(Reuters) - TikTok's fortunes took a positive turn on Thursday as a growing number of U.S. officials said its Chinese owner should have more time to sell the app and stop it from being banned ahead of President-elect Donald Trump's return to the White House.
Trump's incoming national security adviser said the new Republican administration will keep the social media app used by 170 million Americans alive in the U.S. if there is a viable deal and top Senate Democrat Chuck Schumer urged President Joe Biden to extend by 90 days a deadline to shut it down on Sunday.
A law passed in April mandates TikTok's owner, ByteDance, divest TikTok's U.S. assets by Sunday to a non-Chinese buyer, or be banned on national security concerns.
"We will put measures in place to keep TikTok from going dark," U.S. Representative Mike Waltz told Fox News, pointing to a provision in the law allowing for a 90-day extension if there is "significant progress" toward a divestiture.
"Essentially that buys President Trump time to keep TikTok going," said Waltz, who was picked by Trump to be his national security adviser.
A White House official said on Thursday the Biden administration does not plan to enforce the ban on Sunday leaving it up to the Trump administration, though it is not clear if the app will remain online absent a formal extension.
"Given the timing of when it goes into effect over a holiday weekend a day before inauguration, it will be up to the next administration to implement," the official said.
The U.S. Supreme Court is currently deciding whether to uphold the law and allow TikTok to be banned on Sunday absent a divestiture, overturn the law or pause it to give the justices more time to make a decision.
The court said it may issue rulings on Friday, but as is customary, did not state which case or cases would be decided.
Trump once supported a ban on the app but changed his stance last year. His shift came amid growing signs of support for his presidential campaign among tech executives and overtures from Republican donor Jeff Yass, who owns a big share of ByteDance.
In a sign of warming ties between Trump and TikTok, the video app's CEO, Shou Zi Chew, will attend the presidential inauguration on Jan. 20 and be seated on the dais among other high-profile invitees, two people familiar with the matter told Reuters.
BIPARTISAN SHIFT
[1/2]The TikTok app logo and a forbidden sign are seen in this illustration taken January 16, 2025. REUTERS/Dado Ruvic/Illustration Purchase Licensing Rights
"It's clear that more time is needed to find an American buyer and not disrupt the lives and livelihoods of millions of Americans,” Schumer said on the Senate floor, adding that Democrats tried to pass a bill extending the deadline to find a solution to 270 days.
"I will work with the Trump administration and with both parties to keep TikTok alive while protecting our national security," he added.
The comments by Schumer, who was a strong supporter of the law to force a sale, are a sign of the growing concern among prominent Democrats about the potential impact and political fallout of shutting down TikTok.
The New York Times reported Trump is considering an executive order that would seek to allow TikTok to continue operating despite a pending legal ban until new owners are found. It was not immediately clear if Trump has the authority to do so given the legal divestiture requirements imposed by Congress.
TikTok did not respond to requests for comment.
A spokeswoman for the Trump transition, Karoline Leavitt, said, "President Trump has repeatedly expressed his desire to save TikTok, and there's no better deal maker than Donald Trump."
'TALKS A BIG GAME'
Still, several Republicans and Democrats remain concerned about Chinese ownership of the app, worried the Chinese government could use it as a tool to collect data on U.S. citizens and to spread propaganda to the public.
"Trump talks a big game on China & wanted to ban TikTok - just like many Republicans voted to do," Representative Frank Pallone, the top Democrat on the Energy and Commerce Committee, wrote on the social media platform X.
"But now he's inviting TikTok's CEO to sit beside him at his inauguration even though TikTok is linked to the CCP & is a threat to our national security. What message does this send?"
The prospect of a TikTok ban has already triggered some users to seek alternatives, with Chinese social media app RedNote gaining nearly 3 million U.S. users in one day earlier this week, according to analytics firm Similarweb.
Reuters reported that TikTok plans to shut U.S. operations of its social media app on Sunday barring a last-minute reprieve, according to people familiar with the matter.
Privately held ByteDance is about 60% owned by institutional investors such as BlackRock (BLK.N) and General Atlantic, while its founders and employees own 20% each. It has more than 7,000 employees in the United States.
Chinese social media app RedNote, known in China as Xiaohongshu, gained nearly 3 million U.S. users in one day earlier this week as a flood of self-proclaimed "TikTok Refugees" joined, according to new data from analytics firm Similarweb.
The Chinese-language app had about 3.4 million daily active users across both iOS and Android devices in the United States as of Monday, up from fewer than 700,000 the day prior, and around 300,000 the week prior, according to the Similarweb estimate.
The influx of users has been driven by a looming U.S. ban on TikTok, used by 170 million Americans, on national security concerns.
The data suggests an even larger shift to RedNote by U.S. users this week than was previously known, explaining its dramatic rise to the top of U.S. app store download rankings. Reuters reported on Tuesday that more than 700,000 new users had joined the app in only two days.
It also shows the platform racing ahead of TikTok sister app Lemon8, which experienced a moderate surge of its own after parent company ByteDance linked the login functions of the two apps in November.
Lemon8 had 1.7 million daily active users in the United States on Monday, up from around 1.1 million in previous weeks, according to Similarweb.
Meanwhile, U.S. usage of TikTok declined ahead of the ban, down 2.1% week over week to about 82.2 million daily active users, Similarweb said.
Many Chinese users on RedNote welcomed the newcomers and responded eagerly to questions on topics such as popular Chinese dishes, city tourist sights, and even China's birth policies, although there were also signs that U.S. users were testing limits established by Beijing's censors.
China for years has tightly controlled cyberspace through its "Great Firewall" censorship architecture and blocked foreign social media networks such as Instagram and X.
