How a Temporary U.S. Ban Could Destroy TikTok | Top News


(Reuters) – TikTok, owned by China’s ByteDance, has been racing to avoid a crackdown on its U.S. operations after being at loggerheads with the U.S. government, which has expressed concerns over the handling of personal data by the video app.

While ByteDance is still in talks with U.S. investors, the White House and the Chinese government over how to structure the deal, the Trump administration had sought to ban new downloads of the app from U.S. app stores from Sept. 27. A U.S. judge has temporarily blocked that order.

TikTok, in a court filing dated Sept. 23, provided an analysis of how even a temporary ban could affect its business.

** The ban will harm the company irreversibly by first stagnating and then declining its user base. TikTok’s interim head Vanessa Pappas said the app, which was earlier adding about 424,000 new U.S. users daily, saw a drop of over 500,000 daily active users following Secretary of State Mike Pompeo’s announcement that Trump was considering a ban.

** Pappas estimated that if the ban is in place for six months, 80% to 90% of its daily users would not return, citing TikTok’s previous experience of a two-week ban by the Indian government in 2019. If the ban is lifted after two months, 40-50% of daily active users would not return.

** The ban would also have a major impact on TikTok’s global growth as content made in the United States is highly exportable to other English-speaking markets like the United Kingdom, Canada and Australia, Pappas said. U.S. content can comprise as much as 60% of the content in TikTok’s non-U.S. markets. It will result in a massive decrease in content available globally, where TikTok has more than 689 million active users, as of July.

** The blow to TikTok’s reputation

The Technology 202: Trump administration dealt temporary legal blow with TikTok ruling


After that point, the White House will take additional steps to ban the app from all U.S. users. President Trump has said he would back off the ban if TikTok, which he views as a security risk, is sold to a U.S. owner (Oracle and Walmart are bidding for it) and ByteDance divests itself completely from the company.

It’s unclear what grounds Nichols ruled on. His opinion will be unsealed later today after both parties have a chance to review it for sensitive information. 

TikTok’s lawyers argued during the Sunday hearing that a ban on downloads would irreparably harm its business and the action was unnecessary as it tries to iron out a deal that meets White House approval. The Justice Department argued that a ban on downloads would leave TikTok’s business largely intact while preventing any new users from potentially putting their data at risk.

The Justice Department says that TikTok’s parent company ByteDance cooperates with the Chinese government and could be compelled to turn over U.S. user data. TikTok has repeatedly denied it would comply with such a request and says it stores U.S. user data outside of China and keeps it separate from other ByteDance data.

TikTok is also pursuing a lawsuit in federal court in D.C. to block President Trump’s executive order banning downloads of TikTok and the popular Chinese messaging WeChat app from app stores.

“At the same time, we will also maintain our ongoing dialogue with the government to turn our proposal, which the President gave his preliminary approval to last weekend, into an agreement, TikTok spokeswoman Hilary McQuaide said in a statement.

“The Government will comply with the injunction and has taken immediate steps to do so, but intends to vigorously defend the [executive order] and … implementation efforts from legal challenges,”