The House of Representatives voted 352 to 65 in favor of a bill that would force TikTok's parent company ByteDance to divest from the app and sell to a US company within 6 months or else be banned in the United States. Whether or not the bill will pass through the Senate, and if it will do so in an expedited manner, is up for debate.
Yahoo Finance Senior Columnist Rick Newman joins Yahoo Finance to discuss what follows after the House's voted and how unlikely it is that TikTok will be the subject of an outright ban from the US anytime soon.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
JOSH LIPTON: House has indeed voted, and TikTok could be on the chopping block. Today, representatives voted 352 to 65 in favor of a bill that would cause ByteDance, the Chinese owner of TikTok, to either divest the company, selling it to a US company in the next six months or face an entire ban. It now heads to the Senate. Rick Newman has been following this. So that's it, Rick. Tension now goes to the Senate. What do we think is going to happen there?
RICK NEWMAN: They're going to slow roll it. I mean, so this kind of came out of nowhere that the House passed this. But it's not going to happen that fast in the Senate. The analysis, I say the forecasting is 40% chance the Senate passes this year, let's say. And then let's say that this Senate does pass it and actually President Biden has said he would sign it, a lot of the headlines focus on this law that would ban ByteDance and ban TikTok. Well, that's not the main purpose.
The main purpose is to leave TikTok intact and just force them to sell it to somebody else. TikTok is going to be here for a good while. So even if this passes, even if President Biden signs it, it seems almost certain that ByteDance, the parent company would challenge it in court. That could take years. And who knows when this whole thing might get resolved? And then there's the chance that the Senate does not pass it this year, and we have to start over again in 2025.
JULIE HYMAN: Well, and isn't it sort of effectively a ban because some are saying ByteDance has said it's not going to sell it. So if it's not, then--
RICK NEWMAN: I mean, do you believe that.
JULIE HYMAN: I don't know what I believe.
RICK NEWMAN: I mean, so follow the possible course of events here. First, fairly low probability that Congress as a whole passes this law this year and then President Biden signs it, OK? If he does, if that actually happens, they're going to challenge it in court. How long is that going to take? Three years, four years, five years? I mean, is it going to be Microsoft antitrust legislation all over again? I don't know, was that 10 years?
JULIE HYMAN: Yeah.
RICK NEWMAN: So this is going to go on for a while. And I mean, in the meanwhile, the TikTok app will continue to operate. Let's say it actually came to it all gets through court and yes, this is going to happen, you either have to divest or the app is banned. Why would they leave money on the table and say, well, we're just going to shut it down? And I mean, could they even do that?
I mean, this is a normal private sector company in some ways, like you don't just shut down a valuable asset that you could sell for a lot of money and say we're just angry, so we're just going to shut it down. So sometimes, a divestiture can actually be good for shareholders it doesn't mean they're going to lose money. They could make money.
JOSH LIPTON: What do you think politically-- I should get your take on Trump's role in all of this because he's been out there saying, well, yes, it might be a national security threat. But if you ban it, he says, you're going to just make Meta stronger. And we know how he feels about Meta and Mr. Zuckerberg. But it is interesting because it seems to be a change of position from when he was president.
RICK NEWMAN: It's a complete 180 by Trump. So remember, he actually tried to ban TikTok by executive order when he was president, and nobody was surprised that the courts didn't uphold that. And by the way, Montana passed a ban that courts have also reversed but can't do. I mean, you just can't do that unilaterally.
I think the more interesting question is, what if it actually works and TikTok ends up banned? I think whatever politician was associated with TikTok getting banned is just dead. I don't think any politician could get reelected again because of what you would do just to all the people who use TikTok but to all the people who have created businesses around TikTok.
I mean, there are a lot of legitimate businesses that use TikTok as their main-- that is their main way they reach people, right? So I think when for President Biden to say, yes, he would sign this bill, I think he is 100% aware that there would be no negative impact on anybody anytime soon even if he did sign this bill and we did hear that Biden favors a ban of TikTok because it would not happen for years.
As for Trump, he just flip-flopped on this. I mean, what seems to have happened and he has not denied, one investor, a billionaire named Jeff Yass who owns part of TikTok had an audience with Trump and apparently persuaded him to change his mind and gave him these talking points, oh, what about the competition it would benefit?
Part of the weirdness is guess what else is part of the competition, Trump's own social network. So in theory, he owns a social network that would be among these beneficiaries if TikTok were banned. Now, young TikTokers, I don't think there are very many of them on Truth Social ranting about the evil libs and whatever they rant about on Truth Social.
But in theory, he would benefit. But who knows? I mean, maybe he's also been chatting with Elon Musk maybe, and it's not beyond the realm of possibility that there could be some kind of arrangement between Twitter or X and Trump's network, Truth Social.
JULIE HYMAN: Interesting. A lot of different threads to pull on in the coming weeks. Thanks, Rick. Appreciate it.