Speaker 1: Hello, and welcome to the Votes and Verdicts podcast, hosted
Speaker 1: by Bloomberg Intelligence, part of Bloomberg's investment research department. With
Speaker 1: five hundred analysts and strategists working across all major world markets.
Speaker 1: Our coverage includes over two thousand equities and credits, as
Speaker 1: well as outlooks on more than ninety industries and one
Speaker 1: hundred market indices, currencies, and commodities. In this podcast series,
Speaker 1: we talk about the intersection of business policy and law.
Speaker 1: The forthcoming Conversation features a Bloomberg Intelligence Spotlight webinar from
Speaker 1: January tenth titled the TikTok Band Will It Happen? In
Speaker 1: the webinar, Elliott Stein joined me Matt Shettenhelm to discuss
Speaker 1: TikTok's January tenth and oral argument at the US Supreme
Speaker 1: Court and whether the company can dodge a US band
Speaker 1: that's set to take effect on January nineteen. Please enjoy Okay,
Speaker 1: Good afternoon, everyone, and welcome to this Bloomberg Intelligence Spotlight webinar,
Speaker 1: The TikTok Ban Will It Happen? My name is Matt Schuttenhelm.
Speaker 1: I'm a litigation and policy analyst with Bloomberg Intelligence focused
Speaker 1: on the TMT sector, and I'm joined today by our
Speaker 1: litigation and policy team leader, Elliott Stein. Elliott, thanks for
Speaker 1: doing this with me today.
Speaker 2: My pleasure. Thanks for having me, Mett.
Speaker 1: Yeah, absolutely so a couple housekeeping notes before we begin.
Speaker 1: Today's presentation will be recorded and will be available for playback.
Speaker 1: You can ask us a question by submitting one in
Speaker 1: the Q and a box on your screen. After the webinar,
Speaker 1: we're available for further questions. You can reach us through
Speaker 1: the Bloomberg terminal.
Speaker 2: And let me just add a brief note about Bloomberg Intelligence.
Speaker 2: BI offers independent research, analytics and interactive data on the
Speaker 2: Bloomberg Terminal. Our team of over five hundred professionals works
Speaker 2: to help our clients make informed investment decisions. We cover companies, industries,
Speaker 2: and markets from the perspective of strategy, equity, credit, ESG, government,
Speaker 2: and litigation. So when we turn to today's topic, we
Speaker 2: thought we'd structure it as a Q and A session
Speaker 2: to walk through Matt's analysis of the case. We'll look
Speaker 2: at what's at stake, who's likely to prevail, when and
Speaker 2: how Matt thinks will hear from the Supreme Court, and
Speaker 2: what President elect Trump might do about all of this
Speaker 2: once he takes office. As Matt said, if you have
Speaker 2: any questions, you know, throughout this discussion, just put them
Speaker 2: in the Q and A chat and we'll tackle them
Speaker 2: at some point during the conversation. Matt, before we get
Speaker 2: to your high level takeaways from the argument, you were
Speaker 2: in the courthouse today at the Supreme Court. It's always
Speaker 2: exciting for litigation analysts like us. You know, some of
Speaker 2: the best lawyers in the country, one of the most
Speaker 2: high profile cases you know presently. So why don't you
Speaker 2: give us this sort of your high level view of
Speaker 2: what it was like in the courthouse today.
Speaker 1: Oh, it was fantastic. I you know, I had the
Speaker 1: seat right behind the podium there, so I'm staring down
Speaker 1: the Chief Justice as as he's he's asking these questions
Speaker 1: to the best lawyers in the land. So there's no
Speaker 1: better seat in Washington, d C. And so it's so
Speaker 1: great fun to be there. And I think we got
Speaker 1: a lot to talk about.
Speaker 2: Yeah, absolutely, and we'll grow into the details during this conversation,
Speaker 2: But why don't we start with your high level takeaways.
Speaker 2: You followed the case from the get go. You were,
Speaker 2: like we said, in the courthouse this morning You went
Speaker 2: into today's hearing saying that TikTok had a chance to
Speaker 2: win this case and stopped the January nineteenth ban, but
Speaker 2: you didn't think they had a great chance. You put
Speaker 2: it at thirty percent going in. Where are you now
Speaker 2: after the argument?
Speaker 1: Yeah, it went a lot how I thought it would go,
Speaker 1: But I think I've reduced the odds after the argument.
