US House passes bill to ban TikTok, Senate to vote next; all you need to know

On Wednesday, March 13, the US House of Representatives approved a bill to ban TikTok. The bill will be presented before the Senate, followed by the President’s assent. Here are six FAQs to get you up to speed on the issue.

So, is TikTok now banned in the US?

No, TikTok isn’t banned, yet. The House of Representatives, the lower legislative body consisting of 435 members, has passed the bill with 352 members in favour and 65 members against. However, a majority of the Senate, which consists of 100 members, must also pass the same bill. Once passed, it will be sent to President Biden to sign, and then it will become law. It is expected that Biden will sign the bill should it make it to his desk. Currently, the Senate also has its own version of a bill associated with banning TikTok.

How would this work?

The specific piece of legislation doesn’t explicitly ban TikTok but rather requires ByteDance to divest its stake in TikTok. This is due to concerns that ByteDance could be compelled by the Chinese government to provide data on the 170 million TikTok users in the US. If this bill becomes law, TikTok would have six months to comply or be banned from app stores and web hosting services in the US.

While ByteDance has given guarantees that all user data of Americans is held on US-based servers, this isn’t enough. The US operations would need to be sold to a US company and the Chinese would need to approve this. One challenge is that tech companies large enough to purchase this TikTok ‘spinoff’ like Meta or Google would face significant antitrust legal battles. Another challenge is the proprietary algorithm that makes TikTok so addictive. The algorithm likely would not be part of the sale, which means that the US entity would have to license it, leading to further complications. Despite this, former US Treasury Security Steve Mnuchin, who now runs a private equity firm, is gathering investors in a potential bid to acquire TikTok.

What is the background on this?

This isn’t the first time that a TikTok ban has been proposed in the US. Back in 2020, then President Trump signed an executive order to ban TikTok unless the US operations were sold to an American company. The heart of the issue was the same: potential surveillance of US citizens, sharing of private data, and manipulation of what users see based on the feed’s algorithm.

At the time, a deal was brokered where Oracle and Walmart would partner with TikTok to form a US company. In this deal, Oracle would be responsible for hosting all of TikTok’s US user data, while Walmart would provide e-commerce, payments, and other services. However, the executive order was challenged in the federal courts and was never enacted.

What are the complications?

While the bill received broad bipartisan support from both Republicans and Democrats, there is a risk that the potential law would be unconstitutional. The first amendment to the US Constitution states that Congress shall not make a law that prohibits the freedom of speech, religion, press, and peaceful assembly. Influencers, users of TikTok, and other organisations such as the American Civil Liberties Union (ACLU) are making the argument that this law would be a violation of the first amendment. If signed into law, it will certainly be challenged in the courts.

This is also a major election year in the US with the Presidency, 33 Senate seats, and all 435 House seats up for reelection in November. The TikTok ban is about national security and a candidate wouldn’t want to appear to be weak on national security. On the flip side, there is a risk of alienating TikTok creators, users, and business owners – all of whom represent core voting blocks.

While President Trump supported a TikTok ban in 2020, he publicly opposed a ban and the new bill this week. Given that he is now the presumptive 2024 Republican nominee for President, members of his party could rally to his viewpoint making passage of the bill less likely.

Are there broader implications?

While ownership of US data is the primary argument, the heart of the national security issue—and reason for the TikTok ban bill—is the ability of a foreign country to influence US citizens. This has the broadest implications when it comes to elections. If the TikTok ban were to be signed into law and the courts override first amendment concerns on the basis of national security, there could be debates about other social media platforms. In the 2016 and 2020 presidential elections, there was potential interference by foreign entities on Meta and Twitter (now X). While these social media platforms are US-based, there is no governmental regulation that mandates content and user moderation associated with political neutrality. If TikTok is banned due to the potential to influence, this same argument could be made against other social media platforms leading to censorship or more expansive moderation policies. This could be difficult and costly for tech companies to implement.

How did the US markets react?

The S&P 500 was down 0.3% but that was broadly driven by hotter than expected inflation data rather than the TikTok news. The Core Producer Price Index was up 0.3%, which was more than the expectation of 0.2%. With the Federal Reserve meeting next week, this resulted in a jittery market and an increase in treasury yields. Despite this, several large cap tech stocks including Apple, Microsoft, Amazon, and Alphabet traded higher.