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Don’t expect some law passing to end the debate over TikTok — or Chinese tech companies as a whole.
What happened: Today U.S. President Joe Biden signed into law a bill to force TikTok’s parent company, ByteDance, to either divest the app or face a national ban, after the Senate passed the bill yesterday. TikTok said it would fight it in court, an effort that might be complicated by its general counsel heading for the exit.
- TikTok’s claim that the law violates users’ free speech might be on shaky ground legally: Bloomberg analysts give the U.S. government a 70% chance of beating a challenge.
Catch-up: Lawmakers have worried that the Chinese government could force ByteDance to turn over its wealth of user data or use its cultural influence to sway public opinion. The House bundled this TikTok bill with various foreign aid packages so it wouldn’t stall in the Senate, like a similar bill last month.
- ByteDance has nine months to divest, but Biden could extend the deadline to 12 months to close a deal, pending the results of legal challenges.
Why it matters: TikTok is part of a larger battle between the U.S. and China over technology bans and export restrictions. It has been focused on chips and communications equipment — roping in companies like Intel, Nvidia, and Huawei — but has started including software.
Yes, but: Aside from national security concerns, there’s also an economic incentive to foreign tech bans. Fracturing a huge source of training data, like TikTok, could keep Chinese companies from getting an edge in the AI market after being limited on the hardware front.
Bottom line: It will be hard to find a buyer or strike a deal that China doesn’t block, so a ban is likely. But now that Donald Trump has changed his mind about TikTok, the outcome of this fall’s U.S. election could put a ban on ice.