The future of TikTok is in serious danger: all options for resolving the conflict with the United States

A law that prohibits TIK Tak in the United States, unless it sever ties with ByteDance—and therefore China—has been approved. Yesterday President Joe Biden signed Law on peace in the 21st century through forcepackage of regulations, including Protecting Americans from Foreign Controlled Applications Actwhich is informally known as “Tik Tok Law”.

The law establishes that ByteDance, the parent company of the social network, 270 days —about 9 months—to complete the sale of the American version of TikTok. If you don’t do this, it will be blocked and stop working in the North American country. In a popular video application, they did not hide their anger and promised to bring them to justice, as they consider the law unconstitutional.

Both representatives and senators acknowledged that the legislation is not actually aimed at blocking TikTok, but rather at selling it to a local company to sever its ties to China. With 170 million users in the US alone who already understand the importance of reaching young audiences in an already hot election year, Democrats and Republicans understand the platform is a much-needed way to reach a key core of potential voters.

He crux of the matter The thing is Selling on TikTok today is almost impossible to achieve.. Not without big changes and restrictions, to put it mildly. Not only because ByteDance refuses to do this and sees it as a last resort, but also because China is not going to allow it either.

That’s why here we’ll look at everything you need to take into account regarding the conflict between TikTok and the US, and what options the social network is considering to get rid of this mess.

TikTok sale requires Chinese approval

ByteDance, the parent company of TikTok, is a company founded and based in China, although it is registered in the Cayman Islands. Sale or merger of the company or any of its subsidiaries, must receive Chinese regulatory approval. And given the current situation, it is logical to assume that this approval will never be received.

It is worth noting that TikTok has four main divisions that are responsible for conducting business in different parts of the world. They are in Singapore, Australia, UK and USA. If the law forces ByteDance to sell the US portion of TikTok, it cannot happen without China’s prior consent.

“The problem is that the Chinese government is unlikely to approve such forced mergers and acquisitions. Any type of purchase or divestiture and merger with another company must be approved by the Chinese government, which will likely reject it. And so it is. ByteDance is probably already warning that it won’t allow this to happen,” explained analyst Paul Triolo. CNBC.

But the matter is not limited only to business: the most conflicting element is technological. We are, of course, talking about the TikTok algorithm.. Richard Windsor Radio free mobilemade an interesting analysis of this issue, pointing out that China will not allow this technology to fall into foreign hands since it was developed in its country and is critical to its national security.

Here’s what the analyst said:

“TikTok is a popular app because the algorithm created by ByteDance is the best in the world at identifying the characteristics of videos and then matching those characteristics with users who will be interested in watching them.

This algorithm is China’s own technology, and the Chinese state has repeatedly stated that it considers such technology important to its national security. Therefore, he will not allow Chinese technology of this kind to leave its shores or end up in the hands of countries that he considers hostile.

“This makes severing ties between ByteDance and TikTok USA very problematic because TikTok USA needs an algorithm to function, but doing so would be contrary to the wishes of the Chinese government and the laws it has enacted.”

Richard Windsor

Darts crosses China and USA

When the United States partially authorized the first version of the TikTok Act last March, China did not remain silent. The Asian giant’s Foreign Ministry accused the Americans of “state power sentiment” against ByteDance. At the same time, the representative claimed that Congress and the White House were trying to intimidate.

“If excellent foreign companies can be arbitrarily suppressed under the pretext of national security, then there can be no question of any honesty or justice. Everyone can clearly see that this is intimidating behavior and amounts to the logic of theft,” they said from Beijing. , as reported NBCNews.

Given this panorama, a direct solution to the TikTok conflict in the US seems impossible. The law was only approved the first step of a story that promises to be dramatic and this will undoubtedly exceed the time limits established by the rules.

ByteDance and TikTok features

Panorama of ByteDance and TikTok in the USA It’s extremely difficult. The video app is in serious danger of being kicked out of one of its most important international markets. As we indicated at the beginning, in this country alone the platform has more than 170 million monthly users.