Speaker 1: I'm down to twenty percent for TikTok. It's just very
Speaker 1: difficult to see five justices voting in TikTok's favor, both
Speaker 1: on the pause of the law and on striking the
Speaker 1: whole thing down. As you listen to the questions from
Speaker 1: the justices, only I could see TikTok winning one solid vote.
Speaker 1: Justice Gorsic seem to be a vote in the company's favor,
Speaker 1: But then it's a lot harder to get to five
Speaker 1: for TikTok. On the other hand, it's much easier to
Speaker 1: get to five for the United States. With Chief Justice Roberts,
Speaker 1: I think most likely going to be in the majority,
Speaker 1: so he'll likely decide who gets to write the decision.
Speaker 1: Justice Barrett, who earlier this year had suggested maybe foreign
Speaker 1: companies don't have First Amendment rights in the same way
Speaker 1: as other social media companies. I think she was hitting
Speaker 1: that note again. And then you can add, you know,
Speaker 1: three or four other justices pretty easily on the United
Speaker 1: States side. So if I'm TikTok, I'm pretty concerned coming
Speaker 1: out of that, out of that argument, I'm at twenty percent,
Speaker 1: and that might be high in terms of TikTok's chances
Speaker 1: going forward.
Speaker 2: And we'll, you know, we'll discuss in detail why you
Speaker 2: think that some more. But maybe just to make sure
Speaker 2: everyone's on the same page on this call, why don't
Speaker 2: you maybe walk us through how the law operates, what
Speaker 2: it does to TikTok, and how it affects other companies.
Speaker 1: Yeah, so at a high level, January nineteenth is the
Speaker 1: date to know, the one that matters, because when Congress
Speaker 1: passed this law in April, it said two hundred and
Speaker 1: seventy days later, that's when this ban takes effect unless
Speaker 1: bitingts has divested TikTok by then, and no divestiture has happened.
Speaker 1: And so here we are, January nineteenth, And what does
Speaker 1: a ban mean. So it's not a it's not going
Speaker 1: to strip it off everyone's phone on January nineteenth. What
Speaker 1: happens on January nineteenth. Is that any company that hosts
Speaker 1: TikTok in an app store or on a server in
Speaker 1: the United States in a way that makes it available
Speaker 1: for Americans to update and maintain faces liability if they
Speaker 1: continue to host TikTok to allow that on January nineteenth.
Speaker 1: The liability is massive. It's five thousand dollars per user.
Speaker 1: One hundred and seventy million users times five thousand dollars
Speaker 1: is eight hundred and fifty billion dollars. So it's the
Speaker 1: kind of number that companies need to pay attention to
Speaker 1: because they don't want to deal with with potential liabilities.
Speaker 1: So companies like Oracle that that host TikTok, companies that
Speaker 1: that other companies that carried in the app store, so Google,
Speaker 1: Apple that carry it there to the extent that it's
Speaker 1: using cloud services from Amazon or other companies like that,
Speaker 1: those companies would face potential liability starting on January nineteen.
Speaker 2: So it sounds like TikTok is sort of seeking two things, right.
Speaker 2: They want an injunction to stop the January nineteenth deadline,
Speaker 2: and they want the court to strike down the law
Speaker 2: completely on the grounds that violates the first Amendment. You
Speaker 2: sort of gave us your high level thoughts on both
Speaker 2: those things at the outset, but maybe you can walk
Speaker 2: us and walk us through in more detail why you
Speaker 2: don't think TikTok will get to support a five justices, right.
Speaker 1: Yeah, And that came up at the end. One of
Speaker 1: the justices raised the idea of a stay towards the
Speaker 1: end of an argument of the argument. The problem for
Speaker 1: TikTok is the standard for the court to issue a
Speaker 1: stay is really whether TikTok is likely to prevail in
Speaker 1: this case. So the two things sort of run together.
Speaker 1: Will they win in their constitutional challenge? And are they
Speaker 1: entitled to a stay? Because the test looks always does
Speaker 1: TikTok have a serious case here? And as I said,
Speaker 1: it doesn't look like there are five justices that are
Speaker 1: going to say there's a First Amendment problem with this
Speaker 1: law that justifies striking it down. And for that reason,
Speaker 1: a stay, which would pause Congress's deadline isn't very likely
Speaker 1: because those justices are looking at the same question, is
Speaker 1: TikTok going to prevail on its First Amendment challenge? And
Speaker 1: so I think TikTok is likely to lose on both
Speaker 1: And I think they're both likely to go in the
Speaker 1: same direction. We could talk about an administrative stay.
