TikTok's Dark Future: What Happens When the App Goes Dark in the US?

The Supreme Court's decision to uphold the ban on TikTok in the US has sent shockwaves through the tech industry and the global user base. As the deadline of January 19, 2025, approaches, TikTok has warned that it will be "forced to go dark" in the US if the ban is not lifted or a sale is not finalized. This article explores the potential implications of TikTok going dark in the US and the strategic options available to ByteDance to mitigate the effects of the ban.



The Impact of TikTok Going Dark in the US

If TikTok goes dark in the US, the consequences will be far-reaching and multifaceted. Here are some potential impacts:

1. Financial Implications for TikTok and ByteDance:
* Revenue loss for US small businesses: TikTok has warned of an estimated $1.3 billion revenue loss for US small businesses within the first month of the ban's enforcement.
* Contribution to US GDP: In 2023, the platform contributed $24.2 billion to the US GDP, with $15 billion stemming from small businesses leveraging TikTok for marketing and advertising. The ban could lead to a significant decrease in this contribution.
* Creator revenue: Many TikTok creators rely on the platform as a primary income source, earning between $1,000 and $20,000 per video through brand deals. The loss of this revenue stream could destabilize the broader creator economy, valued at approximately $250 billion.
* ByteDance's investment: ByteDance has invested over $1 billion in Project Texas to appease concerns about US data making its way to China. If TikTok goes dark, this investment may not yield the desired results, leading to a financial loss for ByteDance.
2. Global User Base and Revenue Streams:
* User base impact: A ban in the US might lead to a perception of instability or risk associated with the platform, potentially causing some users outside the US to reconsider their use of TikTok. This could result in a decrease in global user base, although the extent of this decrease is uncertain.
* Revenue streams impact: A significant drop in US users could lead to a decrease in advertising revenue, as US users account for a substantial portion of TikTok's user base and engagement. This could result in lower ad rates and fewer ad opportunities, impacting TikTok's global advertising revenue. Additionally, a decrease in US users could lead to a drop in in-app purchases and fewer licensing and partnership deals globally.



Strategic Options for ByteDance

To mitigate the effects of the ban, ByteDance has several strategic options:

1. Sale of TikTok U.S. operations: ByteDance could sell its US operations to a non-Chinese entity, which would be the most straightforward way to comply with the law and avoid the ban. Several potential buyers have expressed interest, including Project Liberty, led by billionaire Frank McCourt, and "Shark Tank" host Kevin O'Leary. However, the Chinese government's final say on a sale and the potential for China to block any deal remain significant hurdles.
2. Negotiations with the incoming Trump administration: TikTok's leaders are banking on Donald Trump to save them, as he has previously supported the app and invited Shou Chew to sit on the inauguration dais. Trump could potentially find a way to make sure the app stays running in the US, but this would likely come with strings attached.
3. Undoing Project Texas: TikTok could attempt to reverse the changes made under Project Texas, which aimed to appease concerns about US data making its way to China. However, undoing Project Texas would be a "massive effort" involving many engineers, and it's unclear if this would be enough to satisfy U.S. concerns.
4. Going dark and relying on users to find workarounds: TikTok could shut down the app in the US but rely on users to find workarounds, such as using virtual private networks (VPNs) to access the platform. This option is risky, as it may not be effective in the long run and could lead to a poor user experience.
5. Litigation and appeals: TikTok could continue to pursue legal challenges and appeals, arguing that the ban infringes on the free speech rights of its users. However, the courts have thus far upheld the legislation, and it's uncertain whether TikTok's legal efforts will be successful.

In conclusion, the most likely strategic options for ByteDance to mitigate the effects of the TikTok ban in the US are selling its US operations to a non-Chinese entity or negotiating with the incoming Trump administration. However, these options come with their own challenges and uncertainties. The other options, such as undoing Project Texas, going dark, or pursuing litigation, are less likely to be successful. As the deadline approaches, TikTok's future in the US hangs in the balance, and the global tech community awaits the outcome with bated breath.