TIKTOK restored US services after Donald Trump pledged to delay enforcement of a ban. Yet it’s not clear whether the app’s Chinese parent is able – or willing – to secure a US backer in time to avoid a permanent shutdown.
Most immediate is the question of whether such an extension would be legal after the ban kicked in on Sunday (Jan 19). The President-elect over the weekend declared he will “not let TikTok stay dark,” promising to sign an executive order granting another 90 days for TikTok to find a US backer and defuse national security concerns. He proposed a joint venture under which American owners would purchase 50 per cent of the company.
TikTok restored service after that post. Yet while Trump gained praise from users for the reprieve, he faces long-time sceptics in his own Republican Party about what they see as the app’s ongoing national security threat. Legally, he may need to demonstrate the likelihood of striking an agreement with TikTok-owner ByteDance – with few visible signs of progress.
“If full China control over TikTok is a security risk, co-control won’t be better,” said Brock Silvers, managing director at private equity firm Kaiyuan Capital, calling celebrations over the app’s reprieve premature. “It seems likely that, after the coming extension, TikTok will be under majority US control – or it won’t operate in the US.”
How Beijing and ByteDance respond could have implications not just for the world’s most popular social video service, but also Chinese companies from Temu to Alibaba Group Holding with thriving American operations.
Beijing and ByteDance have pondered a raft of options to keep the viral social media platform afloat – for Chinese officials, that’s included a deal with a friendly buyer such as Elon Musk. But it’s unclear if President Xi Jinping’s government would even cede control of such a valuable asset in a forced sale. China has likened a forced TikTok sale to US “plundering” and criticised the US for politicising business.
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“Trump’s proposal is not the best solution,”said Cui Hongjian, a former Chinese diplomat who teaches at Beijing Foreign Studies University. “But it shows a willingness by the Trump administration to deal with the issue in a less political and more reasonable way.”
“China will take some time to make a judgement on Trump’s real purpose, and a possible transaction,” Cui added. “But it will keep an open mind to any constructive solution,”
China’s Foreign Ministry stuck with their familiar stance, calling for market principles to dictate TikTok’s fate. “We hope the US can listen to rational voices and provide an open, fair, just and non-discriminatory environment for companies from across the world,” spokeswoman Mao Ning told a regular press briefing in Beijing.
The solution brokered by Trump faces other challenges: The law still requires ByteDance to sell the service’s US business to a buyer approved by the American government.
But it does allow Trump to extend the deadline for such a deal by as many as 90 days, which he’s said he’ll do on his first day in office. It’s not clear that TikTok and ByteDance have taken the steps towards an acquisition that are required to merit such an extension.
Under the national security law, which was signed by President Joe Biden in April, Trump can grant TikTok more time to finalise a deal only by certifying to Congress that a “qualified divestiture” is in motion. He must show there’s a viable path forward, that significant progress has been made towards a deal and that legal agreements are in place to close a deal with ByteDance in that new time frame, according to the law.
Though there are some parties interested in acquiring TikTok’s US business, there is no known front-runner or public evidence of “significant progress” on negotiations. ByteDance has maintained for the better part of a year that it’s unwilling to sell TikTok at all, though that calculus could change now that a ban is finally imminent.
Key Republican leaders have made clear that that they still expect ByteDance to sell TikTok despite Trump’s confidence in some type of solution. There must be a “full divestiture” from the Chinese Communist Party, House Speaker Mike Johnson said on NBC’s Meet the Press. Senate intelligence chair Tom Cotton said in a post on X there was no legal basis for any kind of extension.
Unless Trump and ByteDance can prove a deal is in the works, it’s unclear if the president-elect’s executive order will succeed in keeping TikTok available. If Congress fails to certify Trump’s proposed extension, it could put tech companies like Apple Inc., Alphabet’s Google and Oracle in a legal limbo. They could face significant fines for technologically supporting the app and offering it in their stores.
“TikTok is back online, but the iOS store hasn’t restored the app. That demonstrates the complexities here,” said Jasmine Enberg, vice-president and principal analyst at Emarketer. “It’s Apple and Google, and companies like Oracle, that are on the hook for non-compliance and it’s not clear if Trump’s promise of an executive order will be enough to assure them they won’t face penalties.”
Apple and Google also wiped a plethora of TikTok-affiliated apps including popular game Marvel Snap, video-editing tool Capcut and the TikTok-substitute Lemon8 from stores. That surprise pullback could spook executives and officials already worried about the precedent of allowing Washington to control a Chinese company abroad.
Trump also tried to ban Tencent Holdings’ WeChat during his first administration, wielding some of the same arguments levelled against TikTok. Other Chinese-owned or controlled businesses from Shein to PDD Holdings’ Temu now rely on the US as a primary growth driver.
The President-elect’s latest suggestion on TikTok echoes a 2020 deal he blessed when he tried to ban TikTok. Back then, ByteDance sought a valuation of US$60 billion for TikTok as it tried to sell Oracle and Walmart a combined 20 per cent stake in the app’s business, after rejecting a buyout offer from Microsoft.
A minority stake sale would let ByteDance retain control of its priced algorithm – the one that powers the now-famous scroll of addictive videos – the sale of which Beijing is likely to block. No deal transpired because the Chinese company successfully challenged Trump’s order in court.
“TikTok’s last-minute reprieve in the US doesn’t spell an end to the rising geopolitical pressures in China’s tech sector, following the US Department of Defense’s recent move to blacklist Tencent,” said Robert Lea and Jasmine Lyu, analysts for Bloomberg Intelligence. “Though incoming National Security Adviser Mike Waltz said he didn’t rule out continued Chinese ownership of TikTok, if appropriate firewalls were put in place, we don’t believe this marks a potential change in US policy towards Chinese-owned apps, given the ongoing concerns over national security.”
TikTok on Sunday displayed confidence to users who remain unsure of the app’s future.
But what that solution is, whether it will be allowed by ByteDance and officials in China, and whether Congress will accept Trump’s demand for more time remain unclear.
“We will work with President Trump on a long-term solution that keeps TikTok in the US,” the company said in a statement. BLOOMBERG
