Supreme Court Upholds TikTok Ban: What's Next for Users and the Market?

The Supreme Court has upheld the law that effectively bans TikTok in the U.S., leaving the popular short-video app's 170 million American users in limbo. The ruling, which came after a lower court upheld the law in early December, means that TikTok's days in the country are numbered. Here's what users and the market can expect in the coming days and weeks.



Impact on Users

If the law takes effect as scheduled, app stores such as Apple's iPhone and Google Play would no longer be allowed to offer the app for downloads or updates, starting Sunday. Existing users would likely still have access to the app if it is already downloaded on their phone. However, the general expectation is that the app would "degrade over time, with usage and revenue migrating to competing platforms," as Evercore ISI analyst Mark Mahaney wrote in a client note Tuesday.

TikTok officials say it is possible that on Jan. 19, when U.S. users try to open the app, a prompt will show up indicating the service is no longer available in the country. This is what happens when someone tries to launch TikTok in India, which banned the app in 2020.

It's also possible that users will be able to access the app but it may be buggy, operate slowly or crash often, the TikTok official said.



Market Implications

A shutdown of TikTok in the U.S. would disrupt services for 170 million users, potentially damaging ByteDance's reputation and global operations reliant on U.S.-based providers. Prolonged legal uncertainty surrounding TikTok's fate may erode user and advertiser confidence, impacting revenue and market share in key regions.

The Biden administration's refusal to intervene and the Supreme Court's pending decision leave ByteDance vulnerable to an unfavorable outcome, heightening operational risks. Even if Trump issues an executive order to delay enforcement, legal complexities may hinder its effectiveness, prolonging uncertainty for TikTok's U.S. operations.

National security concerns tied to ByteDance ownership could deter future partnerships and investments in TikTok, limiting its growth potential in the U.S. market. A potential shutdown of TikTok could disrupt its 170 million American users and ripple across global operations reliant on U.S.-based service providers. With the Supreme Court yet to decide, ByteDance faces mounting pressure as the clock ticks toward Sunday's ban. Trump's incoming administration holds the potential to offer TikTok a lifeline, but swift action will be required to avert a shutdown.

TikTok and ByteDance's legal battle underscores the complexities of balancing national security concerns with First Amendment protections. Whether Trump intervenes or the Supreme Court acts, the outcome will significantly impact the social media landscape and ByteDance's future in the U.S.



Competitor Opportunities

A ban on TikTok could present opportunities for competing social media platforms, such as Meta Platforms (META), Google (GOOGL), Snap (SNAP), and Oracle (ORCL). These companies may see an increase in user migration and market share as TikTok users seek alternative platforms for short-form video content.

However, the long-term effects of a TikTok ban on U.S. users and the global app market remain uncertain. The Supreme Court's decision and the Trump administration's policies will shape the resolution of the ByteDance divestment and influence user and advertiser confidence in TikTok. As the situation unfolds, investors should closely monitor the developments and their potential impacts on the social media landscape and the broader technology sector.