Here’s What Analysts Expect as Biden Signs Bill That Could Ban TikTok Into Law

U.S. President Joe Biden signed a bill into law Wednesday that requires ByteDance to divest TikTok within a year through a forced sale or face a ban of the app in the U.S., based on national security concerns.

Analysts noted possible buyers for TikTok, how the app may be sold without its signature algorithm, and likely legal challenges, as well as how Meta Platforms (META), Google parent company Alphabet (GOOGL), and Snap (SNAP) could gain.

Microsoft, Oracle, and Mnuchin Among Those Who Have Expressed Interest in Buying TikTok

While it remains unclear whether ByteDance is open to selling TikTok, CFRA analysts said they are “leaning toward a sale as the likeliest outcome.” Even if ByteDance is on board to sell the platform, many questions linger about the price tag and who would buy it.

Companies including Microsoft (MSFT), Oracle (ORCL), Walmart (WMT), Rumble (RUM), and Twitter (now Elon Musk’s X) have reportedly expressed interest in acquiring the platform amid earlier threats of a forced sale or ban of TikTok.

Wedbush analysts named Microsoft and Oracle as “likely buyers” based on “past interest” that TikTok “strategically would make a logical fit.” UBS analysts indicated they think it unlikely that regulators would allow TikTok to be sold to a tech company.

Several private equity groups have also voiced interest, as well as former Treasury Secretary Steven Mnuchin, “Shark Tank” investor Kevin O’Leary, and former CEO of Activision Bobby Kotick.

Analysts Say TikTok Sale Unlikely To Include Algorithm

While analysts suggested a sale could be likely, they warned a forced sale may lack an important component of the platform: its algorithm. TikTok is powered by a recommendation algorithm that creates users’ “For You” page, a unique, personalized, and curated feed.

Wedbush analysts noted they “see no chance TikTok would be sold WITH the algorithm as Beijing and ByteDance would never allow that to happen.”

Without the TikTok algorithm that creates users’ unique and personalized “For You” page, the value of the platform “dramatically change[s].” Without the algorithm, the platform could fundamentally change and impair TikTok’s popularity going forward.

ByteDance Expected To Challenge Law in Court

The new law could face legal challenges that might lengthen the time before a forced sale or ban takes effect, as seen when states have passed similar regulations.

“There will clearly be a myriad of legal challenges from TikTok/ByteDance once this legislation becomes US law and would even get more complicated heading into the upcoming Presidential election,” Wedbush analysts wrote.

However, UBS analysts indicated that there is “limited opportunity to appeal,” as the law is structured to send any litigation to the D.C. Circuit Court of Appeals. The firm cited a former Federal Communications Commission (FCC) commissioner as saying this “helps limit the ability of a legal challenge to the [law] and it limits the opportunity for TikTok to respond.”

The former commissioner also told UBS that the designation of TikTok as a national security risk could be key to limiting legal challenges, saying, “National Security almost always wins.”

Who Could Benefit? Analysts Say Meta, Google, and Snap

Whether TikTok is banned or sold in a way that significantly changes the user experience, analysts named Meta, Google parent company Alphabet, and Snap as potential benefactors.

Wedbush analysts said they expect “Meta to be the primary recipient of redistributed TikTok revenue should the company exit the U.S., with Google the likely number two beneficiary.” A Wedbush survey found that 60% of TikTok users surveyed said they would use Meta’s Facebook or Instagram as a TikTok alternative, while 19% said Google’s YouTube.

CFRA analysts said they “think SNAP is poised to be the biggest beneficiary of a potential ban, followed by META.”