US Senate not moving to fast-track House bill for TikTok divestiture

 

TikTok ban would hit many users where it hurts — their pocketbook

Delyanne Barros has a lot riding on whether TikTok survives in the U.S. The 41-year-old personal finance and money coach, who built a financial consulting company from the ground up, said a ban of the popular social media app could wipe out as much as 30% of her business overnight. 

Barros, who goes by @delyannethemoneycoach on TikTok, isn't sure if she'd even be running her own business today were it not for the Chinese-owned app, which faces a potential ban if a bill passed by the House on Wednesday eventually makes it into law. 

"I started my business in January 2020 and went full in on TikTok," Barros told CBS MoneyWatch. "That's where a lot of my content started going viral, and it catapulted my business. It was an integral part of how I grew it in the beginning," 

TikTok doesn't pay Barros directly; rather, it's how upwards of 30% of her clients find her and ultimately purchase her investing course. The rest of her clients have found her through other social media apps, internet searches, and word of mouth. She also makes money through brand-sponsored posts on social media platforms including TikTok.

"A ban would result in me losing a major part of my business. I would definitely feel a hit," she said.

Barros is hardly alone. Many of TikTok's 170 million monthly active U.S. users rely on the app to generate secondary and even primary income streams. That includes 7 million small businesses that use the platform to drive growth, according to a joint report from Oxford Economics and TikTok released Wednesday. 

Thirty-nine percent of small businesses say that access to TikTok is critical to their businesses' existence, while another 39% say TikTok has allowed them to generate supplemental or principal incomes through their activity on the app, according to the report. Sixty-nine percent of small businesses say TikTok has led to increased sales in the past year. 

"It's how people discover us"

Tori Dunlap, founder of a money and career platform Her First $100K, said TikTok "was absolutely fundamental" to the growth of her business, securing a book deal and launching a podcast. Her viral videos have helped her amass 2.4 million followers on TikTok over four years. Her popularity on the platform has also led to lucrative brand partnerships and new clients for her coaching services. 

"TikTok is the top of the funnel in terms of our customer journey. It's how people discover us," Dunlap told CBS MoneyWatch.

Sophie Beren, founder and CEO of The Conversationalist, an education platform that empowers young people to have conversations and create community, said banning TikTok would be "devastating" for content creators who use the service to make money. 

"They are struggling with a potential ban because we are living in a world where it's impossible to have one traditional path for income. The traditional path for young people doesn't guarantee economic success or stability like it used to," Beren said.

Tiffany Yu, founder of Diversability, a for-profit advocacy group and community provider for people with disabilities, is also afraid of what a potential ban would mean for her business.

Yu's advocacy group makes money selling memberships and through corporate sponsorships. She credits TikTok with growing her reach large enough to secure major brand partnerships, including deals with Hilton and Dove. All told the deals acquired through TikTok account for more than 50% of Diversability's revenue. 

For Yu, a ban could mean going back to her bootstrapping roots, when she made ends meet in the early days of running Diversability by renting part of her apartment and selling used furniture. "I would like to not have to go back there, but if that's what we had to, then we would do it," she said. 

Barros, the money coach, said that while a TikTok ban would hurt her business, it wouldn't destroy it. "Like any business, you need to diversify, and I use Instagram and Threads and all the other platforms, too," she said. 

But TikTok offers a unique advantage for people like herself, Barros said because its algorithm is more effective at feeding audiences tailored content that they're likely to engage with.

Still, she's preparing for a potential TikTok ban. "I use other platforms, but I have also been building an email list that I own," Barros said. "I feel secure that my business will continue to grow and thrive." 

Several U.S. senators want the chamber to take its time in deciding whether to back a House of Representatives bill that would force Chinese-based ByteDance to divest the short video app TikTok within six months or face a ban.

The House voted 352-65 on Wednesday, just eight days after the proposal was introduced. There is broad support in the Senate for taking action to address national security threats from foreign apps like TikTok but no agreement on the right approach.

Senate Commerce Committee chair Maria Cantwell said in an interview with Reuters she wants legislation to address broad concerns about foreign apps that will hold up in court and is not sure the House bill goes far enough.

