TikTok ban looms as US sell-off law is set to come into force

 ByteDance said it handed in an overdue document assessing potential risks to minors of its TikTok Lite service, a day after regulators threatened it with fines and a partial ban.

The clock has started ticking for TikTok as a US sell-off law is about to come into force.

The US Senate voted to ban TikTok’s ownership by Chinese parent ByteDance, which will force the app to be sold into US ownership, or be banned entirely in the region.

The law has set the stage for a constitutional clash over whether the prohibition deprives US users of their First Amendment free speech rights.

The measure, which also includes aid to Ukraine, Israel, and Tawian, won sweeping bipartisan approval from senators worried about the app’s collection of data from more than 170 million American users as well as the potential for China to use it for propaganda purposes.

The legislation passed by a vote of 79-18 on Tuesday night.

The bill gives the company nearly a year for ByteDance to divest from TikTok before the app would face a ban. That sets a deadline well after the November election, to the disappointment of some lawmakers worried Beijing might use the app to interfere in the election.

The company is already promising to fight the legislation in court.

With the legal battle set to unfold, TikTok’s US users face a wave of uncertainty about a place to express themselves via video, make money as influencers or sell wares on TikTok Shop. If implemented, a TiKTok ban would risk disrupting “a critical channel for engaging with younger audiences and building brand visibility,” said Damian Rollison, director of market insights at SOCi.

“TikTok’s unique format has allowed businesses to showcase products and services creatively, leveraging trends and user-generated content to connect with potential customers,” Mr Rollison said.

Financial fallout

TikTok has invoked economic arguments against the law, saying content creators and merchants who make a living from posting videos and selling goods would be hurt financially. While many US lawmakers who backed the newly passed federal bill think it would survive court review, some rights groups say the First Amendment will be a more difficult hurdle to clear.

US President Jo Biden’s opponent in the November election, Donald Trump, has recently come out against a TikTok ban, saying it could boost rival Meta Platforms — which previously suspended Mr Trump from its platforms. For Mr Trump, that marked a reversal from his decision while president to ban the app via a 2020 executive order that was later voided by federal courts.

What's your view on this issue?

You can tell us here

Meanwhile, ByteDance said it handed in an overdue document assessing potential risks to minors of its TikTok Lite service, a day after regulators threatened it with fines and a partial ban.

The company said in a statement it met a deadline to hand over the document, after the EU’s Monday decision to open a probe into the launch in France and Spain under its new Digital Services Act.

Regulators contend that TikTok Lite, which includes a rewards system for users, could be addictive to young people, and claimed the company didn’t complete a full risk assessment in time.

TikTok employs just under 3000 people in Ireland after it cut around 200 jobs at its operations in the Republic in early 2024.

Bloomberg with additional reporting by the Irish Examiner