Speaker 2: I don't know.
Speaker 1: We can get to that later if you want in.
Speaker 2: The way I mean, maybe want to just suddress that now,
Speaker 2: because because I guess it's two different things, right, an
Speaker 2: administrative stay versus preliminary injunction. And I know likelihood a
Speaker 2: success of the merits on the merits is the standard
Speaker 2: for one of the elements of getting an injunction. But
Speaker 2: is that also, you know, one of the elements for
Speaker 2: an administrative stay or does something else.
Speaker 1: Playing I don't know that there are clear elements for
Speaker 1: an administrative stay. And maybe the Court uses administrative stays
Speaker 1: for housekeeping purposes, and you know, it's trying to do
Speaker 1: its work as fast as it can and sometimes it
Speaker 1: has to temporarily hit pause on things. I think the court,
Speaker 1: you know that did come up today, can can we
Speaker 1: can we issue an administrative stay? I don't think the
Speaker 1: Court is going to be inclined to go down that
Speaker 1: road and and to issue an administrative stay because President
Speaker 1: Trump asked for it or or or something along those lines.
Speaker 1: You know, the fact that they're considering a stay and
Speaker 1: denying it. You know says a lot, and I don't
Speaker 1: think they're going to want to go down the road
Speaker 1: of creating a precedence of doing you know, administrative stays.
Speaker 1: For that reason, it's possible they could try to kick
Speaker 1: it a couple of days into the Trump administration using
Speaker 1: this this this procedure. I don't want to say that's
Speaker 1: it's absolutely not going to happen. But again, I think
Speaker 1: you need a majority of the court to do these things,
Speaker 1: and you didn't really have a majority of the court
Speaker 1: to do it. The other thing is, I'm not and
Speaker 1: we can talk about this later as as president we
Speaker 1: talk about President Trump. But even if they did kick
Speaker 1: it into President Trump's term, I'm not so sure there's
Speaker 1: a lot he can do to say we get it
Speaker 1: into President Trump's term. What exactly is that going to
Speaker 1: change as a practical matter, when you talk about the
Speaker 1: liability exposure we we mentioned earlier, I'm not sure it
Speaker 1: changes very much. But we can get into that too.
Speaker 2: Yeah, let and let's send a Trump and what he
Speaker 2: might be able to do in a minute, But just
Speaker 2: on on the merits of the case, on what you
Speaker 2: heard today on the amendment arguments, Why don't you think
Speaker 2: there's five justices that would side with TikTok.
Speaker 1: It was a lot like what we saw at the
Speaker 1: DC's circuit when this was argued in September. There was
Speaker 1: just a sense, like, you know, there really wasn't a
Speaker 1: sense that this is a major First Amendment crisis for
Speaker 1: our country because of the unique circumstances. This is a
Speaker 1: company that is the parent company is located in China,
Speaker 1: and as the government made the argument to the justices,
Speaker 1: the idea that look, we're not trying to change anything
Speaker 1: about how TikTok speaks or how its users operate. They
Speaker 1: can use the same algorithm on December I'm sorry, on
Speaker 1: January twenty fifth as they do today if they want
Speaker 1: to don't. We just don't want it owned by a
Speaker 1: parent company in China. And Justice after Justice seemed inclined
Speaker 1: to defer to the government on that and say, look,
Speaker 1: this is sort of a narrow issue we're addressing here.
Speaker 1: This is about corporate structure, foreign ownership. It's not about uh,
Speaker 1: you know, regulating social media companies generally. It's about the
Speaker 1: foreign ownership there. That caught on a lot more with
Speaker 1: the justices than did any concerns about how the First
Speaker 1: Amendment issues that that this law raises.
Speaker 2: And what what about TikTok's arguments which they sort of
Speaker 2: focused on at the very end in the in the
Speaker 2: summary rebuttal that that there are less restrictive alternatives that
Speaker 2: that the government could have taken. If it were concerned
Speaker 2: with you know, data privacy, it could have just said, well,
Speaker 2: you know, you ban the transfer of data from TikTok
Speaker 2: to bydance or something like that. And you know, if
Speaker 2: you were concerned with covert manipulation, you could just have
Speaker 2: risk disclosures.
