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TikTok has cycled through two chief executives in its bid to placate Washington. The first, Disney executive Kevin Mayer, lasted only a few months. Successor Chew Shou Zi has stuck around for three years. But his failure to convince US lawmakers that the app is not a security threat could put a time limit on his tenure. It could also trigger further app bans.
A US bill signed into law this month, part of a package that includes aid for Ukraine, means TikTok’s Chinese owner ByteDance has until early 2025 to sell the video app to a US company or face a ban from app stores and internet providers. The bill’s language suggests the ban could be extended. It points to threats from any operated by “foreign adversary controlled applications”.
TikTok’s efforts to quell concerns have been expensive. However Project Texas, a $1.5bn initiative to keep US data on home soil, addresses only part of the problem. Politicians also worry about the influence Beijing could wield over the app’s content.
Both concerns are valid — though data and moderation worries are not limited to TikTok. Tighter regulation on both fronts is one option, though it would be unpopular with homegrown peers. Note that in the first quarter of the year, Meta spent a record $7.64mn on lobbying.
There is precedent for a sale. Four years ago, China’s Kunlun Tech sold LGBTQ dating app Grindr to San Vicente Acquisition after US regulators grew concerned about user data security. However, that sale was priced below $1bn. TikTok is far larger. Revenue in the US hit $16bn last year. On the same sales multiple as Meta that could mean an enterprise value of $120bn. Its size would spell antitrust trouble for potential buyers.
In reality, there will be no offers of this scale. Unlike Meta, TikTok is reported to be lossmaking. It is spending heavily to build its ecommerce business. China can veto sales of key technology, making any bid effort speculative. TikTok has also made it clear that it is planning a legal fight.
A ban would upset TikTok’s 170mn US users, who want to be left to make memes about industrial-grade glycine and other jokes in peace.
But it would not be a one-off. More countries are attempting to use specific bans and connection blocks to wall off users. In 2016, Russia blocked access to LinkedIn, citing its refusal to store Russian user data in Russia. In 2020, India banned TikTok over privacy and security concerns. This year, China banned WhatsApp on the same grounds. The global internet is splintering further apart.
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