Speaker 1: Bloomberg Audio Studios, podcasts, radio news. A ban on TikTok
Speaker 1: passed by Congress last April is set to take effect
Speaker 1: this coming Sunday.
Speaker 2: They call it a divest or ban measure, so basically,
Speaker 2: the measure calls upon byte Dance to sell TikTok before
Speaker 2: January nineteenth or face a ban.
Speaker 1: Sarah Forden runs Bloomberg's legal team, which has been covering
Speaker 1: a challenge to that law filed by TikTok and some
Speaker 1: of its users last year. At issue is TikTok's ownership.
Speaker 1: Even though the hugely popular social media app is technically
Speaker 1: run by an American company, it's owned by byte Dance,
Speaker 1: which is a Chinese tech giant, and the nature of
Speaker 1: the relationship between byte Dance and the Chinese government has
Speaker 1: raised national security concerns for US intelligence officials and US
Speaker 1: lawmakers for years. One worry is that the app could
Speaker 1: give China acts to American phones and American data. Another
Speaker 1: is about whether the apps algorithm could be used to
Speaker 1: influence politics or spread disinformation. TikTok has been adamant that
Speaker 1: these concerns are unfounded, and their lawsuit has made it
Speaker 1: all the way to the US Supreme Court, So this.
Speaker 2: Case really picks national security interests against free speech.
Speaker 1: On Friday, the Court indicated it's likely to uphold the
Speaker 1: divest or ban law, bringing months of debate to a head.
Speaker 1: That means if ByteDance doesn't sell, the ban could go
Speaker 1: into effect in just a few days.
Speaker 2: So they still have time. You know, obviously the clock
Speaker 2: is ticking.
Speaker 1: But there's another major player complicating this case, President elect
Speaker 1: Donald Trump. He said he opposes the ban and wants
Speaker 1: to negotiate a deal himself. And the day after TikTok's
Speaker 1: January nineteenth deadline is inauguration day. This is the take
Speaker 1: from Bloomberg News. I'm Sarah Holder today on the show.
Speaker 1: The TikTok case could get decided by the Supreme Court
Speaker 1: any moment now. If the ban goes into effect, what
Speaker 1: would that mean for the apps one hundred and seventy
Speaker 1: million users, for competitor tech platforms, and for US China relations.
Speaker 1: And how could Trump's imminent inauguration call the decision into question? Sarah,
Speaker 1: It seems like it's actually getting closer to happening. The
Speaker 1: Supreme Court indicated last week that it is likely to
Speaker 1: uphold a US law banning TikTok if it's Chinese parent
Speaker 1: company ByteDance doesn't sell to an American firm by January nineteenth,
Speaker 1: walk us through how we got here. When did Washington
Speaker 1: first start raising these concerns about TikTok's ownership.
Speaker 2: Mean, there have been concerns about TikTok's ownership floating around
Speaker 2: Washington for years. And if you go back even to
Speaker 2: the first Trump administration, he himself was proposing a ban
Speaker 2: in past, an executive order banning TikTok, which then got
Speaker 2: hung up in the courts. So intelligence circles, national security
Speaker 2: circles have been expressing concerns that TikTok could provide a
Speaker 2: tool for the Chinese government to both a spy on
Speaker 2: and collect data on American citizens, but also use the platform,
Speaker 2: which is highly wildly popular, use it to influence people,
Speaker 2: feed them, you know, surreptitious information with goals of creating
Speaker 2: unrest and divisiveness in this country.
Speaker 1: What do we know about the extent of the relationship
Speaker 1: between the Chinese government and ByteDance. Is there evidence that
Speaker 1: China could use TikTok to spy on people in the US?
Speaker 2: You know, TikTok's leadership in the US is adamant that
Speaker 2: there is a wall between the company and the Chinese
Speaker 2: government that they don't share any data. But the fact
Speaker 2: is this is an autocratic regime and companies would have
Speaker 2: to comply if the government said it wanted certain information
Speaker 2: or to use the platform in a certain way. So
Speaker 2: no lawmakers or government officials have provided broad evidence of this.
Speaker 2: But last year there were intelligence briefings on the Hill
Speaker 2: that led to Congress. You know this incredibly, like divided
Speaker 2: Congress came together in a flash to pass this law
Speaker 2: banning TikTok. So whatever material they got in those briefings
Speaker 2: was compelling enough to prompt them to act.
Speaker 1: So that law passed in April. Why wasn't TikTok just
Speaker 1: immediately sold? Were there any American companies who are jumping
Speaker 1: at the chance to own TikTok?
