TikTok Ban Looms: Experts Stunned by Company’s New Direction

Navigating the Uncertain Future

Finding a Path Forward

The looming TikTok ban has convened an interesting group of strange bedfellows: lawyers, politicians, journalists, commentators, and activists have been joined by rank-and-file social media influencers in watching—and critiquing—the move. Some of those incensed content creators are following the legal arguments about civil liberties and market competition. But a lot of them are throwing something else into the mix: They see the ban as an attack on their economic viability.

TikTok is how they pay their bills. The truth of that statement is a case study in the obscure economics of online hustling. For every viral social media star who translates 15 seconds of fame into a substantial payout, there are untold millions of users who will either never go viral or go viral but not make any money. Even the infrastructure of influencer stardom is convoluted. White influencers make more money than nonwhite influencers.

There are credible charges that platforms and user biases unfairly promote white creators over minority-group creators. There is also a parallel star-making system in Hollywood. Agencies and representatives cherry-pick influencers for the real-world endorsements and live events that can turn marginal celebrity into actual money. Very few viral influencers break through, and that is kind of the point. Influencing looks a lot like a Ponzi scheme.

A small group of winners justifies the millions of people who will never make a dime being popular online. So the question is, why do so many people see social media influencing as an economic opportunity? Influencers tap into the folk economics that a lot of young people believe in. They intuitively sense that the prescribed route to success—a college degree, student debt, and an ever more nonexistent entry-level job market—is precarious.

My college students frequently report that they would leave their professional paths if they could hit it big as an influencer. They probably do not have the right assessment of their personal risk. Their degrees are a better bet. But they do have a sense of their generation’s collective risk. People without college educations or prestige or specialized skill sets especially will have a bumpier road moving along the opportunity structure.

But even with good odds in that structure of sorting or allotting income, jobs, and status, a lot of younger people will find it harder to secure housing, save money, get health care, and afford to start a family than previous generations. For them, influencing is about as risky as obtaining a middle-class lifestyle.

The Global Implications

Navigating the Geopolitical Landscape

The U.S. government has come to see technological interdependence with China as a major threat to American security, prosperity, and values. Washington fears that Beijing can leverage technological linkages to steal secrets, spread disinformation, surveil dissidents, hold U.S. infrastructure hostage, and leap ahead in economic competition, among other threats.

As a result, U.S. officials of both parties have sought to substantially—though not completely—reduce the flow of technology products, services, and inputs to and from China. This process is sometimes called “technological decoupling.” Decoupling is not just a bilateral phenomenon, nor is it entirely the product of governmental policy.

Many public and private sector actors around the world are contributing—in different ways, and with varying motivations and levels of enthusiasm—to the trend. Although the overall trend toward technological decoupling is clear, its exact course and ultimate extent remain unknown.

There are many possibilities. In an extreme scenario, decoupling widens and accelerates until distinct geo-technological spheres emerge—one centered on the United States, one centered on China, and perhaps others. Because technology is so intertwined with all commercial activity, such a technological split would drastically reduce every kind of economic interaction between China and the U.S.-aligned world.

Technological Decoupling: A New Conventional Wisdom

Understanding the Drivers of Decoupling

Two broad trends have driven the U.S. government’s recent interest in technological decoupling. First, beginning in the mid-2010s, U.S. policymakers and political leaders developed much darker views of China. Previously, most in Washington had believed that China’s rise was largely compatible with and even beneficial to American interests.

Although Beijing’s human rights abuses, market distortions, and other behavior were always points of friction, U.S. officials in the 1990s and 2000s thought the best solutions were further integration of China into global institutions and deepening of bilateral political and economic engagement.

This official consensus, never without dissenters, eroded and eventually collapsed during the Obama administration. Major catalysts included China’s militarization of disputed islands and broader military buildup; its unrelenting intellectual property theft and exploitation of international trade rules to move up the economic value chain; its deepening authoritarianism and abhorrent repression of Uyghurs and other minority groups; and its bolder encroachments into the South China Sea.

Potential Solutions

Exploring Alternatives to a Ban

Potential bidders are circling TikTok as many in Congress demand its split from its Chinese parent. But obstacles remain, starting with Beijing. DealBook has spoken with people in the know about what these investors, including financial giants like the Susquehanna International Group, can do, with billions of dollars on the line.

A potential takeover bid by Steven Mnuchin is adding a wrinkle to matters. Mnuchin, a former Treasury secretary, told Andrew on CNBC on Thursday that he was in talks with a “combination of U.S. investors” about a TikTok deal.

One option is said to be removing ByteDance’s control over how TikTok operates, while allowing it to maintain its stake, The Financial Times reported. (Shari Redstone’s National Amusement stake in Paramount Global is based on a similar arrangement.) But such a radical restructuring would almost certainly need Chinese government approval.

The Role of Regulation

Navigating the Complexities of Data Security

The U.S. government has been a principal driver of recent technological decoupling with China and remains uniquely able to adjust this global trend up or down. By comparison, other major actors have been more reactive. While Beijing has long maintained its own limits on American and other foreign technology, it has been more hesitant than Washington to add significant new technology restrictions in recent years.

China still appears interested in retaining many of the technological links it has built over decades, at least until it can position itself for greater self-sufficiency. Beijing has therefore responded in a cautious, reciprocal manner to many U.S. tech restrictions (though it is gradually becoming more assertive).

Other governments and private sector players have diverse views on technological decoupling, yet very few are as forward-leaning as the U.S. government, and none has pushed the trend as forcefully and effectively.

Empowering Users

Education and Digital Literacy

The rage around banning TikTok poses a lot of political problems. There is the sense that out-of-touch politicians dislike young people who like and use the app. There are also big issues about the First Amendment, proxy wars with China, and executive overreach (should Donald Trump intervene as he implies he will).

But there is also a less-observed problem: Young people feel trapped. Their sense that they don’t have a shot at economic opportunity is being funneled into their online influencer fantasies. They seem desperate for anything that promises a way forward, even if it is just an algorithm.

Shutting down TikTok won’t solve that existential crisis and it may, for many, make it worse. Constitutional common sense has prevailed. Early on Friday, a unanimous Supreme Court upheld the Protecting Americans From Foreign-Adversary-Controlled Applications Act, which will effectively ban TikTok in the United States unless it divests itself of Chinese control.