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US Lawmakers Approve TikTok Sell-off Proposal

The US House of Congress has voted in favour of banning short-form video app TikTok, which may force its Chinese owners ByteDance to sell the platform or divest its US assets. 

However, the bill still needs to pass the US’s second chamber, the Senate, before it becomes law. If it passes and is signed, ByteDance would have six months to divest its controlling stake in TikTok.

Concerns about US data

American lawmakers are concerned about the platform’s ties with China and the access it has to data on around 170 million American users. The move is built around a response to national security concerns regarding China, who many in Congress believe could demand access to US user data at any time it wants.

Jake Sukllivan, White House National Security Adviser, via ABC

“Do we want TikTok, as a platform, to be owned by an American company or owned by China? Do we want the data from TikTok – children’s data, adults’ data – to be staying here in America, or going to China?”

Hurtful for small businesses and advertisers

Those opposed to the ban say it can hurt small business owners and entrepreneurs, who use the app to make money. According to TikTok, there are seven million small businesses from America on the app, which would suffer the most from the ban, says a report from Oxford Economics. It is worth noting that this was created in collaboration with TikTok, so take it with a pinch of salt.

TikTok: Helping grow small and midsized businesses and deliver value for consumers across the United States, Consulting report

“SMBs that leverage TikTok’s capabilities effectively have the opportunity to realize growth, stimulating economic activity within businesses and their supply chains and through employees’ spending in the wider economy. Via these channels, our economic modelling suggests that SMB activity on TikTok contributed $24.2bn to GDP in the US in 2023, while supporting 224,000 jobs.”

On the other side of the coin, a ban would hurt advertisers who target Gen Z – the demographic which favours platforms such as TikTok over Google. TikTok is now a crucial channel for brands targeting younger customers, and an American ban could have serious implications for advertising campaigns around the world.

Pre-ban outlook is positive

To be clear, American lawmakers aren’t talking about banning a plucky little upstart. They want to ban the most downloaded app worldwide in 2021 and a platform that earned more than $4bn USD in 2022 – a figure Statista expects (or expected) to double by 2024.

Valentina Dencheva, Researcher, Statista

“Over the last few years, more brands have started leveraging TikTok’s impressive reach and engagement figures to boost brand awareness and foster relationships with young, mostly Gen Z, customers. And even though the new kid on the block cannot yet match Facebook’s advertising revenues, it is becoming more appealing each year.”

TikTok’s response

As you’d expect, TikTok is not happy about this threat. In a statement published on X (Twitter), it called the proposed law “a ban”.

TikTok Statement

“This process was secret and the bill was jammed through for one reason: it’s a ban. We are hopeful that the Senate will consider the facts, listen to their constituents, and realize the impact on the economy, 7 million small businesses, and the 170 million Americans who use our service.”

Additionally, TikTok posted a video of CEO Shou Chew on X saying how a ban would put more than 300,000 American jobs at risk and take money away from creators and small businesses.

Divided… as always

Unsurprisingly, the issue has been met with strong reactions on both sides. While the House voted 352 to 65 in favour of the bill, it has some political heavyweights calling it out. One of those is Donald Trump, who says a TikTok ban would give more power to Facebook – a platform he once called “an enemy of the people”. 

Current American president Joe Biden has said he will sign it into law if it passes in the House and the Senate.

As always with the two parties, it seems as if they’re determined to fight tooth and nail on the subject – no matter their motivations.

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