TikTok's potential ban is signed by Biden. Here's what comes next.

By Robert SchroederVictor Reklaitis

Popular app has one year to ditch its Chinese ownership before any ban would take effect

President Joe Biden on Wednesday signed legislation that could lead to a nationwide ban on TikTok, acting after the U.S. Senate passed it as part of a broader measure to provide support to Ukraine, Israel and other U.S. allies.

The bill passed the Senate on an overwhelming and bipartisan 79-18 vote, after the House of Representatives passed the measure last weekend. It would ban TikTok in the U.S. if the video-sharing app continues to be controlled by its Chinese parent company, ByteDance Ltd.

The bill had originally included a provision requiring ByteDance to divest itself of TikTok within six months, but House Speaker Mike Johnson and other top House Republicans tweaked the legislation to stretch that deadline to a year.

Also read: Long congressional battle over Ukraine funds set to end as Biden signs aid bill

Next up: a legal battle.

"This unconstitutional law is a TikTok ban, and we will challenge it in court," the company said in a post on Wednesday. In a separate post, TikTok CEO Shou Zi Chew called the bill and Biden's signature "a ban on you, and your voice."

Supporters of the measure have argued that the popular app is a threat to national security and have raised data-privacy concerns around it.

A TikTok spokesperson has said the U.S. government is "attempting to trample the free-speech rights of 170 million Americans and devastate 7 million small businesses nationwide."

Related: Here are the lobbyists working to keep TikTok on U.S. phones

Analyst Ed Mills of Raymond James noted that the judicial review of any lawsuit brought by TikTok is limited to the D.C. Circuit Court of Appeals, which could speed up any litigation "and increase the probability the bill is upheld."

In a note Sunday, he wrote: "Our base-case is that China will not allow divestment and TikTok will no longer operate in the U.S. in 2025."

Washington's action on TikTok is positive for companies with rival social-media platforms, like Meta Platforms Inc. (META), Snap Inc. (SNAP) and Alphabet Inc.'s (GOOG) (GOOGL) Google business, according to TD Cowen analysts.

Some Western investors have expressed interest in buying TikTok's U.S. operations, among them Steven Mnuchin, who served as Treasury secretary in the Trump administration, and "Shark Tank" reality-TV personality Kevin O'Leary.

See: Steven Mnuchin says he's gathering investors to explore TikTok purchase

-Robert Schroeder -Victor Reklaitis

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04-24-24 1155ET

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