"We'll probably have a better idea in a week what we think the options are," Cantwell said. "Of course, we want to the strongest possible tool and we want it to be the most robust tool we can get," Cantwell said she has thought about holding hearings.

Senator Ron Wyden, a leading Democrat on tech issues, said he is still reviewing the House bill and has "serious concerns about any app that gives the Chinese government access to Americans' private data. I'll also say this: history teaches us that when lawmakers rush to legislate on tech and social media, mistakes get made."

Senator Ted Cruz, the top Republican on the Commerce Committee, told Bloomberg News the bill should be open to a "full amendment process," which could significantly delay any action.

Senate Majority Leader Chuck Schumer has said only the Senate will review the legislation -- and gave no timeline for action.

TikTok CEO Shou Zi Chew was on Capitol Hill for a second day of meetings with senators on Thursday. He said in a video posted Wednesday on TikTok that has gotten more than 25 million views in less than a day that the legislation if signed into law "will lead to a ban on TikTok in the United States... and would take billions of dollars out of the pockets of creators and small businesses. It will put 300,000 American jobs at risk."

This week, the Senate's No. 2 Democrat Dick Durbin expressed concerns about a TikTok ban. "Cutting out a large group of young voters is not the best-known strategy for re-election,” Durbin told reporters.

The House bill has won the backing of some key senators including Senate Intelligence Committee chair Mark Warner and the top Republican on the panel Marco Rubio

The pair said they "look forward to working together to get this bill passed through the Senate and signed into law"

The lopsided vote means senators should move quickly, said House Energy and Commerce Committee chair Cathy McMorris Rodgers.

"The overwhelming vote today is a strong signal to the Senate that they need to act," she said.

Some senators say they oppose the House bill including Republicans Rand Paul and Mike Lee but many others have expressed support for acting quickly.

 TikTok's Chinese parent is stuck in a Washington doom loop. Four years after then-U.S. president Donald Trump tried to ban the popular short-video app, lawmakers on Wednesday passed a bill giving ByteDance six months to divest its American assets or face a ban. It escalates a seemingly endless fight for the privately-held company led by co-founder and CEO Liang Rubo.

Washington's latest assault on TikTok, which critics labeled a national security threat, has a sense of deja vu. In 2020, Trump tried to force an auction of TikTok's U.S. operations in which Walmart (WMT.N), opens new tab and Oracle (ORCL.N), opens new tab where rumored buyers are. Since then, more than two dozen states have banned the app from government phones; Montana went as far as blocking TikTok, only to have the decision overturned. Any definitive action from Washington will take time as the bill grinds its way through the Senate, where many prominent lawmakers have yet to endorse it.

The distraction is costly and will make it harder for ByteDance to focus at home, where it operates TikTok's sister app, Douyin. The company faces a slowing economy, fierce competition from Alibaba (9988.HK), opens new tab and Tencent-backed Kuaishou (1024.HK), opens new tab, and Beijing's tightening regulations on everything from video-streaming to video games to artificial intelligence. Against this backdrop in its largest and most important market, the company is trying to offload non-core assets and retrenching to focus on Douyin, e-commerce, and local services like food delivery.

The rejig is substantial. Earlier this year, ByteDance confirmed it was in talks with prospective buyers to sell its gaming assets after Reuters reported it was looking to offload a studio it acquired in 2021 for $4 billion. ByteDance may also be rethinking its virtual reality business, Pico. Last month, the head of Douyin also resigned. Nonetheless, ByteDance is managing its growing list of problems surprisingly well.

Thanks to advertising and e-commerce, revenue surged 30% to $110 billion last year, according, opens new tab to Bloomberg. Earnings before interest and tax in the three months to June alone hit $9 billion,, opening a new tab in the Financial Times, and helping the company boost its cash pile to $51 billion. In the United States, TikTok claims 170 million users, 70% more than in 2020.

That success offers some relief. But the TikTok saga means the company is unlikely to push ahead with an initial public offering. To that end, ByteDance has been steadily buying back shares; most recently from investors at a $260 billion valuation, down from $300 billion last summer. The purchases ease some of the pressure from employees and backers that include Japan's SoftBank Group (9984.T), opens new tab, and U.S. firms KKR and General Atlantic. ByteDance has had to be creative but its fortunes have not fallen too far.