Speaker 1: Yeah, TikTok's always had strong arguments in my view. You know,
Speaker 1: it's a serious First Amendment case. Did Congress really need
Speaker 1: to go this far? You know, a band's a big
Speaker 1: step or an effective band, whatever you want to call it.
Speaker 1: Did they really need to go this far? When I
Speaker 1: first came to this case, you know, you read these
Speaker 1: briefs and you say, hey, this is a decent argument.
Speaker 1: Maybe the judges are going to make Congress rethink this
Speaker 1: and do it over make sure they got it right
Speaker 1: at least, and really think about did they need to
Speaker 1: go that far? You just haven't seen that catch on
Speaker 1: despite its potential appeal to you know, in legal circles,
Speaker 1: the judges kind of maybe it's because it's so rare
Speaker 1: for Congress to agree to something like this on a
Speaker 1: bipartisan basis, and we had such a strong consensus that
Speaker 1: this needed to happen for national security reasons that I
Speaker 1: think judges are a little concerned to get in the
Speaker 1: middle of that on legal technicalities. And so I think
Speaker 1: there's a real reluctance to stop a national security law
Speaker 1: if that's Congress's judgment, and so I just it's a
Speaker 1: serious argument. It just hasn't really caught on.
Speaker 2: All Right, So let's talk about timing and what you
Speaker 2: think happens next. When do you expect that we'll see
Speaker 2: your decision from the Supreme Court?
Speaker 1: Yeah, so this is such a unique case that usually
Speaker 1: we can, you know, we can give you averages on
Speaker 1: exactly how long the court takes for these things and
Speaker 1: really give you a really clear idea. This is so
Speaker 1: unique that the Court took this case on such a
Speaker 1: fast track schedule and they're facing this January nineteenth deadline,
Speaker 1: and they're they're balancing both that the stay issue and
Speaker 1: the merits issue. That it's hard to know exactly, but
Speaker 1: my best sense is that what I think they'll they'll
Speaker 1: try to do, and what might be easiest for them
Speaker 1: to do, is to very quickly address the stay issue
Speaker 1: that the ban taking effect on January nineteenth. TikTok has
Speaker 1: asked them to pause. That the Court is meeting in
Speaker 1: a conference today after the argument in their private conference,
Speaker 1: and very often after those private conferences, they the next
Speaker 1: Monday put out an order list that addresses what they
Speaker 1: talked about in that conference. It wouldn't surprise me at
Speaker 1: all if they release an order on the stay coming
Speaker 1: out of this afternoon's conference. One thing to watch for,
Speaker 1: and I kind of want to watch the headlines as
Speaker 1: they're coming in. When things are urgent, sometimes the Supreme
Speaker 1: Court won't wait till Monday. Sometimes they'll they'll put them
Speaker 1: out Friday afternoon. And there is real urgency here. The
Speaker 1: TikTok said, Look, we have all these companies trying to
Speaker 1: figure out what do we do about January nineteenth, and
Speaker 1: so there is an urgency. So I think there's a
Speaker 1: possibility that the Court very quickly releases an order on
Speaker 1: that stay as early as this afternoon. The other alternative
Speaker 1: that I can't rule out is that they try to
Speaker 1: address the full First Amendment question and write a full
Speaker 1: opinion on whether this violates the First Amendment by January nineteenth.
Speaker 1: That's possible. The Court typically takes over one hundred days
Speaker 1: after argument to issue a decision. We're probably going to
Speaker 1: have a dissent from Justice Gorsic in this case, and
Speaker 1: balancing those things takes time. So writing an opinion that
Speaker 1: sets the First Amendment law going forward is going to
Speaker 1: be real tough for the Court in the next nine
Speaker 1: days or so, So that to me, isn't the most
Speaker 1: likely path. Much more likely I think that they address
Speaker 1: the stay first with a short decision saying no, we
Speaker 1: are not going to hit pause on January nineteenth. Then
Speaker 1: they can take their time get these legal details right
Speaker 1: on the First Amendment. Address that in March April May.
Speaker 2: And if they don't pause it, I mean, that's a
Speaker 2: pretty big clue to how they're.
Speaker 1: Going to rule exactly exactly.
Speaker 2: All right, Let's talk about President President elect Trump and
Speaker 2: what he might do. He's said he has a warm
Speaker 2: spot in his heart. I think that's a quote for
Speaker 2: TikTok because it might have helped him win the election.
