Bloomberg Audio Studios, podcasts, radio news. A ban on TikTok passed by Congress last April is set to take effect this coming Sunday.
They call it a divest or ban measure, so basically, the measure calls upon byte Dance to sell TikTok before January nineteenth or face a ban.
Sarah Forden runs Bloomberg's legal team, which has been covering a challenge to that law filed by TikTok and some of its users last year. At issue is TikTok's ownership. Even though the hugely popular social media app is technically run by an American company, it's owned by byte Dance, which is a Chinese tech giant, and the nature of the relationship between byte Dance and the Chinese government has raised national security concerns for US intelligence officials and US
lawmakers for years. One worry is that the app could give China acts to American phones and American data. Another is about whether the apps algorithm could be used to influence politics or spread disinformation. TikTok has been adamant that these concerns are unfounded, and their lawsuit has made it all the way to the US Supreme Court, So this.
Case really picks national security interests against free speech.
On Friday, the Court indicated it's likely to uphold the divest or ban law, bringing months of debate to a head. That means if ByteDance doesn't sell, the ban could go into effect in just a few days.
So they still have time. You know, obviously the clock is ticking.
But there's another major player complicating this case, President elect Donald Trump. He said he opposes the ban and wants to negotiate a deal himself. And the day after TikTok's January nineteenth deadline is inauguration day. This is the take from Bloomberg News. I'm Sarah Holder today on the show. The TikTok case could get decided by the Supreme Court
any moment now. If the ban goes into effect, what would that mean for the apps one hundred and seventy million users, for competitor tech platforms, and for US China relations. And how could Trump's imminent inauguration call the decision into question? Sarah,
It seems like it's actually getting closer to happening. The Supreme Court indicated last week that it is likely to uphold a US law banning TikTok if it's Chinese parent company ByteDance doesn't sell to an American firm by January nineteenth, walk us through how we got here. When did Washington first start raising these concerns about TikTok's ownership.
Mean, there have been concerns about TikTok's ownership floating around Washington for years. And if you go back even to the first Trump administration, he himself was proposing a ban in past, an executive order banning TikTok, which then got
hung up in the courts. So intelligence circles, national security circles have been expressing concerns that TikTok could provide a tool for the Chinese government to both a spy on and collect data on American citizens, but also use the platform, which is highly wildly popular, use it to influence people, feed them, you know, surreptitious information with goals of creating unrest and divisiveness in this country.
What do we know about the extent of the relationship between the Chinese government and ByteDance. Is there evidence that China could use TikTok to spy on people in the US?
You know, TikTok's leadership in the US is adamant that there is a wall between the company and the Chinese government that they don't share any data. But the fact is this is an autocratic regime and companies would have to comply if the government said it wanted certain information or to use the platform in a certain way. So no lawmakers or government officials have provided broad evidence of this. But last year there were intelligence briefings on the Hill
that led to Congress. You know this incredibly, like divided Congress came together in a flash to pass this law banning TikTok. So whatever material they got in those briefings was compelling enough to prompt them to act.
So that law passed in April. Why wasn't TikTok just immediately sold? Were there any American companies who are jumping at the chance to own TikTok?
I mean, there was a deal proposed, again going back to the first Trump administration. He was working with Microsoft and with Oracle, and the idea was that Oracle would host the platform, and that deal fell apart. It never came to fruition. There are several American is this men who have just in the past few days come forward and saying they want to buy TikTok Frank McCourt and Kevin O'Leary. Kevin O'Leary was just reportedly in mar Lago talking about this transaction.
Frank McCourt is a real estate mogul and former owner of the Los Angeles Dodgers, and Kevin O'Leary is an investor on Shark Tank.
The other important distinction in this latest deal that Kevin O'Leary and McCord are talking about apparently, again according to reports, they're not interested in buying the algorithm. Well, the algorithm is really the crown jewel of the platform, and that's also where all the data is stored and processed. So raises the question of would a sale actually achieve the
goals of this law if the algorithm isn't included. But all of this really still begs the question of whether Byte Dance would approve a sale, and we haven't seen an indication that they would be open to this.
So Bite Dance is resistant to a sale. TikTok filed this lawsuit and now the case is up at the Supreme Court. What are the key arguments for and against this TikTok ban.
TikTok is arguing that this law is unconstitutional and that it violates the free speech rights both of the company and of the users on the platform. And so as the arguments unfolded, there were a lot of questions about whose speech is being violated here and who has the right to free speech in the US. So, for example, some of the justices observed that foreign entities don't have the same free speech protections as US citizens. So while TikTok is a US company, it is owned by a
Chinese company. So there was a lot of discussion around that, What about the speech rights of the one hundred and seventy million users of the platform? Are they protected in this case? But then, you know, the Solicitor General, arguing for the US Justice Department, pointed out that this really isn't about the speech rights of the users of the platform. This is about a ban against this you know, streaming
platform and the national security interest that it raises. So they're arguing kind of across each other.
