Yes, Biden signed the bill, but securing a viable buyer will be a #TikTokChallenge

ByteDance has been given nine months to find a buyer, with a possible extension period of three months.

The bill is part of a larger foreign policy package that includes $95bn in aid for Israel, Ukraine and Taiwan. It was passed by the Senate in a 79-18 vote on Tuesday in a rare showing of bipartisan support.

Now the question remains: will ByteDance be able to find a suitable buyer and, if so, who might that buyer be?

Experts are confident that ByteDance will aggressively seek a buyer to avoid the threat of extinction in the US, even as it challenges the decision in court. But it’s sure to be a difficult needle to thread.

“Aligning interests might be tricky, as ByteDance will seek a buyer who can maintain TikTok’s global appeal and innovative edge – while also satisfying US regulatory requirements regarding data security and operational independence,” says Christopher Bouzy, founder and CEO of an emerging social media platform called Spoutible.

With bipartisan support behind the effort to force a sale, some experts believe that the US government itself might aid the video-sharing app in its quest to secure an acquisition. “The urgency and necessity created by political pressures [may] accelerate [the process],” says Majid Bahi, CEO of social media and influencer marketing agency Socially Powerful.

Of course, it’s possible that this kind of arrangement might include remediation actions required by TikTok or its buyer – a development that could further muddy the waters and turn off potential buyers, Bahi notes.

At this stage, potential contenders include tech titans like Oracle, Amazon, Microsoft or Walmart. “These companies have the firepower to get the deal done and don’t have a competing social network of their own to trigger monopoly or antitrust issues,” says Raz Romanescu, co-founder and chief executive of 10pm Curfew, a social-first publisher.

Oracle in particular is viewed as a strong contender because, since 2022, the company has stored all US TikTok user data in its US cloud infrastructure. Some experts estimate that the deal already generates over $1bn in annual revenue for Oracle.

However, some experts suggest that Microsoft might be a more natural fit.

“Microsoft’s acquisition of such a heavily consumer-focused app makes sense and would be a valuable asset – particularly in light of their growing AI initiatives,” says Mike Allton, a social media marketing expert and head of strategic partnerships at social media management platform Agorapulse. “It would also be an incredibly strategic play against Google, as TikTok Search has been detracting from Google with younger generations – something [Microsoft’s] Bing has largely been unable to accomplish.”

A handful of independent investors and investor consortiums have also thrown their proverbial hats into the ring. Trump’s former US treasury secretary, Steve Mnuchin, told CNBC last month that he planned to cobble together a group to make an offer. Kevin O’Leary, the business mogul famous for his role on ABC’s ‘Shark Tank,’ also expressed his interest to CNBC.

Around the same time, Rumble, a TikTok challenger, publicly petitioned TikTok CEO Shou Zi Chew in a letter from its CEO Chris Pavlovski that said the company wanted to “join a consortium with other parties seeking to acquire and operate TikTok inside the US.”

An offer for TikTok from our CEO @chrispavlovski pic.twitter.com/lIeZ6IXANU

— Rumble ‍☠️ (@rumblevideo) March 12, 2024

A key consideration is whether the application might be separated from its underlying technology – something that’s not out of the question (earlier this month, for example, Yahoo acquired the algorithm underlying AI-driven news aggregation platform Artifact but ditched the app).

It’s possible that ByteDance will attempt to sell the TikTok app as a shell without its infamous algorithm – in fact, the Chinese government has regulations in place that forbid the sale of content recommendation algorithms from being sold without its sign-off.

As it stands, TikTok’s current valuation hovers around $100bn, but this number would surely drop with the exclusion of its underlying algorithm. A reduced valuation would, of course, expand the list of potential buyers but would sap the value of the platform itself. (Kevin O’Leary’s initial pitch on CNBC last month included a starting bid of $20bn to $30bn – on the presumption that the app would be sold without its algorithm).

As Jasmine Enberg, a principal analyst at eMarketer specializing in social media, puts it: “The algorithm is much of what makes TikTok. Its ability to serve relevant and entertaining content to users is unparalleled and so far unreplicated in the social media world.”

And even in the case that a buyer was able to amass the resources and engineering capabilities to recreate TikTok’s powerful recommendation technology, “it can’t replicate the culture,” Enberg warns. “In that sense, TikTok’s survival is also dependent on its audience. If the uncertainty of a potential ban drives users, creators and brands away in big enough numbers, it could lead to an erosion of the app even before the legal battle reaches a conclusion – or before TikTok finds a buyer.”

Another concern is how a change of hands might itself dampen the app’s value. Sarah Oh Lam, senior fellow at the Technology Policy Institute, an independent Washington, DC-based think tank, points to billionaire Tesla CEO Elon Musk’s takeover of Twitter, now X, as a cautionary tale. “We have seen Twitter change management, with the value and popularity of its platform changing over time accordingly,” she says.

But before these big questions about the platform’s future can be answered, the new law is expected to be met with a flurry of legal challenges – the first coming from TikTok itself.

The company’s head of public policies in the Americas, Michael Beckerman, wrote in a memo to TikTok staffers this weekend, “At the stage that the bill is signed, we will move to the courts for a legal challenge.” Beckerman said that the bill represents a “clear violation” of the First Amendment. “This is the beginning, not the end of this long process,” he wrote.

The belief is shared by some policy experts, including Becca Branum, deputy director of the Free Expression Project at the Center for Democracy & Technology, a nonpartisan think tank. “The divest-or-ban bill … almost certainly violates the First Amendment.” While ByteDance “theoretically” has 270 days to find a suitable buyer, Branum says, in reality, the law isn’t likely to go into effect before it’s challenged in a courtroom.

And that courtroom could be as big as the US Supreme Court. “I expect that, ultimately, it will come down to the Supreme Court deciding whether or not Congress can make such a determination toward a single corporate entity,” says Agorapulse’s Allton.

It’s a possibility that would severely impede any progress toward securing a buyer, Allton suggests. “While many US companies would be eager to snatch up a property so rich with users, data and now e-commerce revenue, will they be so eager to invest time now knowing that Bytedance has no interest in selling and may ultimately prevail in court?”

Even if a potential buyer wanted to fast-track the acquisition to get ahead of ensuing legal battles, the process would likely be drawn out over negotiations about valuation, compliance, restructuring and assuaging China’s likely pushback.

“While ByteDance can potentially sell TikTok, the process will be fraught with diplomatic, legal and commercial hurdles,” says Spoutible’s Bouzy. “The outcome will depend on how effectively ByteDance navigates these challenges in finding a buyer whose interests align with both commercial success and compliance with US regulatory standards.”