Speaker 2: He also filed an amicus brief in this case, which
Speaker 2: is pretty unusual, asking the Supreme Court to halt the
Speaker 2: law so that he can resolve the issue through political means,
Speaker 2: saying that he wanted to pursue what he called a
Speaker 2: negotiated resolution. You know, how did that come up in
Speaker 2: the argument today? Did it get any attraction with the
Speaker 2: court And do you think it'll have any effect?
Speaker 1: Yeah, it did come up pretty directly. I think it
Speaker 1: was just this Kavanaugh that that that may have raised
Speaker 1: it about midway through. Maybe Justice Alito mentioned it as well,
Speaker 1: but and also the Solicitor General mentioned it in her
Speaker 1: in her response on this and and I think, as
Speaker 1: I said earlier, the problem when President Trump filed that
Speaker 1: amikis brief, he didn't make a legal argument. The Court
Speaker 1: is into legal arguments. It does it does things based
Speaker 1: on the law. And he told the court how great
Speaker 1: he is on social media, but he didn't really give
Speaker 1: them a path legally to issue a stay. And so
Speaker 1: that came up today and whether they you know, they
Speaker 1: could just push it to the next administration. And the
Speaker 1: Solicitor General said, well that the standard for a stay
Speaker 1: is is TikTok likely to prevail on the merits and
Speaker 1: and and there, I think TikTok's going to have a
Speaker 1: tough time prevailing on the merits. And so, you know,
Speaker 1: judges love kicking things to the political branches and avoiding
Speaker 1: having to decide cases if they can, If they could
Speaker 1: get a political resolution of this case, I think they
Speaker 1: would love that. But I don't think that that instinct
Speaker 1: or that impulse is enough to justify overriding a deadline
Speaker 1: that Congress sets. It's not the judge's job to change,
Speaker 1: you know, to set a new deadline that that's different
Speaker 1: from the one that Congress set for national security reasons.
Speaker 1: So I don't really see that leading to a change.
Speaker 1: And as we talked about earlier, an administrative stay is
Speaker 1: possible that sort of kicks it into the next administration
Speaker 1: while the court writes this up. But then there's real
Speaker 1: questions about what could President Trump do at that point.
Speaker 2: Yeah, so let's talk about that, and let's sort of
Speaker 2: operate under the assumption that you're right, because you usually are.
Speaker 2: And the Supreme Court ruled against TikTok, doesn't issue a
Speaker 2: stay of the January nineteenth, date, the band takes effect
Speaker 2: on that day. President Trump comes into office. The next day,
Speaker 2: January twenty, what if anything, can he do to try
Speaker 2: to step in and save tik Tok.
Speaker 1: Yeah, so it's a great question. He first of all,
Speaker 1: the law is enforced by the Justice Department, and President
Speaker 1: Trump will be in charge of the Justice Department. So
Speaker 1: he could tell his Justice Department, look, I'm not you know,
Speaker 1: we're not going to enforce this. And he could tell
Speaker 1: all the companies that face those hundreds of billions of
Speaker 1: dollars in liability, don't worry about that. It's not a concern.
Speaker 1: And then there was, you know, some question that came
Speaker 1: up at the court today, if if they reversed him,
Speaker 1: if he reversed himself on that, would they have a
Speaker 1: due process claim? And maybe is the question is is
Speaker 1: the resolution is the answer on that? So the but
Speaker 1: then Justice Soda Mayor asked, I think they pushed back
Speaker 1: and said to this Solicitor General, what what is the
Speaker 1: statute of limitations on that? And I think the response
Speaker 1: was five years, which, you know, maybe we get into
Speaker 1: the next of the next president. And so all of it.
Speaker 1: It's if I'm a company facing hundreds of billions of
Speaker 1: dollars of liability exposure and you're dealing with the president
Speaker 1: who sometimes changes his mind or sometimes likes to use
Speaker 1: leverage against you. I'm not going to take that on.
