Explainer-What will happen to TikTok in US as Supreme Court upholds ban?
2025.01.17 12:24
By Sheila Dang and Jaspreet Singh
(Reuters) -The U.S. Supreme Court on Friday ruled against TikTok’s bid to avoid a ban that could shut the app down in just two days and impact millions of users who rely on the platform for entertainment, ecommerce and ad dollars.
The looming ban is the end result of 2024 legislation passed on national security concerns that called for TikTok parent ByteDance to sell the popular short-video app or see it shut in the United States on Jan. 19.
It remained unclear how long a potential ban would stay in place as President-elect Donald Trump, who takes office on Monday, has said he would try to find a “political resolution” of the issue to keep the app operating in the United States.
On Friday, Trump said he spoke with Chinese leader Xi Jinping on several topics, including TikTok.
Here’s what could happen on Sunday.
WHAT HAPPENS TO THE APP?
New users will not be able to download TikTok from Apple (NASDAQ:) and Google (NASDAQ:) 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.
Cloud service provider Oracle (NYSE:) 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 it to app stores.
TikTok plans to keep paying its 7,000 employees in the U.S., the company’s leadership has said in an internal memo.
HOW WILL USERS BE AFFECTED?
TikTok’s about 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 redundant.
At best, a web-based version of the service might be accessible that has fewer features than the app, and even that might not work, experts have said.
Some users could try to access TikTok through virtual private networks, or VPNs, which can conceal the internet protocol, or IP, address of a user and thereby their location.
Other Chinese social media apps such as RedNote, known in China as Xiaohongshu, are expected to continue gaining traction among U.S. users.
Content creators who have built businesses from their TikTok followings are preparing for the app’s potential shutdown and redirecting their followers to alternatives such as Instagram and YouTube.
WHAT WILL ADVERTISERS DO?
Advertisers have rushed to prepare contingency plans this week as the ban will jeopardize their campaigns on the platforms. One marketing executive described it as a “hair on fire” moment for the ad world, after months of conventional wisdom saying that a solution would materialize to keep the short-video app up and running.
TikTok has continued to pitch advertisers on new features, like a tool launching in test form that would make it easier to create, modify and add advertisements in bulk.
If a ban does occur, more than $11 billion in annual U.S. ad investment would be up for grabs, according to a forecast from marketing group WARC Media.
“Wall Street will be watching the results of Meta (NASDAQ:), Snap, and others to see who benefits from this rapid spend shift,” said Craig Atkinson, CEO of digital marketing agency Code3.
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.
WHAT HAPPENS TO U.S.-CHINA TRADE RELATIONS?
A TikTok ban could worsen trade tensions between the U.S. and China that were already strained after export curbs on advanced American semiconductor technology to Beijing.
However, “such a ban would be no surprise as it has been under discussion for five years,” said Sean Ennis (NYSE:), professor from the University of East Anglia.
Trump could try to use an executive action to protect TikTok for his four years in office, but he could use the risk of him changing his position to extract something meaningful from China, analysts at LightShed Partners have said.
Reversing the ban could give Trump some bargaining power with China, analysts say.
WHO ARE THE 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. His consortium values the app without its algorithm at around $20 billion.
Other media have reported that Chinese officials are in talks about potentially selling TikTok’s U.S. operations to billionaire Elon Musk, a big financial backer of Trump. TikTok called the report “fiction”.
