Bill Alpert
A law banning China-owned TikTok grew more likely, with its hitching to an aid bill for Ukraine and Israel set for a Saturday vote. Washington watchers put high odds on the ban going to the Senate next week, and then the White House for signing.
The ban's advance could divert additional advertisers from the threatened video-sharing app, to American-owned alternatives such as Meta Platforms' Instagram, Snap's Snapchat, and Pinterest.
"It's going to pass this weekend, unless something really weird happens, " says Paul Gallant, of TD Cowen's Washington Research Group. In the class of weird things, he says, would be House Speaker Mike Johnson being forced to resign by far-right Republicans.
Citing national security risks from a China-based app sitting on millions of American phones, the House bill demands the app's owner ByteDance sell TikTok within a year, or the service will be banned in the U.S.
The legislative package would then advance to the U.S. Senate, where it could not be modified -- the Senate must give it an up-or-down vote. Next week is a vacation week for the Senators, Gallant notes, so it could take a week or two for a Senate vote. One week, if majority leader Chuck Schumer calls the senators back from vacation; two weeks if he doesn't.
President Joe Biden has indicated that he'll sign the bill, if it then advances to his desk.
"It is unfortunate," a TikTok spokesman told Barron's, "that the House of Representatives is using the cover of important foreign and humanitarian assistance to once again jam through a ban bill that would trample the free speech rights of 170 million Americans, devastate seven million businesses, and shutter a platform that contributes $24 billion to the U.S. economy, annually."
TikTok, or some of those affected U.S. businesses, could go to court and seek a stay of the law on constitutional grounds. That might forestall the service's shutdown for a bit, says Gallant in a Friday note, but is unlikely to ultimately prevail. Courts are reluctant to overturn laws that cite national security.
The potential ban of TikTok may be bad for its U.S. business partners, but it could lead to an advertising windfall for social-media rivals such as Meta's Instagram and Facebook, Snapchat, and Pinterest. Amazon.com would also be spared a new rival, as TikTok has been revving up an e-commerce offering. A forced sale would hand an opportunity to U.S. private-equity firms that are interested buyers.
China's government isn't happy with the course that events have taken. Beijing has said it would refuse to allow ByteDance to sell TikTok to other owners.
And this week, it was reported that China wants to force Apple's iPhone app store to remove messaging apps that are resistant to China's state surveillance, such as Signal, WhatsApp, and Telegram.
"That may be intended to dissuade the U.S. from passing this bill," said Gallant. "But that's never going to happen."
Write to Bill Alpert at william.alpert@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 19, 2024 14:18 ET (18:18 GMT)
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