There is much more at stake than just TikTok's fate with the looming ban of the app ahead of very important tariff negotiations with China for the incoming Trump administration in the month ahead, analysts at Wedbush believe.
If the app is not sold to a US-approved buyer by its Chinese parent company ByteDance by January 19 amid national security concerns, the social media platform will be shut down across the US. Arguments against the ban are still being debated in front of the US Supreme Court.
“While the 1st Amendment argument will be front and center the broader concern is that a ban could set in motion a harsh response from China which is not ideal in the first days of the Trump White House,” Wedbush's analysts wrote.
Analysts highlighted that President-elect Donald Trump does not want TikTok banned and has called on the US Supreme Court to delay the ban while he works on a political solution.
“Trump met with TikTok's CEO Shou Zi Chew in December which is noteworthy ahead of this month's court hearings in DC,” they wrote.
“The US Supreme Court could potentially issue an 'administrative stay' that could put the law on hold for a few weeks before the courts/Trump camp considers how to proceed.”
If the Supreme Court upholds the ban, analysts believe Trump could ask the Justice Department to not enforce the law once he takes office.
This would be important for tech companies like Apple and Google not to face major fines by allowing TikTok to remain on the app store and data to be hosted, they added.
“The biggest problem in our view is that Beijing would take this ban as a slap in the face and could then look to retaliate towards US companies in China (Apple, Tesla) while also heading into the important tariff negotiations with the US in the coming months,” they wrote.
Wedbush said ByteDance would never sell TikTok with its algorithm, dramatically reducing its potential sale value.
“We continue to believe a true ban of TikTok is not likely as there are a range of options the Trump Administration could head down along with ByteDance potentially pursuing a sale process (without the algorithm) to US strategic buyers (e.g. Oracle, Microsoft, etc.) or financial buyers,” they concluded.