What was the upshot of these oral arguments.
So they didn't issue a decision, but they could rule soon as this week. Our expectation is that they will probably uphold the band judging from you know, the commentary that that we heard. But again, nothing is nothing is sure, nothing is set yet.
Has ByteDance indicated any openness to selling off TikTok to avoid losing its American user base.
Byte Dance has absolutely said it's not going to sell TikTok. It has no desire and it doesn't have any compunction to sell TikTok. So, you know, this could lead to a real flare up in US China relations in addition to to the business situation.
After the break, we look at how a TikTok band could actually play out and how Trump's return to office could change everything. The Supreme Court's decision on the lawsuit challenging Congress's TikTok ban is expected to come down this week. Bloomberg's legal editor Sarah Forden, has been following the court case closely for months and looking into the possible outcomes if a ban is upheld by the Supreme Court, what happens next.
One of the requests was to try to postpone this law going into effect, to delay it until Trump gets into office, because now he has flip flopped and said he has warm feelings about TikTok, and he's the great negotiator, and you know he should be able to get into office and help them negotiate a deal. So one possibility that the Supreme Court has is to delay the ban until he gets into office, and then you sort of
what happens next. I mean, technically, the Justice Department is responsible for enforcing the ban, but if Trump is in office and he could tell his Attorney general not to enforce it, for example, and there are other scenarios that could play out, he could go back to Congress and ask them to revise the law. So it's really still a very fluid situation with not a clear solution or resolution in sight.
Yet how likely are those scenarios? What has Trump said about his stance on the ban and how do you explain his position towards keeping TikTok running in the US?
Well, so, the TikTok community was really critical in his winning the election, so he's very mindful, you know that he owes them a favor, and so he's come back and said that he doesn't think it should be banned, that it should be sold to a US company, and that he's in a great position to make that happen.
So let's say bye Dance. It doesn't sell, it doesn't find an American buyer, it doesn't want to find an American buyer. Trump doesn't weigh in in time, and the ban is upheld. What actually happens on January nineteenth? How do you actually get TikTok off American phones?
Yeah, so this came up in the Supreme Court arguments and the lawyer for TikTok was arguing that, you know, basically the whole platform would go dark, you know, on January twentieth. That actually isn't the case as far as we can see, because what would happen is that the app stores, so Google an Apple would be required to remove the app from the app store, so you can't sign up anymore. But the people who already have TikTok
on their phones could keep using it. But then the idea is that they wouldn't be able to get updates, you know, TikTok wouldn't be able to continue, you know, offering the service, and so gradually those apps on those phones would become dysfunctional.
How are competitor apps like metas Real performing? Are we seeing TikTokers preemptively head to other platforms. These other platforms kind of courting these TikTokers. Where does that stand?
Well, surely it's a very competitive atmosphere, and the people who oppose a TikTok band also say that it would actually, you know, just basically be sort of giving that, you know, swath of the market to meta to the others. At the same time, the TikTok creators themselves are starting to think about what possible workarounds do they have. Could they use VPNs to access the platform to make it look
like they're not in the United States. So the content creators are on the one hand trying to protect their assets on the platform, but at the same time trying to get ready to jump if they have to.
Right now, the app is full of users trying to game out their next moves.
I am in a full state of denial that this is the last Sunday I'll be able to doom scroll TikTok. What are we doing? Where we're going? Just try scrolling for Instagram.
I didn't laugh one time. And some TikTok creators are actually involved in this case, right.
So we had three parties arguing we had TikTok, we had lawyers for the content creators themselves who are arguing that this is really going to hurt their livelihood and their free expression. So they're being very vocal that they want to have a say here and they're really standing up for their right to continue to use this platform.
At the end of the day, what would this mean for the TikTok economy? All of these influencers we've talked about and small business owners who sell goods and services through TikTok brands who partner with influencers to get their products out there. Could this cause like a huge ripple effect on the economy.
Well, clearly there's a big chunk of the economy tied up in here, and that's one of the reasons why this case has gone as far as it has. At the same time, though, I mean, the tech market is highly disruptive and use to disruptions, and people can jump quick and new platforms can come into effects. So I think, yes, a big chunk of business would go away, and that's why the influencers are so concerned. But at the same time, there are other opportunities out there.
We'll be following this story as it unfolds this week for more reporting and updates on TikTok. Go to Bloomberg dot com. This is the Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by Julia Press. It was edited by Michael Sheppard and our senior producer Naomi Shaven. It was mixed and sound designed by Alex Huguiera. It was fact checked by Adrianna Tapia. Our senior editor is Elizabeth Ponso. Our executive producer is Nicole Beemster. Bor
Sage Bauman is Bloomberg's head of podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow, he say,