The prospects of TikTok getting banned in the US increased dramatically after the House of Representatives passed legalization that would lead to a ban on the popular short video app if its Chinese parent company, ByteDance, does not sell its stake within a year.

The new measure, passed with a 360-58 majority, gives ByteDance up to a year to sell TikTok. The previous bill passed by the House last month gave the Chinese company a six-month ultimatum but the Senate has yet to vote on it.

Talks of banning TikTok in the US have been around for around for almost four years which coincides with the runup to the 2020 US presidential elections where incumbent Donald Trump took a hard line on China.

Trump issued an executive order in August 2020 that gave TikTok 90 days to either sell its US assets to a US-based company or shut its operations in the country. However, Trump lost his election and a TikTok ban went into cold storage even as the country subsequently banned federal employees from using the app on state devices.

Cut to 2024, and Trump has toned down his rhetoric against TikTok and even said that he was against a TikTok ban. He argues that the bill would only act to strengthen Facebook, which he sees as a mortal enemy because of its controversial content moderation practices that may have favored his opponent including restricting Hunter Biden laptop stories. However, House Republicans managed to include the TikTok ban as part of the foreign aid package that President Joe Biden proposed for Ukraine and Israel.

Meanwhile, as the bill to ban TikTok gains traction in Washington, Erich Andersen, general counsel for TikTok and ByteDance is planning to leave the company.

“As I started to reflect some months ago on the stresses of the last few years and the new generation of challenges that lie ahead, I decided that the time was right to pass the baton to a new leader,” said Andersen in an internal note that was viewed by the Wall Street Journal.

Would the US Ban TikTok This Time?

To be sure, there are genuine concerns over TikTok being a security threat as, according to Chinese law, ByteDance could be forced to assist in national intelligence efforts, likely including sending US user data to the government. While ByteDance has denied it would ever do so, the assertion has failed to cut ice with many governments globally.

India banned TikTok in 2020 after a border clash with China while countries like the UK, Canada, and Australia have barred government employees from using TikTok.

Concerns over TikTok sharing data with China gained further impetus after multiple former TikTok employees came forward with allegations that the social media service’s operations were closely intertwined with their Chinese parent company, ByteDance, during their tenures, casting serious doubt on the company’s assertions of autonomy.

Reacting to the new bill being passed to ban TikTok in the US, the company reiterated its previous comments when the package was introduced and said it was “unfortunate that the House of Representatives is using the cover of an important foreign and humanitarian assistance to once again jam through a ban bill.” This part is important because it may actually force the Senate to vote on the wide-ranging bill.

Because the TikTok forced sale or ban is included in the same massive proposal along with the nearly $100 billion in foreign aid, the Senate is much more likely to vote it into law. The Senate, like the House, is desperate to send as much US taxpayer money as possible to Ukraine and Israel, so it will almost certainly pass the entire bill. Likewise, President Biden will no doubt sign it once it reaches his desk.

China Is Against a Forced Sale of TikTok

Assuming the Senate and Biden give the ok on the massive bill that includes the TikTok provision, there is just one question left: will ByteDance sell or let TikTok be banned? It seems like an obvious question because TikTok is easily worth 10s of billions of dollars because of its almost fanatical user base of over 150 million Americans. However, the TikTok content recommendation algorithm, credited with much of the platform’s success, might be so valuable that ByteDance (and the Chinese government, if it steps in) may simply let the platform get banned instead of selling it to US competitors.

On the other hand, ByteDance may be able to find a way to pawn off the TikTok brand and basic functionalities without being forced to sell the priceless algorithm. This would be better for the 150 million Americans who use the app but it will likely provide a significantly worse experience. Furthermore, if it is bought by a greedy or inexperienced buyer, it could make changes that hurt the app even more.

We will simply have to wait and see what ByteDance decides to do from here, assuming the bill becomes law (and isn’t struck down in the courts).

Expect the US-China Tech War to Escalate

Whether the US bans TikTok or forces it to sell a stake, it would only add fuel to the ongoing US-China tech war as China has signaled that it won’t allow a forced sale.

Relations between the world’s two biggest economies have already been strained over multiple issues including over US ban on exports of high-end chips to China over possible military use.

There is an apparent “AI war” going on between the two countries and the US move to ban exports of high-end chips could stall the progress that Chinese companies are making in AI.

The escalating tech war is impacting the fortunes of US companies as well. Nvidia for instance has warned that its long-term competitiveness in China – which accounted for 20% of its data revenues before the ban – might be negatively impacted and it would lose out on business in the country.

US Companies Doing Business in China Are Also at a Receiving End

Apple is also at the receiving end, and many Chinese consumers seem to be preferring domestic Chinese brands, especially Huawei, which achieved a chip breakthrough despite crippling US sanctions.

As for banning TikTok, the bill is set to face legal challenges. TikTok’s head of public policy for the Americas, Michael Beckerman, told staff in a memo, “At the stage that the bill is signed, we will move to the courts for a legal challenge.”

He added, “We’ll continue to fight, as this legislation is a clear violation of the First Amendment rights of the 170 million Americans on TikTok.”

However, if the US indeed bans TikTok, it would be a boost for companies like Facebook’s parent company, Meta Platforms, Alphabet-owned YouTube, and Snap, as all of these companies lost out on advertising revenues to TikTok.

By clubbing the TikTok ban along with the foreign aid for Israel and Ukraine (which is quite important for both Congress and President Biden), the supporters of the bill have now made an action against TikTok much more likely than it ever was before.