Supreme Court upholds law that could ban TikTok. Here's why the app probably won't go away soon.

MW Supreme Court upholds law that could ban TikTok. Here's why the app probably won't go away soon.

By Victor Reklaitis

If the Chinese-owned platform does end up getting shut down, Meta and Alphabet look like the big winners

The U.S. Supreme Court has upheld a bipartisan law that aims to ban TikTok nationwide on Sunday if the video-sharing app continues to be controlled by its Chinese parent company, ByteDance Ltd.

The high court's decision could set the stage for usage of TikTok to end in the U.S., as the law calls for app stores and other enterprises to stop supporting it. TikTok reportedly may be ready to just itself shut down entirely on Sunday and direct users to a site with information about the ban.

It also has started to appear increasingly likely that President Joe Biden's administration or the incoming Trump administration will find a way to prevent a U.S. ban on TikTok from taking effect this weekend, as both seem to be looking into such a move.

Trump - who is slated to take office Monday - has been considering ways to save TikTok, discussing unconventional deal-making and legal maneuvers such as an executive order that would undo the bipartisan law, according to a Washington Post report citing unnamed sources. Legal experts have noted a president's order can't entirely overcome a law that Congress approved with overwhelming bipartisan support, the report added.

The president-elect said in a social-media post on Friday morning that TikTok was among the subjects that he had just discussed with Chinese President Xi Jinping in a call.

President Joe Biden's administration also has been considering ways to keep TikTok available in the U.S., according to an NBC News report citing unnamed sources. Providing a reprieve would mean the popular app's shutdown would not define Biden's last full day in office and would defer the issue to Trump, said the NBC report, which also noted that a Biden White House official said not enforcing a TikTok ban isn't an option.

The law - known as the Protecting Americans from Foreign Adversary Controlled Applications Act - says a president can grant a 90-day extension that would delay a U.S. ban, but stipulates that certain conditions must be met for there to be an extension. There must be "significant progress" by its Chinese owner toward a sale of TikTok's U.S. business, with binding legal agreements in place to enable execution of the deal during the extension. But there are expectations among some analysts that Trump could certify those conditions have been met even if they actually haven't been, and then he would grant the extension and get involved in the talks over a ByteDance divestiture like he did during his first term.

Authorities in Beijing have talked about selling to billionaire entrepreneur and Trump ally Elon Musk, according to multiple published reports. In addition, a group backed by entrepreneurs Frank McCourt and Kevin O'Leary has said it made a proposal to ByteDance to acquire TikTok's U.S. assets, and Wall Street analysts have mentioned Amazon.com Inc. $(AMZN)$, Microsoft Corp. $(MSFT)$, Walmart Inc. $(WMT)$ and Oracle Corp. $(ORCL)$ as potential buyers, noting some of those companies were previously interested in the social-media platform.

While Trump made efforts to ban TikTok during his first term, he switched his stance on the app last year. Trump asked the Supreme Court last month to put the brakes on the law targeting TikTok, saying he wanted to "negotiate a resolution" to save the social-media platform while addressing national-security concerns.

One other recent sign of Trump's support for the platform is that TikTok Chief Executive Shou Chew plans to attend Trump's inauguration on Monday as one of the president-elect's guests, according to multiple published reports.

Biden's potential reversal on TikTok would come after he signed the measure targeting the app into law in April. His signature came after the legislation passed the U.S. House and Senate with the support of roughly 80% of each chamber.

Related: TikTok ban: Here's what to expect if the app is banned in the U.S. on Sunday

How Meta and Alphabet could benefit

If TikTok goes away in the U.S., analysts have said that's likely to provide a sizable boost for its publicly traded competitors.

TikTok had an estimated $10.1 billion in U.S. advertising revenue last year and could score $12.8 billion this year, according to analysts at Benchmark. They reckon that revenue potentially will be up for grabs and that 80% or 90% of it would go to Meta Platforms Inc. $(META)$ and Alphabet Inc. $(GOOG)$ $(GOOGL)$, which drew in about $65 billion and $101 billion in U.S. ad revenue last year, respectively. Meta is the parent company for Facebook and Instagram, while Alphabet's businesses include YouTube and Google.

The remaining 10% or 20% of TikTok's ad revenue could go to Pinterest Inc. $(PINS)$ and Snapchat parent Snap Inc. (SNAP), according to the Benchmark analysts.

Analysts at Morgan Stanley also view Meta and Alphabet as the biggest beneficiaries if TikTok is banned or sold to a company that fails to ensure that the app thrives. They said they see Reddit Inc. (RDDT), along with Pinterest and Snap, as benefiting as well.

Read more: TikTok ban goes before Supreme Court. Here's where the app's $10 billion in ad revenue could go if it dies.

Opinion: TikTok is the last thing Elon Musk needs right now

Oracle - which counts TikTok as a customer - warned in June that it could be hurt if TikTok is banned in the U.S. Morgan Stanley's analysts have estimated that TikTok provides more than $370 million a year in revenue to Oracle's cloud-computing business.

TikTok and its supporters have argued the law amounts to government suppression of free speech. Supporters of the law have said the app is a threat to national security because its parent company must do the bidding of China's government.

During oral arguments over the TikTok law last week, Supreme Court justices sounded sympathetic to the national-security concerns.

"Are we supposed to ignore the fact that the ultimate parent is, in fact, subject to doing intelligence work for the Chinese government?" Chief Justice John Roberts said to TikTok's lawyer, Noel Francisco, who served as U.S. solicitor general in the first Trump administration.

-Victor Reklaitis

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January 17, 2025 10:02 ET (15:02 GMT)

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