Speaker 2: I mean, there was a deal proposed, again going back
Speaker 2: to the first Trump administration. He was working with Microsoft
Speaker 2: and with Oracle, and the idea was that Oracle would
Speaker 2: host the platform, and that deal fell apart. It never
Speaker 2: came to fruition. There are several American is this men
Speaker 2: who have just in the past few days come forward
Speaker 2: and saying they want to buy TikTok Frank McCourt and
Speaker 2: Kevin O'Leary. Kevin O'Leary was just reportedly in mar Lago
Speaker 2: talking about this transaction.
Speaker 1: Frank McCourt is a real estate mogul and former owner
Speaker 1: of the Los Angeles Dodgers, and Kevin O'Leary is an
Speaker 1: investor on Shark Tank.
Speaker 2: The other important distinction in this latest deal that Kevin
Speaker 2: O'Leary and McCord are talking about apparently, again according to reports,
Speaker 2: they're not interested in buying the algorithm. Well, the algorithm
Speaker 2: is really the crown jewel of the platform, and that's
Speaker 2: also where all the data is stored and processed. So
Speaker 2: raises the question of would a sale actually achieve the
Speaker 2: goals of this law if the algorithm isn't included. But
Speaker 2: all of this really still begs the question of whether
Speaker 2: Byte Dance would approve a sale, and we haven't seen
Speaker 2: an indication that they would be open to this.
Speaker 1: So Bite Dance is resistant to a sale. TikTok filed
Speaker 1: this lawsuit and now the case is up at the
Speaker 1: Supreme Court. What are the key arguments for and against
Speaker 1: this TikTok ban.
Speaker 2: TikTok is arguing that this law is unconstitutional and that
Speaker 2: it violates the free speech rights both of the company
Speaker 2: and of the users on the platform. And so as
Speaker 2: the arguments unfolded, there were a lot of questions about
Speaker 2: whose speech is being violated here and who has the
Speaker 2: right to free speech in the US. So, for example,
Speaker 2: some of the justices observed that foreign entities don't have
Speaker 2: the same free speech protections as US citizens. So while
Speaker 2: TikTok is a US company, it is owned by a
Speaker 2: Chinese company. So there was a lot of discussion around that,
Speaker 2: What about the speech rights of the one hundred and
Speaker 2: seventy million users of the platform? Are they protected in
Speaker 2: this case? But then, you know, the Solicitor General, arguing
Speaker 2: for the US Justice Department, pointed out that this really
Speaker 2: isn't about the speech rights of the users of the platform.
Speaker 2: This is about a ban against this you know, streaming
Speaker 2: platform and the national security interest that it raises. So
Speaker 2: they're arguing kind of across each other.
Speaker 1: What was the upshot of these oral arguments.
Speaker 2: So they didn't issue a decision, but they could rule
Speaker 2: soon as this week. Our expectation is that they will
Speaker 2: probably uphold the band judging from you know, the commentary
Speaker 2: that that we heard. But again, nothing is nothing is sure,
Speaker 2: nothing is set yet.
Speaker 1: Has ByteDance indicated any openness to selling off TikTok to
Speaker 1: avoid losing its American user base.
Speaker 2: Byte Dance has absolutely said it's not going to sell TikTok.
Speaker 2: It has no desire and it doesn't have any compunction
Speaker 2: to sell TikTok. So, you know, this could lead to
Speaker 2: a real flare up in US China relations in addition
Speaker 2: to to the business situation.
Speaker 1: After the break, we look at how a TikTok band
Speaker 1: could actually play out and how Trump's return to office
Speaker 1: could change everything. The Supreme Court's decision on the lawsuit
Speaker 1: challenging Congress's TikTok ban is expected to come down this week.
Speaker 1: Bloomberg's legal editor Sarah Forden, has been following the court
Speaker 1: case closely for months and looking into the possible outcomes
Speaker 1: if a ban is upheld by the Supreme Court, what
Speaker 1: happens next.
Speaker 2: One of the requests was to try to postpone this
Speaker 2: law going into effect, to delay it until Trump gets
Speaker 2: into office, because now he has flip flopped and said
Speaker 2: he has warm feelings about TikTok, and he's the great negotiator,
Speaker 2: and you know he should be able to get into
Speaker 2: office and help them negotiate a deal. So one possibility
Speaker 2: that the Supreme Court has is to delay the ban
Speaker 2: until he gets into office, and then you sort of
Speaker 2: what happens next. I mean, technically, the Justice Department is
Speaker 2: responsible for enforcing the ban, but if Trump is in
Speaker 2: office and he could tell his Attorney general not to
Speaker 2: enforce it, for example, and there are other scenarios that
Speaker 2: could play out, he could go back to Congress and
Speaker 2: ask them to revise the law. So it's really still
Speaker 2: a very fluid situation with not a clear solution or
Speaker 2: resolution in sight.
Speaker 1: Yet how likely are those scenarios? What has Trump said
Speaker 1: about his stance on the ban and how do you
Speaker 1: explain his position towards keeping TikTok running in the US?
