The fate of TikTok in the U.S. is still uncertain as Congress calls for Chinese-owned ByteDance to divest from TikTok by January 19th, 2025, citing national security concerns.
Failure to divest could result in a nationwide ban of the platform. Nick Wolny, finance columnist at Out Magazine, joined TheStreet to discuss why ByteDance is hesitant to sell its U.S. arm.
Related: ByteDance is sticking point for Supreme Court as TikTok ban looms
Full Video Transcript Below:
CONWAY GITTENS: It looks like the Supreme Court is going to vote to uphold the law that bans TikTok in the U.S. So what’s the likelihood of TikTok surviving this legal battle?
NICK WOLNY: It’s not looking great for TikTok right now. The Supreme Court sounded skeptical in those oral arguments on Friday, and we also know that the decision is very, very near. It’s next week, so there’s really not a lot of wiggle room in all of this. The Supreme Court, it looks like that they’re going to just go ahead and uphold that law that was implemented late last year. And President Trump, incoming President Trump won’t be able to do a whole lot about it because the ban takes effect on the 19th and he doesn’t actually get inaugurated until the 20th. So there will be at least an interim blackout period. And it doesn’t look like TikTok is going to be coming back up for air, so it will be banned in the United States starting on that day.
CONWAY GITTENS: Much focus seems to be on the ByteDance part of the equation. Is separating TikTok and its parent company – is it really that simple?
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NICK WOLNY: I don’t think it’s that simple, personally. It would be kind of like asking your grandma to give up her beloved chocolate chip cookie recipe. The idea of a divestiture of this app seems really unlikely. That is an option for ByteDance, which is the parent company of TikTok to sell off the U.S. arm of its business. That was a conversation that was also happening several years ago when Trump was pushing for a ban. There was a conversation between Microsoft or Oracle potentially buying TikTok, and that ended up not going through. It would be just buying that U.S. arm of TikTok. But it seems unlikely that TikTok is going to reveal that secret sauce, that algorithm. It’s what makes people love the app so much is that the algorithm is really sticky. It’s very sensitive. If you want to watch a dog video and you’re going to get 10 more dog videos in just a few minutes, it’s a very sensitive algorithm. It’s very much TikTok’s secret sauce, and so it doesn’t seem likely or smart that this company, this global company, would give away its recipe to a U.S. based company, particularly given that the United States has historically produced a lot of the most successful and most compelling social media apps over the last couple decades. It just seems like, given your playbook to the competition, to be totally honest.
CONWAY GITTENS: Now what about one of the solutions we heard suggested by one or two of the Supreme Court justices in their questioning? Something like a warning label that clearly identifies ‘the risk,’ although we can debate – there’s some debate about what the risk is. What could that look like and how would it work?
NICK WOLNY: It doesn’t really get to the root of what the issue at hand really is, which is the sharing of data. Most users are probably going to ignore that disclaimer, and the concern is about US users data being shared with ByteDance. When the People’s Republic of China has said in the past that they have a right to potentially access that data. There’s also been several breaches of security that have been traced back to China. And so in terms of the entire reason the ban is going into effect, adding a Warning label is very much a Band-Aid. It doesn’t really solve the problem in any way. I think it’s unlikely to influence many users to stop using the app. Most users are not very concerned about their data being shared, they just want to see that next piece of content in their feed. So when it comes down to the actual debate, I don’t think we’ll actually see that be the reason or the solution because it’s not really solving anything.
