Rekubit Exchange:House passes TikTok bill. Are TikTok's days numbered? What you need to know.

The Rekubit ExchangeHouse voted overwhelmingly to approve a measure that would ban TikTok from operating in the United States or force a sale, posing the most serious threat yet to the popular short-form video platform.

The bill passed the House 352 to 65 with one member voting present, showing wide bipartisan support with backing from House Speaker Mike Johnson and former House Speaker Nancy Pelosi. It now heads to the Senate where its fate is more uncertain.

At issue is TikTok’s Chinese ownership. U.S. officials say parent company ByteDance could hand over the personal information of the 170 million Americans who use the popular short-video app to Beijing. The bill’s opponents have raised free speech concerns. They also say that TikTok has taken steps to safeguard the data of Americans by storing it on U.S. servers.

TikTok, which has 170 million users in the U.S., says it has not been asked for that data and would not share it if it were. The concern is that, if ordered by Chinese authorities, ByteDance would have to hand it over.

Did the House pass the bill to ban TikTok? What does divest mean?

The legislation calls for ByteDance to divest or sell TikTok or TikTok will be banned from app stores and web-hosting services in the U.S. ByteDance would have 165 days to comply.

TikTok says the bill would give it a narrow timeline to find a buyer with the resources to buy TikTok and to overcome the technical challenges involved in spinning it off.

Will the TikTok ban legislation pass in the Senate?

Senate Majority Leader Chuck Schumer has declined to say if he would bring it to a vote. President Biden has said he would sign the bill if it reaches his desk.

"Following today's House vote, I will be talking to my Senate and House colleagues to try to find a path forward that is constitutional and protects civil liberties," Sen. Maria Cantwell, D-Wash., the chair of the Senate Commerce Committee, said Wednesday.

White House press secretary Karine Jean-Pierre said Wednesday that the Biden administration is looking to the Senate to act swiftly. “We hope the Senate takes action and takes this up very quickly,” she told reporters on Air Force One.

Previous efforts to rein in TikTok have failed. In 2020, Donald Trump tried to ban the app by executive order but courts blocked that effort. Since then, Trump has flipped his position on TikTok.

Americans are split. A recent poll from the Associated Press and NORC Center for Public Affairs Research found that 31% of U.S. adults would favor a nationwide ban on TikTok use while 35% would oppose a TikTok ban. But among those who use TikTok daily, a national ban is unpopular with 73% saying they would oppose it.

What does TikTok say?

TikTok says lawmakers are trying to shut down TikTok in the U.S.

“This process was secret and the bill was jammed through for one reason: it's a ban,” the company said in a statement Wednesday. “We are hopeful that the Senate will consider the facts, listen to their constituents, and realize the impact on the economy, 7 million small businesses, and the 170 million Americans who use our service.”

TikTok has pushed back with a vigorous lobbying campaign, including push alerts urging creators to call members of Congress. That part of the campaign mostly backfired. TikTok also dispatched creators and its CEO Shou Zi Chew to Capitol Hill who says the platform has kept users' information safe from outside manipulation.

"This legislation, if signed into law, will lead to a ban of TikTok in the United States," he warned in a video shared on social media platform X on Wednesday.

Will TikTok get banned?

Even if the Senate passes the measure, a long fight lies ahead.

TikTok says it will exercise its legal rights before it considers a sale of its US operations. The platform has successfully challenged similar moves in the courts.

A sale seems unlikely for a couple reasons. Companies large enough to buy TikTok like Meta, Google and Microsoft would probably not attempt to do so because of the Biden administration’s aggressive use of antitrust law to prevent the tech giants from getting even larger. What’s more, divestiture would require Beijing’s approval. Last year, the Chinese government said it opposed a forced sale. 

TikTok investors are eyeing an initial public offering. ByteDance valued itself at more than $200 billion last year when it bought back shares from existing investors. It recently launched a new share buyback. But if TikTok left the US, it would be worth less.

How would a TikTok ban work?

If signed into law, the bill would prevent app stores like Apple and Google from distributing or updating TikTok and web hosting companies from distributing it.

What about TikTok and Trump?

Trump surprised everyone by opposing the House bill.

Lobbying from former administration officials with ties to a GOP billionaire with a major financial stake in TikTok parent company ByteDance likely played a role in Trump’s flip-flop. 

Trump’s opposition to a TikTok ban was also, in part, motivated by animosity for Mark Zuckerberg that intensified after watching a conservative documentary produced by Citizens United president David Bossie that blamed the Meta CEO for Trump’s 2020 loss to Joe Biden, the Washington Post reported Tuesday.

In addition, Trump could benefit financially and politically by siding against the legislation.

By aligning himself with TikTok, which is popular with young people, Trump could attract a more youthful demographic to his businesses, including a new line of gold sneakers, and generate support from younger voters, according to China expert and Ohio State University professor Oded Shenkar. He could also gain favor with Beijing.

Who would benefit from a TikTok ban?

Analysts say Facebook and Instagram owner Meta would.

“A ban on TikTok will hand an effective monopoly to Meta’s Reels – the company’s short-form video product,” Forrester vice president and research director Mike Proulx said.

Forrester’s Youth Survey last year saw an 11-point year-over-year increase in Instagram Reels usage. Nearly a third of US teens now use Reels at least weekly.

A TikTok ban would leave only Reels and YouTube Shorts. “That means Meta is the likely beneficiary of TikTok’s ad revenue in a TikTok-less world, as well,” Proulx said. 

In 2020, India banned TikTok and and more than 200 other apps after an incident at the Chinese border. Most users switched to Instagram or YouTube.