Speaker 2: Well, so, the TikTok community was really critical in his
Speaker 2: winning the election, so he's very mindful, you know that
Speaker 2: he owes them a favor, and so he's come back
Speaker 2: and said that he doesn't think it should be banned,
Speaker 2: that it should be sold to a US company, and
Speaker 2: that he's in a great position to make that happen.
Speaker 1: So let's say bye Dance. It doesn't sell, it doesn't
Speaker 1: find an American buyer, it doesn't want to find an
Speaker 1: American buyer. Trump doesn't weigh in in time, and the
Speaker 1: ban is upheld. What actually happens on January nineteenth? How
Speaker 1: do you actually get TikTok off American phones?
Speaker 2: Yeah, so this came up in the Supreme Court arguments
Speaker 2: and the lawyer for TikTok was arguing that, you know,
Speaker 2: basically the whole platform would go dark, you know, on
Speaker 2: January twentieth. That actually isn't the case as far as
Speaker 2: we can see, because what would happen is that the
Speaker 2: app stores, so Google an Apple would be required to
Speaker 2: remove the app from the app store, so you can't
Speaker 2: sign up anymore. But the people who already have TikTok
Speaker 2: on their phones could keep using it. But then the
Speaker 2: idea is that they wouldn't be able to get updates,
Speaker 2: you know, TikTok wouldn't be able to continue, you know,
Speaker 2: offering the service, and so gradually those apps on those
Speaker 2: phones would become dysfunctional.
Speaker 1: How are competitor apps like metas Real performing? Are we
Speaker 1: seeing TikTokers preemptively head to other platforms. These other platforms
Speaker 1: kind of courting these TikTokers. Where does that stand?
Speaker 2: Well, surely it's a very competitive atmosphere, and the people
Speaker 2: who oppose a TikTok band also say that it would actually,
Speaker 2: you know, just basically be sort of giving that, you know,
Speaker 2: swath of the market to meta to the others. At
Speaker 2: the same time, the TikTok creators themselves are starting to
Speaker 2: think about what possible workarounds do they have. Could they
Speaker 2: use VPNs to access the platform to make it look
Speaker 2: like they're not in the United States. So the content
Speaker 2: creators are on the one hand trying to protect their
Speaker 2: assets on the platform, but at the same time trying
Speaker 2: to get ready to jump if they have to.
Speaker 1: Right now, the app is full of users trying to
Speaker 1: game out their next moves.
Speaker 2: I am in a full state of denial that this
Speaker 2: is the last Sunday I'll be able to doom scroll TikTok.
Speaker 2: What are we doing? Where we're going? Just try scrolling
Speaker 2: for Instagram.
Speaker 1: I didn't laugh one time. And some TikTok creators are
Speaker 1: actually involved in this case, right.
Speaker 2: So we had three parties arguing we had TikTok, we
Speaker 2: had lawyers for the content creators themselves who are arguing
Speaker 2: that this is really going to hurt their livelihood and
Speaker 2: their free expression. So they're being very vocal that they
Speaker 2: want to have a say here and they're really standing
Speaker 2: up for their right to continue to use this platform.
Speaker 1: At the end of the day, what would this mean
Speaker 1: for the TikTok economy? All of these influencers we've talked
Speaker 1: about and small business owners who sell goods and services
Speaker 1: through TikTok brands who partner with influencers to get their
Speaker 1: products out there. Could this cause like a huge ripple
Speaker 1: effect on the economy.
Speaker 2: Well, clearly there's a big chunk of the economy tied
Speaker 2: up in here, and that's one of the reasons why
Speaker 2: this case has gone as far as it has. At
Speaker 2: the same time, though, I mean, the tech market is
Speaker 2: highly disruptive and use to disruptions, and people can jump
Speaker 2: quick and new platforms can come into effects. So I think, yes,
Speaker 2: a big chunk of business would go away, and that's
Speaker 2: why the influencers are so concerned. But at the same time,
Speaker 2: there are other opportunities out there.
Speaker 1: We'll be following this story as it unfolds this week
Speaker 1: for more reporting and updates on TikTok. Go to Bloomberg
Speaker 1: dot com. This is the Big Take from Bloomberg News.
Speaker 1: I'm Sarah Holder. This episode was produced by Julia Press.
Speaker 1: It was edited by Michael Sheppard and our senior producer
Speaker 1: Naomi Shaven. It was mixed and sound designed by Alex Huguiera.
Speaker 1: It was fact checked by Adrianna Tapia. Our senior editor
Speaker 1: is Elizabeth Ponso. Our executive producer is Nicole Beemster. Bor
Speaker 1: Sage Bauman is Bloomberg's head of podcasts. If you liked
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