok has a year until it either needs to be in U.S. ownership or it’s gone. So it’s not going to disappear tomorrow, and there’s still plenty of time for the related parties to work out an alternative outcome for the app.

The most significant catch here, which could prevent any sell-off happening, is that the Chinese Government has vowed to oppose the sell-off push. So even if TikTok can find a potential partner it likes, it may not be able to enact a sale either way.

It also seems unlikely that Triller would be in a position to make a bid. Last month, reports circulated that former Treasury Secretary Steven Mnuchin was putting together an investor group to make a bid for the app, while former Activision CEO Bobby Kotick has also expressed an interest.

A key provision, however, would be the inclusion of TikTok’s algorithm code, which current owner ByteDance will likely be reluctant to include in any sale. Indeed, it may not even be able to, given that China’s cybersecurity rules include provisions that may restrict the sale of such.

TikTok’s algorithm is its true secret sauce, and if it’s not part of the deal, the asking price will be significantly reduced, and the field of potential suitors will also shrink. This is a major concern for TikTok, that other nations will now also follow the U.S. lead, and implement similar rulings.

Theoretically, if TikTok does end up being sold to a U.S. company, most Western nations would seemingly be okay with their user data also being stored in the U.S., as that’s the current situation with every other social app.

But E.U. officials have also been pushing for European user data to be kept in Europe, similar to the U.S. The closest precedent here is the bans of TikTok on Government devices, which have spread through Western nations over the past few years. Once one nation looks to enact restrictions, others follow suit.

Which makes sense, since they’re all acting on the same cybersecurity advice, but it could also indicate that other nations may look to implement similar restrictions on TikTok, unless it does institute clear delineation between itself and its Chinese homeland. Essentially, this could end up being a domino effect, which will see TikTok face more bans, in more regions, as a result.

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