Biden signs law requiring ByteDance to sell TikTok or face US ban – Business
President Joe Biden today signed legislation that will ban TikTok in the U.S. unless parent company ByteDance Ltd. sells the app within one year.
The Senate approved the bill a few hours earlier in a 79-18 vote. The legislation previously received the green light from the House of Representative on Sunday, a few weeks after lawmakers first submitted the initial version of the proposal.
The first iteration of the bill would have given ByteDance six months to sell TikTok. The version that became law today, which was bundled with a foreign aid package for Ukraine and Israel, extends that time frame to nine months. The law permits the deadline to be extended for 90 days provided there is “evidence of significant progress toward” a sale of TikTok.
If ByteDance fails to complete the spinoff, the video sharing app will be banned in the U.S. Upon the sale deadline’s expiration, app marketplaces such as Google Play and Apple Inc.’s App Store will not be allowed to distribute TikTok. Furthermore, data center operators will be prohibited from providing hosting services to TikTok or ByteDance.
In recent years, the company placed its data center infrastructure at the center of its efforts to stave off a U.S. ban. In 2022, TikTok detailed a $1.5 billion initiative dubbed Project Texas through which it sought to move U.S. users’ data to stateside cloud servers. In mid-2022, Bloomberg reported that the project had stalled.
After this week’s TikTok bill cleared the House on Saturday, Bloomberg cited sources as saying that ByteDance plans to “exhaust all legal actions” before considering a sale of TikTok. The company is expected to reshuffle its legal team ahead of the litigation. According to the Financial Times, ByteDance general counsel Erich Andersen will likely step down before the legal challenge.
“This unconstitutional law is a TikTok ban, and we will challenge it in court,” TikTok said in a statement. “We believe the facts and the law are clearly on our side, and we will ultimately prevail. The fact is, we have invested billions of dollars to keep U.S. data safe and our platform free from outside influence and manipulation.”
TikTok is also facing regulatory pressure across the Atlantic. On Monday, the European Union opened a probe to determine whether the app may have breached the bloc’s Digital Digital Services Act, a piece of legislation that regulates social media platforms and other online services. The investigation focuses on a version of the app called TikTok Lite that has a smaller hardware footprint than the standard edition.
Two months earlier, the EU launched another probe into the company over potential Digital Services Act violations. Each breach of the law can carry a fine equivalent to as much as 6% of a tech firm’s annual revenue. Additionally, EU officials can order companies to change business practices that run afoul of regulatory requirements.