TikTok has become a reference site not only for youth and influencers but also for merchants. Bloomberg reports that between June and October 2023, the number of downloads from the TikTok Shop Seller Center in the US nearly quadrupled. This is a clear sign that entrepreneurs are turning to social media to get their products in front of new customers.

ByteDance has launched a campaign calling on TikTok users to make their concerns about the app’s possible ban known to representatives and senators. However, the efforts did not pay off. Although he still has options up his sleeve, here they are:

Prove that the law is unconstitutional

Following Joe Biden’s signature, TikTok returned to the fray, saying the new law is unconstitutional and that it plans to go to court to challenge it. IN X (Twitter)ByteDance’s platform was powerful:

“We believe that the facts and the law are clearly on our side and we will ultimately prevail. The fact is that we have invested billions of dollars in the security of American data and in protecting our platform from outside influence and manipulation. seven million businesses and the silence of 170 million Americans.”

According to ByteDance, the TikTok ban violates the freedom of expression of users, which is guaranteed by the First Amendment to the US Constitution. Chinese company History is in his favor.: In 2023, Montana passed a social media blocking law. However, the company and content creators filed suit under the First Amendment and managed to get the judge presiding over the veto before it took effect.

We are waiting for Donald Trump to return to the White House

This sounds quite contradictory, and to some extent it is. In 2020 Donald Trump signed a presidential decree to block TikTok, but the intervention of federal courts prevented its implementation. Interestingly, the former president has now spoken out against the banning of the ByteDance app.

Shortly before this, the businessman said that a veto on TikTok would benefit Mark Zuckerberg and the metaplatforms (Facebook and TikTok), which he classifies as the true “enemies of the people.”

If the legal battle against the new law drags on so long that the ban does not take effect under the current administration, ByteDance could have an extra life at its disposal. If Trump defeats Biden in this year’s presidential election, his return to the White House could help prevent the blockade from going into effect. Unless, of course, the Republican candidate changes his stance on TikTok again.

Yes, sell TikTok, but without its algorithm

ByteDance doesn’t want to sell TikTok, and that’s clear. The company will consider this alternative as a last resort and can only move forward if potential buyers accept one condition: that your recommendation algorithm will not be included in the transaction.

TikTok is now valued at more than $280 billion, but it is very difficult to put a specific price on its US business. According to the publication Wall Street Magazineestimates of the hypothetical sale price are very wide, ranging from $20,000 million to $100,000 million.

Is anyone willing to shell out that much money for a version of TikTok without its signature algorithm? There is no shortage of candidates, but as the old saying goes, “it’s a long way from word to action.”

Potential candidates

Bobby Kotick, the former CEO of Activision Blizzard, has been named as one of those interested in buying TikTok. The former video game industry leader contacted Zhang Yiming, co-founder of ByteDance, to get an estimate. But not only that, he also tried to entice potential partners to accompany him on the adventure. Among them, Sam Altmanfrom OpenAI.

Steven MnuchinThe former US Treasury Secretary also said he would form a group of investors to acquire the social network. “The law should be passed and I think it should be sold. It’s a big business and I’m going to start a group to buy TikTok. It must be owned by American companies. There is no way the Chinese will allow an American company to have something like this in China,” he said.

Kevin O’Learybillionaire, well known in the USA from the TV show Shark Tank, another of those who are ready to propose. “It’s the largest business and entertainment network in the United States today, so it’s of great interest and great value,” he said. CNBC in March. The businessman admitted that he is willing to invest between 20,000 and 30,000 million to buy TikTok without its algorithm, which should be imitated with the help of the ingenuity of North American programmers.

Let the ban take effect

Believe it or not, ByteDance does not rule out that the ban will pass and come into force. Reuters claims that four sources close to the company have indicated that the company would prefer TikTok to cease operating in the US rather than complete the sale.

The aforementioned media outlets indicate that the video app represents a smaller portion of their overall revenue and daily active users. Thus, if legal alternatives to avoiding the veto are exhausted, the Chinese firm will decide to cease operations in the North American market. Will this be the case?

The outcome of this story obviously remains a mystery. The “TikTok Law” has already opened the door to one of the most shocking soap operas in the recent history of the tech sector. And there is much more to be said about this.