Speaker 1: And so this law does have a provision that allows
Speaker 1: a ninety day extension of the president to issue a
Speaker 1: ninety day extension of that January nineteenth deadline. It's not
Speaker 1: entirely clear though, that you can extend after January nineteen
Speaker 1: once the law is in place. Maybe he can extend
Speaker 1: it after it's already in place, but it's much clear
Speaker 1: that President Biden could extend it today. The problem is
Speaker 1: the law says you can't just extend an agreement there
Speaker 1: extend the ban because you want to. You have to
Speaker 1: extend it because ByteDance has shown that it's entered into
Speaker 1: an agreement to do a divestiture. So that would have
Speaker 1: to apply for President Trump to use this extension power,
Speaker 1: even if he could, even if you can grant an
Speaker 1: extension of something that already took effect. And all of
Speaker 1: this turns on whether the companies are willing to gamble
Speaker 1: that Trump is right that he can extend it, and
Speaker 1: that that they're not going to at least a crew
Speaker 1: theoretical billions of dollars of liability on that date. If
Speaker 1: I'm a company facing that sort of risk, I'm not
Speaker 1: sure I can take my chances. Even if I want
Speaker 1: to appeal to the new administration and let him, you know,
Speaker 1: try to save the save the app, I'm not sure
Speaker 1: I can take on that risk.
Speaker 2: Yeah, So let's talk about what it means practically for
Speaker 2: some of these companies. First of all, you know what
Speaker 2: companies are we talking about? If Trump can't stop the
Speaker 2: law from operating, you know, what does it mean for
Speaker 2: the companies that host TikTok, companies that compete with TikTok,
Speaker 2: people who use TikTok, and what companies are we talking about?
Speaker 1: Yeah? So, I mean, I think you're you're thinking about
Speaker 1: a major op opportunity for TikTok social media competitors in
Speaker 1: the United States, And you're talking about YouTube shorts, You're
Speaker 1: talking about Meta's products, all those all those users, one
Speaker 1: hundred and seventy million users are going to need to
Speaker 1: go somewhere as a we should caution though. I think
Speaker 1: you're going to see social media posts on TikTok on
Speaker 1: January twenty first saying look nothing happened. You know, look
Speaker 1: I'm still here, and but it's very possible that that
Speaker 1: even with you know, these changes, TikTok tries to host
Speaker 1: outside of the US. As I said, it doesn't immediately
Speaker 1: strip the app off people's phones, but I think I
Speaker 1: think there's likely to be a decline. You know, the
Speaker 1: companies have said it in various ways. TikTok said, I
Speaker 1: think they was going to lose something like twenty five
Speaker 1: percent or in that ballpark of its revenue. With a
Speaker 1: thirty thirty day band it would lose a quarter of
Speaker 1: its revenue, something like a quarter of its users. So
Speaker 1: it's just big opportunities for TikTok's leading social media competitors
Speaker 1: in the United States. In terms of risks, there's risks,
Speaker 1: as I said, for all these companies that host the
Speaker 1: app currently, Apple and Google in their app stores probably
Speaker 1: want to think about whether they want to keep doing that. Oracle,
Speaker 1: which hosts the app on servers now, potentially Amazon or
Speaker 1: other companies that host it in the cloud in the
Speaker 1: United States face potential liability.
Speaker 2: Great, I'm just looking through the Q and A right now. Okay,
Speaker 2: sorry if I'm not able to summarize the questions because
Speaker 2: I'm looking at them for the first time. I had
Speaker 2: heard that If the January nineteenth law goes into effect,
Speaker 2: the most noticeable effect would be the app disappearance from
Speaker 2: the app store, given the penalties on app store providers. However,
Speaker 2: you mentioned ISPs also being at risk for penalties. Does
Speaker 2: that mean it's likely that ifs COTUS does not intervene,
Speaker 2: that TikTok will be effectively wiped from the US internet
Speaker 2: and devices. Thanks for the great coverage, this person says.
Speaker 1: Oh, okay, that's nice. There's a question about Internet service
Speaker 1: providers generally, whether they're subject to the law. I've seen
Speaker 1: people arguing about that and whether you know, if you're
Speaker 1: going to get forget the app, if you're going to
Speaker 1: try to go you know, using other ways, just using
Speaker 1: your internet service provider, is it a risk to those companies.
