Will Trump Save TikTok? Some Experts Have Their Doubts
The popular social media app TikTok faces an uncertain future in the U.S., as a recent decision from a federal appeals court could pave the way for its ban. President-elect Donald Trump had previously expressed opposition to shutting down the app during his campaign but experts are skeptical about his capacity to prevent such a ban.
Legal Uncertainties Surrounding TikTok
With a January 19 deadline looming, TikTok’s fate hangs in the balance. This date coincides with the end of Trump’s term. A bipartisan bill passed by Congress in April requires TikTok’s Chinese parent company, ByteDance, to sell the app or face a ban, with ByteDance maintaining that it will not sell. Despite Trump’s public support for TikTok’s continuation, skepticism about his ability to influence the situation remains, particularly in light of the recent legal developments.
Experts Weigh In on Trump’s Options
Sarah Bauerle Danzman, an associate professor of international studies at Indiana University Bloomington, noted that Trump could potentially inform companies like Apple and Google that they will not face repercussions for maintaining TikTok. However, she cautioned that this may not be enough to ensure the app’s survival. “This could set up a legal battle, and the app stores likely do not feel comfortable being in violation of the law even if Trump says he won’t enforce it,” she explained.
Isaac Boltansky, a director of policy research at BTIG, described Trump’s options as “limited,” especially given the immense pressure companies would face to comply with the law. He pointed out that although Trump could instruct the Department of Justice not to enforce the law’s penalties, significant compliance pressure would likely remain. Furthermore, Congress seems unlikely to reverse the statute that requires ByteDance to divest its ownership.
The Supreme Court Appeal
TikTok is anticipated to appeal the decision to the Supreme Court, requesting a stay on the ban while the legal process unfolds. Should the Supreme Court delay the ban, Boltansky suggested that Trump could use that time to negotiate a sale of TikTok as part of broader trade discussions with China. However, he acknowledged that this scenario feels more like a “storyline in a novel than a real-world possibility.” A TikTok spokesperson expressed confidence that the Supreme Court would uphold Americans’ right to free speech regarding the app.
The Impact of a Potential Ban on Competitors
If TikTok were indeed banned, users and advertisers would likely redirect their activities to other platforms such as Meta Platforms’ Instagram, Alphabet’s YouTube, and Snap’s Snapchat. Brian Wieser, founder of the strategic advisory firm Madison & Wall, claimed that Snap, due to its smaller size, stands to gain significantly from the potential exodus of users and advertising dollars from TikTok. “The benefits to Snap in particular will be significant,” Wieser noted. “Relatively, they’re going to be a much bigger beneficiary.”
Despite this potential shift, shares of Meta, Alphabet, and Snap only rose between 1% and 2% after the decision, indicating that investors may still be uncertain about the likelihood of an actual ban.
Investor Sentiment and Market Implications
Analyst Dan Ives from Wedbush shared his skepticism about the ban, asserting that “there is a better chance of me playing in the NFL than a TikTok ban.” He believes that Trump will leverage executive powers to prevent the ban, a sentiment echoed by many investors on Wall Street. While the ongoing legal drama may offer temporary benefits to competitors like Meta and Alphabet, the broader consensus suggests that a genuine threat to TikTok’s existence remains questionable.
Conclusion
The unfolding situation regarding TikTok reflects a complex interplay of legal, political, and commercial interests. While Trump has expressed support for the app, the realities of legal enforcement and Congressional actions raise significant questions about his influence. As TikTok prepares for a potential Supreme Court battle, competitors may benefit from any changes in user dynamics, but the actual outcome remains uncertain. The coming weeks will be crucial in determining TikTok’s future in the United States, while advertisers and users alike await a clearer picture.
