According to the Washington Post, on April 23 local time (morning of April 24 Beijing time), the U.S. Senate passed the “sell or ban” bill targeting TikTok, which has received explicit support from the current U.S. President Biden. He will sign this bill into law.
Under the bill, ByteDance, the parent company of TikTok, is given one year to find a buyer for the app. If the transaction is not completed within the stipulated time, TikTok will face serious consequences, including being removed from U.S. app stores and banned by web hosting companies.
The bill received overwhelming bipartisan support in both houses of Congress: on April 20, the House of Representatives approved the TikTok-related sections by a vote of 360 to 58; on April 23, the Senate passed the bill with a high vote of 79 to 18.
The cleverness of the House lies in tying the TikTok bill to a foreign aid package worth $95 billion, which forced the Senate to expedite the processing of these bills. It can be said that through this ingenious tactic, the House successfully pushed through the TikTok bill.
On the Edge of a Cliff
TikTok has been pushed to the brink. Firstly, U.S. lawmakers have taken action against TikTok, with backing from the White House, implementing legal restrictions. This move by the House of Representatives comes after years of attempts to ban TikTok, culminating in a more precise and effective strategy to achieve their goals while avoiding any potential obstacles that could hinder the legislation.
Moreover, TikTok is also facing shifting regulatory attitudes from the European Union and Kyrgyzstan.
On April 22, the European Commission initiated a new investigation into TikTok Lite, a simplified app version launched in France and Spain. The focus is on potential addiction issues among children and the lack of risk assessment and mitigation measures. The Commission has demanded a risk assessment report from TikTok within a concise timeframe, or the company could face substantial fines.
Simultaneously, Kyrgyzstan has unexpectedly banned TikTok. Despite frequent interactions with China and relatively free information space, the recent tightening of speech and information control in the country is concerning and adds to the uncertainty of TikTok’s international expansion.
Hanging by A Thread but Still Fighting
Despite facing significant pressure and challenges, TikTok has not chosen to give up.
As the bill passed in March, TikTok quickly implemented various measures to proactively respond, including launching a splash screen for users and initiating lobbying efforts in Washington, D.C. Additionally, Shou Zi Chew released a response video outlining the company’s stance and position.
TikTok claimed that the recent amendment, passed on April 20, violates the free speech rights of 170 million Americans. It also stated that the amendment could harm 7 million businesses and endanger a platform that adds $24 billion yearly to the U.S. economy.
These actions and statements by TikTok demonstrate its determination to defend its rights and status. Furthermore, public figures like Elon Musk and Hu Xijin have publicly opposed the ban on TikTok on social media.
The Dilemma And the Obstacles of Chinese Companies Going Global
No matter what the future holds for TikTok, it is in a challenging and complex environment. For this globally oriented company with Chinese roots, integrating smoothly into local regulations has become a critical issue to address in its internationalization efforts.
If the US successfully bans TikTok through legal measures, other countries like Canada, the EU, and the UK may likely follow its lead. This loss of significant markets could substantially reduce TikTok’s influence on global content, potentially confining its operations to regions like Latin America, Southeast Asia, and some unstable Middle Eastern markets. Such a development would challenge TikTok’s ability to maintain its international stature.
To overcome these challenges, TikTok must strive independently and seek support from other Chinese companies with international aspirations. These businesses must collectively determine how much leverage they hold on the global stage. TikTok’s strategies will largely dictate the bargaining power of all Chinese international companies in the worldwide market.
Although the current legislation targets TikTok, if it becomes effective, it could theoretically extend to all the US-operating companies with Chinese origins, including Temu and Shein. This means the US market could be a potential risk factor for these businesses, facing unfair competition if they threaten American interests.
TikTok is a significant gateway for cross-border e-commerce, with hundreds of millions of users each month showing a strong desire to purchase after viewing videos. In China, the live streaming and content-driven e-commerce model on short video platforms has been hugely successful, a trend gradually spreading to North America. In 2023, the surge in Chinese companies expanding overseas continued, with notable achievements by companies like SHEIN, Aliexpress, and TEMU.
According to data from China’s Ministry of Commerce, the total value of cross-border e-commerce in and out of China reached 2.38 trillion yuan in 2023, up 15.6% year-on-year, with exports increasing by 19.6%. Cross-border e-commerce has become a new choice for many export-oriented companies, especially those reliant on short video platforms with visible growth potential.
Before this controversy, TikTok’s e-commerce had set a lofty target of $50 billion GMV for 2024, doubling from the $20 billion target in 2023. With the bill’s passage, many domestic small and medium-sized merchants are inevitably affected. Industry insiders point out that many Chinese cross-border e-commerce businesses operating accounts and selling products on TikTok will face significant impacts if TikTok is shut down in the US.