U.S. users who have amassed followings and careers on TikTok had hoped for months that it would find a way to avoid a U.S. ban passed into law in 2023, but resignation appeared to set in this week as the Jan. 19 deadline approached.
Advertisers reliant on TikTok as a major digital marketing tool rushed to prepare contingency plans this week, as the realization dawned on many that the popular Chinese-owned social media app may not be saved before a U.S. ban takes effect on Sunday.
One marketing executive described it as a "hair on fire" moment for the ad world, after months of conventional wisdom saying that a solution would materialize to keep the short-video app up and running.
"It seemed unbelievable even as of just a few weeks ago to imagine that there would be no TikTok," said Kerry Perse, the founder of marketing firm Influence & Inspire Consulting and former head of social media at Omnicom Group's (OMC.N) media agency OMD.
"We all thought that any access issues to the TikTok app would be slow and drawn out," she said.
Chinese tech firm ByteDance is facing a Jan. 19 deadline to sell TikTok's U.S. assets or accept an unprecedented ban on the app, used by 170 million Americans, on national security grounds.
TikTok plans to shut U.S. operations of the app on Sunday barring a last-minute reprieve, Reuters reported on Wednesday.
U.S. President-elect Donald Trump's incoming national security adviser said the new administration plans to put measures in place "to keep TikTok from going dark," but it was not immediately clear whether Trump - who takes office on Monday - could legally do so.
"I think after a long time feeling like this was a 'boy who cried wolf' situation, we may actually have a wolf sighting," said Craig Atkinson, CEO of digital marketing agency Code3.
If a ban does occur, more than $11 billion in annual U.S. ad investment would be up for grabs, according to a forecast from marketing group WARC Media.
Most of that spending is likely to shift to platforms where advertisers are already established and running short-video ad campaigns, primarily Meta's (META.O) Instagram and Alphabet's (GOOGL.O) YouTube Shorts, four ad agency sources told Reuters.
TikTok staffers appeared to be in the dark about what exactly would happen to the app as of Sunday, the sources said, although two of the sources noted that TikTok was offering favorable refund terms in the event services stop in the middle of advertisers' campaigns. TikTok did not immediately respond to a request for comment.
Even as the ban approached, the company continued to pitch advertisers on new features, like a tool launching in test form on Thursday that would make it easier to create, modify, and add advertisements in bulk, according to an email from this week described to Reuters.
It also planned to host a booth at the upcoming World Economic Forum meeting of political and business leaders in Davos, Switzerland, next week, after holding cocktail parties at the Consumer Electronics Show in Las Vegas earlier this month.
Meanwhile, brands and content creators alike were downloading their data en masse in case the app becomes inaccessible as of Sunday, hoping to salvage at least some of the fruits of their labor.
One influencer, who hawks cereal and beauty products in her videos, posted on Tuesday advising her nearly 16,000 followers on how to save their videos.
“Here’s how to download your TikTok data so you don’t lose literally everything you’ve had from the past five years,” said Maria Slate, grimacing, as the words “it’s fine I’m fine” displayed over her head.
The sentiment was a marked change from the dominant mood last month when advertisers told Reuters they were in no rush to shift their marketing budgets off TikTok despite a U.S. appeals court upholding the law requiring a divestment or ban.
As of Jan. 8, ad spending on TikTok was set to increase 57% in the first two months of 2025, according to Guideline.ai, a research firm that tracks forward booking data from major ad agencies.
TikTok has become a powerful tool for advertisers looking to reach young Americans in particular in recent years, growing to 20% of U.S. social media ad spending from only 2% in 2020, its first full year of operation in the United States, Guideline.ai said.
Part of that power has come from the platform's cultivation of influencers and online shopping culture, which has made it a reliable driver of e-commerce sales.
E-Marketer, another research firm, forecast late last year that some 43.8% of U.S. TikTok users would have made a purchase on the platform by the end of 2024, a higher share than on Meta-owned services Facebook and Instagram.
As TikTok staffers await the fate of their app in the United States, the company has reassured its workers that their jobs are safe, even if the platform goes dark on Sunday, according to an internal employee memo obtained by the Verge.
The social media company stressed that the wellbeing of its employees is a “top priority,” the note stated.
TikTok has assured its U.S. workforce that their "employment, pay, and benefits are secure," and that its offices will continue to operate, even if a resolution is not reached by the January 19 deadline.
The company emphasized that the legal challenges primarily impact the U.S. user experience, not the employment infrastructure of TikTok's workforce since it is a global platform.
Wedbush analyst Dan Ives told CBS MoneyWatch that TikTok's U.S. operations are valued at $100 billion, primarily due to its sophisticated algorithm that curates personalized content for users.
President Joe Biden’s administration is reportedly actively seeking ways to prevent TikTok from being shut down on Sunday, according to NBC News. An administration official stated that U.S. users should not anticipate an immediate ban on the app. Meanwhile, President-elect Donald Trump, who assumes office the day after the ban is set to take effect, is contemplating an executive order that would temporarily suspend the ban's enforcement for 60 to 90 days, the Washington Post reported. This potential suspension would provide the incoming administration time to explore alternative solutions or find a buyer for TikTok's U.S. operations. Late last month, Trump urged the Supreme Court to postpone the impending TikTok ban, stating that he possesses the "dealmaking expertise" and "political will" to broker a resolution that would address national security concerns while preserving the platform.
TikTok faces substantial revenue losses if it loses access to American users. Despite the assurances from the company, the long-term impact on job security remains uncertain. TikTok's loss of revenue from the U.S. market could affect its overall financial stability, potentially leading to future workforce adjustments.