Speaker 1: The law is not very clear on that, and it's
Speaker 1: certainly true that look, January nineteenth is not TikTok disappear
Speaker 1: from the world day. TikTok could come up with workarounds
Speaker 1: oracles hosting in the United States, they maybe they can
Speaker 1: shift that to Canada or some other place. The law
Speaker 1: only applies to to operations in the United States. But
Speaker 1: if I'm a competitor to TikTok. I'm certainly going to
Speaker 1: play up the risks of continuing to use the app
Speaker 1: after January nineteenth, the idea that Congress said, look, you
Speaker 1: you can't maintain or update this app anymore after January
Speaker 1: nineteenth in the United States? Do you want to keep
Speaker 1: using that? I got to think for competitive reasons, some
Speaker 1: companies have an incentive to play that up. And then
Speaker 1: there's this questions of practically with the hosting. I think
Speaker 1: there's other hosting in the cloud that probably on the
Speaker 1: back end is going on in the United States. I
Speaker 1: think that could be disruptive on its own. So yeah,
Speaker 1: don't think of it as go dark immediately, although there
Speaker 1: was some language about that in the argument today. I'm
Speaker 1: not sure that it will go dark immediately, but I
Speaker 1: think it's going to be a major change for the
Speaker 1: system going forward.
Speaker 2: And here's the question that has to do with the algorithm.
Speaker 2: Can't TikTok just sell the US brand in the one
Speaker 2: hundred and seventy million users, but not the algorithm. This
Speaker 2: person doesn't see bike Dance selling the algorithm, you know,
Speaker 2: instead maybe taking it right down of the of one
Speaker 2: hundred and seven million users.
Speaker 1: That's that's a possibility. So right now we've had no
Speaker 1: indication that byte edance is willing to do anything, and
Speaker 1: and so is it willing to leave all that on
Speaker 1: the table and not do any deal. It would be
Speaker 1: a surprise, I think if they said, oh, we're not
Speaker 1: going to do anything. So that is one way to
Speaker 1: do it. If if China won't approve the sale of
Speaker 1: an algorithm, they can they can sell all the other pieces.
Speaker 1: It's going to at least if you believe the argument
Speaker 1: that TikTok made today, the algorithm is what makes TikTok TikTok,
Speaker 1: and and so there there's there's at least a question
Speaker 1: of whether TikTok is going to be the same if
Speaker 1: it continues with the same users and the same website
Speaker 1: but and the same name, but but not the secret
Speaker 1: sauce that makes it run. But that's absolutely a possibility
Speaker 1: under the law. The big unknown is whether China byte
Speaker 1: Dance is willing to bite Dance, is whether they're willing
Speaker 1: to go there with that sort of sale.
Speaker 2: And one last user question, this has to do with
Speaker 2: a sort of a federalism question. Trump's in charge of
Speaker 2: dr J, of course, but he can't really control what
Speaker 2: states do. So do the states have their do the
Speaker 2: states have to do their own ban if they wanted
Speaker 2: to ban from their state, since the federal government wouldn't
Speaker 2: enforce it. If the federal government doesn't enforce it under Trump.
Speaker 1: Yeah, I mean, I guess that's that's a possibility that
Speaker 1: this this whole saga started Montana, I think past the
Speaker 1: first man of TikTok And and I think that the courts,
Speaker 1: you know, had had some issues with that because in
Speaker 1: part because look, this is better suited for the federal
Speaker 1: government to address on a national scale. But that's a possibility.
Speaker 1: We've seen that in other areas as the federal government
Speaker 1: is pulling back on its regulation, the states stepping up theirs.
Speaker 1: So that's that's that's a creative idea. It's it's a
Speaker 1: possibility going down the road. But I'm not sure that that.
Speaker 1: I'm not sure the federal government can really pull this away.
Speaker 1: The legal way to do that is for Congress to
Speaker 1: step back in and if President Trump could go to
Speaker 1: Congress and convince them, look, we made a mistake on
Speaker 1: this whole band thing. Let's let's push it off for
Speaker 1: a year or something along those lines. That's the that's
Speaker 1: the way to address this, if you know properly. The
Speaker 1: hard thing is this passed by such overwhelming bipartisan you know, measure,
Speaker 1: but such a bipartisan measure that I'm not sure Trump
Speaker 1: could could do that. I'm not sure you'd want to
Speaker 1: spend the political capital to do that. So I think
Speaker 1: the federal regime is likely to stay in place because
Speaker 1: of the concerns about the liability exposure that those companies
Speaker 1: are going to see no matter what Trump says about
Speaker 1: warm spots in his heart.
Speaker 2: And that's it for the Q and A man.
Speaker 1: Okay, Okay, great, So I think that's it today. If
Speaker 1: there are more questions, please reach out to Elliott or
Speaker 1: or me at any time on the Bloomberg terminal. Thank
Speaker 1: you so much for joining us today and hope to
Speaker 1: see you again sometime soon.
Speaker 2: M Yeah,