TikTok has gone dark, but here's why the app probably won't go away for good

MW TikTok has gone dark, but here's why the app probably won't go away for good

By Victor Reklaitis

Trump has expressed interest in a joint venture between the U.S. and a corporation, which could keep TikTok operational over the long haul. For now, he's likely to delay the ban once he takes office Monday.

TikTok has gone dark in the U.S., but that may not be permanent.

U.S. TikTok users lost access to the app late Saturday, after the U.S. Supreme Court on Friday upheld a bipartisan law that banned TikTok nationwide, provided it was still controlled by its Chinese parent company.

But it's increasingly likely that the incoming Trump administration will find a way to delay or soften the U.S. ban on TikTok. The president-elect, who is due to be sworn in on Monday, indicated over the weekend that he would issue an executive order to extend the amount of time before the ban takes hold.

Trump said Sunday on Truth Social that he initially leans toward "a joint venture between the current owners and/or new owners whereby the U.S. gets a 50% ownership in a joint venture set up between the U.S. and whichever purchase we so choose."

He also said his executive order would come down on Monday, and that the order would "confirm that there will be no liability for any company that helped keep TikTok from going dark before my order."

Even before the app went dark, Trump was 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 that cited unnamed sources. Legal experts have noted that a president's order can't entirely overcome a law that Congress approved with overwhelming bipartisan support, the report added.

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 the app's 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 that those conditions have been met even if they actually have not been, and that he would then grant the extension and get involved in the talks over a ByteDance divestiture, as he did during his first term.

Ahead of the court's ruling, Trump 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. In addition, the incoming administration's adviser for national security, Michael Waltz, told Fox News on Thursday that Trump officials are "going to find a way to preserve" the app while protecting Americans' data from the Chinese government, saying "that's the deal that will be in front of us."

The popular platform earlier this week reportedly was considering shutting down entirely on Sunday, but TikTok Chief Executive Shou Chew on Friday sounded upbeat about Trump stepping in.

"On behalf of everyone at TikTok and all our users across the country, I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States," the CEO said in a video after the Supreme Court's decision. "We are grateful and pleased to have the support of a president who truly understands our platform - one who has used TikTok to express his own thoughts and perspectives, connecting with the world and generating more than 60 billion views of his content in the process."

The message shown to U.S. TikTok users on Sunday also references a willingness to work with Trump.

Another recent sign of Trump's support for the platform is that TikTok's CEO is due to be one of the president-elect's guests at Monday's inauguration, according to multiple published reports.

In its statement on Friday, the Biden administration said TikTok "should remain available to Americans, but simply under American ownership or other ownership that addresses the national-security concerns identified by Congress in developing this law." Biden signed the measure targeting TikTok into law in April after it was passed by the U.S. House of Representatives and the Senate with the support of roughly 80% of each chamber.

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. Wall Street analysts have mentioned Amazon.com Inc. $(AMZN)$, Microsoft Corp. $(MSFT)$, Walmart Inc. $(WMT)$ and Oracle Corp. $(ORCL)$ as potential buyers, noting that some of those companies were previously interested in the social-media platform. There also was interest in March from an investor group led by Steven Mnuchin, who served as Treasury secretary during Trump's first term.

Perplexity AI, an artificial-intelligence startup, expressed interest over the weekend in a purchase, according to the Associated Press.

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.

And see: TikTok ban: U.S. users are fleeing to another Chinese app as 'refugees'

The Supreme Court's ruling

In its opinion released on Friday morning, the Supreme Court said there is "no doubt that, for more than 170 million Americans, TikTok offers a distinctive and expansive outlet for expression, means of engagement, and source of community."

The opinion continued: "But Congress has determined that divestiture is necessary to address its well-supported national-security concerns regarding TikTok's data-collection practices and relationship with a foreign adversary." The court said it concluded that "the challenged provisions do not violate petitioners' First Amendment rights," and it affirmed the judgement of a lower court.

How Meta and Alphabet could benefit

If TikTok goes away for good in the U.S., analysts have said that would be likely to provide a sizable boost to the platform's 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 the revenue will potentially 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, respectively, in U.S. ad revenue last year. Meta is the parent company of 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.

Snap's stock dropped 3% on Friday, while shares in Meta, Reddit and Pinterest inched fractionally higher. Alphabet's stock rose more than 1%, as did the tech-heavy Nasdaq Composite COMP.

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 analysts have estimated that TikTok provides more than $370 million a year in revenue to Oracle's cloud-computing business. Oracle's stock closed nearly 1% higher on Friday.

TikTok and its supporters have argued that the law amounts to government suppression of free speech. Proponents 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 19, 2025 11:54 ET (16:54 GMT)

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