Biden signed a bill that could ban TikTok. What happens next?

President Biden signed a bill Wednesday that could lead to a ban on TikTok, but the video-sharing app will not be cut off from its millions of U.S. users just yet.

The bill moved with unusual speed and was signed into law by the president less than two months after it was first introduced in the House of Representatives. Biden’s signature sets in motion a timeline in which TikTok’s China-based parent company ByteDance must sell the app or face a ban from U.S. app stores and networks.

ByteDance is expected to take up to a year to find a buyer, a process likely to be marred by Chinese rules governing technology exports and a court challenge from TikTok.

“This unconstitutional law bans TikTok, and we intend to challenge it in court,” a TikTok spokesperson said in a statement.

“We believe the facts and the law are clearly on our side and ultimately we believe we will prevail,” the spokesperson added.

Here’s what to expect next as this law takes effect.

TikTok sales period is up to 1 year

ByteDance must sell TikTok or be banned in the U.S. under the Foreign Adversary Control Applications Act, which was added to the foreign aid package Congress passed this week.

Supporters of the bill argue that TikTok raises national security concerns because it is owned by a Chinese company, and that sensitive data of U.S. users would be exposed to the Chinese government. TikTok is pushing back against these accusations.

Lawmakers who supported the bill said they were informed in several closed-door parliamentary sessions about the risks posed by TikTok and its ties to the Chinese government through ByteDance.

A TikTok spokesperson said Wednesday that the company has “invested billions of dollars to keep U.S. data secure and protect our platform from outside influence and manipulation.”

Critics of the law said national and data security threats are widespread throughout the industry, and they do not support legislation that singles out and targets one company as a way to alleviate the problem.

The version included in the aid package extended the timeline for the sale to 270 days, up from the six months set in the version passed by the House in March. That would push the deadline to January, after a heated 2024 election.

The president also has the power to extend the deadline for ByteDance to sell TikTok by 90 days, which would push the deadline back until next April.

The extension was a key aspect of building support for the bill among senators who were initially reluctant about it, including Senate Commerce Committee Chairwoman Maria Cantwell (D-Wash.).

But even if extended, some of the bill’s critics say the timeline is not long enough for a sale of this size, and given the challenges surrounding the sale, the bill is not an ultimatum but a final claims that it is prohibited.

“Given that the average time to sell a company is more than a year, the new long schedule for forced sales does not guarantee sufficient time to find a buyer for such a large company and will Similar bans are likely,” Jenna Leventov, senior policy adviser for the First Amendment at the American Civil Liberties Union, said in a statement.

Who will buy TikTok and will it be the same?

Supporters of the bill argue that despite how the company describes it, it is not an outright ban. That’s because the bill would give ByteDance the power to keep the app under different owners.

“I look forward to seeing TikTok continue,” Sen. Mark Warner (D-Va.) said Tuesday in a speech on the Senate floor before the final vote, even though it is not considered an enemy state under U.S. law. Only if not controlled by a defined country.

Analysts at Wedbush Securities said in a note Tuesday that TikTok’s “likely buyers” would be Microsoft or Oracle. The company is involved in TikTok’s “Project Texas,” TikTok’s attempt to allay concerns by placing U.S. data on U.S.-based Oracle servers. and “would be a logical strategic fit.”

“A number of private equity and consortium companies have joined former Treasury Secretary Steven Mnuchin in bidding for this important asset, among many that have expressed early interest in it,” the analysts said in a note. It’s obvious that we’re going to put it together.”

However, China’s export control regulations pose a significant hurdle that could prevent another company from purchasing the app or continuing to operate it after the sale.

The rules, updated in 2020, include restrictions on the sale of certain technologies, such as algorithms, without government approval. Stephen Weymouth, an associate professor at Georgetown University’s McDonough School of Business, said China will likely try to block the sale of TikTok’s algorithm itself.

“The value of TikTok is in the algorithm, and it’s not clear who would be interested in buying TikTok without the algorithm attached. Instead of buying an app that’s actually useful, you’re buying a brand.” said Mr. Weymouth.

If the sale goes through without the algorithm, it also means that the remaining TikTok may not be the same app that users, creators and small businesses are accustomed to, and that they have asked Congress and the president to keep.

Court challenges could block the law and lengthen the timeline

A lawsuit could determine a possible ban and extend the 270-day deadline imposed by the law.

TikTok, along with some advocacy groups and progressive lawmakers, argue that the law interferes with free speech rights. This appears to be TikTok’s central argument as it prepares to challenge it in court.

“This ban will devastate 7 million businesses and silence 170 million Americans. While we continue to challenge this unconstitutional ban, we hope that TikTok will continue to impact Americans from all walks of life. “We continue to invest and innovate to ensure that TikTok remains a space where people can safely share experiences, find joy, and find inspiration,” a TikTok spokesperson said. statement.

TikTok has previously been successful in defeating attempts to ban the app, both under the Trump administration and in the state of Montana.

But Weymouth said the ban focused on national security concerns and could lead to a different outcome in court.

Reps. Mike Gallagher (R-Wis.) and Rep. Raja Krishnamoorthi (D-Ill.), the top members of the House Select Committee on the Chinese Communist Party, first introduced the bill in March, and they advocated for its passage. He said that he is aiming for Problems other attempts have faced in court.

For example, in addition to naming TikTok and ByteDance, the bill also gives the president the power to designate other apps as applications controlled by foreign adversaries. It also provided a time frame for a sale, rather than being drafted as an outright ban as in other attempts.

Also, federal law may be more advantageous than state law, such as in Montana. That’s because “federal law is likely to be viewed by courts as both responsive to addressing national security concerns,” said Justin Hurwitz, senior research fellow and academic director. There is. The Center for Innovation and Competition at the University of Pennsylvania said in an email.

“The government has quite legitimately argued that this law was written to address a compelling government interest, which is an important issue in First Amendment analysis. The question is whether this legislation is an effective and narrowly tailored way to address these concerns,” Hurwitz added.

Updated at 12:43pm EDT