By Sheila Dang
(Reuters) -The U.S. Supreme Court justices on Friday expressed skepticism about a challenge from TikTok and its Chinese parent company ByteDance against a law signed by President Joe Biden, which would force the sale or ban of the popular short-video app by Jan. 19 in the United States.
Some of the justices seemed to acknowledge Congress’ national security concerns over TikTok, given its ownership by what lawmakers deemed a foreign adversary.
Here’s what could happen on Jan. 19.
WHAT HAPPENS TO THE APP?
New users will not be able to download TikTok from app stores and existing users will not be able to update the app, because the law prohibits any entity from facilitating the download or maintenance of the TikTok application. In a Dec. 13 letter, U.S. lawmakers told Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL)’s Google, which operate the two main mobile app stores, that they must be ready to remove TikTok from their stores on Jan. 19.
Cloud service provider Oracle (NYSE:ORCL) could see some disruption to its work with TikTok. Oracle hosts TikTok’s U.S. user data on its servers, reviews the app’s source code and delivers the app to the app stores.
Google declined to comment, while Oracle and Apple did not respond to requests for comment.
HOW WILL USERS BE AFFECTED?
TikTok’s 170 million users in the U.S. will likely still be able to use the app because it is already downloaded on their phones, experts say. But over time, without software and security updates, the app will become unusable.
Some users have begun posting TikTok videos instructing others on how to use virtual private networks (VPNs), which mask an internet user’s location, as a way to circumvent the possible ban.
Content creators who have built businesses from their TikTok followings are preparing for the worst. Nadya Okamoto, who has 4.1 million followers and founded August, a menstrual products brand, said TikTok helped her business grow organically through viral videos. A TikTok ban could force her and other small businesses to spend more on marketing and raise their costs.
“It’s very stressful,” she said. “If TikTok goes away, we’ll be okay, but it is going to be a hard hit.”
WHAT HAPPENS TO TIKTOK’S EMPLOYEES?
TikTok’s 7,000 employees in the U.S. are still trying to figure out their fate. After a U.S. appeals court upheld the sell-or-ban law on Dec. 6, pessimism spread among staffers who began worrying about layoffs, said one current employee.
But the company has continued to make job offers for new roles, prompting some confused job seekers to seek advice on Blind, an anonymous forum for employees to discuss companies.
One user posted on Blind that they received a job offer from ByteDance in San Jose, California, starting in February. Others commented on the post, counseling the user to accept the offer and use it as leverage in other interviews.
“I signed the offer and will wait and watch how the situation unfolds,” the user said in the Blind post.
WHAT WILL ADVERTISERS DO?
TikTok’s U.S. ad revenue is expected to total $12.3 billion in 2024, according to research firm eMarketer, and while that is much smaller than Instagram owner Meta Platforms (NASDAQ:META), advertisers say TikTok’s devoted user base means some brands will try to advertise beyond Jan. 19.
“The ongoing assumption is the app might not be updatable, but you’ll see a groundswell of usage,” said Craig Atkinson, CEO of digital marketing agency Code3. The app’s e-commerce feature TikTok Shop, which lets users purchase products directly from videos, has no direct competitor that advertisers can easily switch to, Atkinson said, adding that his agency was signing new contracts with clients to build TikTok Shop campaigns even as of late December.
Some advertisers may continue spending beyond Jan. 19 on TikTok and reevaluate if the app sees declining usage or performance, said Jason Lee, executive vice president of brand safety at media agency Horizon Media.
ARE THERE POTENTIAL BUYERS?
TikTok has repeatedly said it cannot be sold from ByteDance. That hasn’t deterred billionaire businessman Frank McCourt, a former owner of the Los Angeles Dodgers baseball team who said he has secured $20 billion in verbal commitments from a consortium of investors to bid for TikTok.
McCourt has not yet spoken with ByteDance, but said he believes the Supreme Court will uphold the law requiring TikTok’s divestment, after which the parent company would be more open to sale discussions.
McCourt and his team have had “preliminary conversations” with members of the incoming administration of President-elect Donald Trump, who had tried to ban TikTok during his first term in the White House but has since reversed his views, and are also seeking a CEO to lead the app. McCourt’s business plan for TikTok includes migrating the app onto open-source technology and earning revenue through e-commerce and licensing data for AI training.
