Click to open contact form.
Your Global Partners in the Business of Innovation

New U.S. Law Requires Divestment in TikTok

Client Updates / Apr 30, 2024

Written by: Haim Ravia and Dotan Hammer

U.S. President Joe Biden signed into law the Protecting Americans from Foreign Adversary Controlled Applications Act. The Act was bundled within the package of laws on military aid to Ukraine, Taiwan, and Israel, Fentanyl trafficking sanctions, and sanctions against Hamas and Iranian leaders.

As of January 2025, the law bans “foreign adversary-controlled applications”, a term defined in the statute to expressly apply to TikTok and its Chinese parent company, ByteDance. The law authorizes the President to postpone the effective date of the ban for an additional 3 months. A company that violates the ban can be subject to fines of $5,000 for each American user the application has.

The ban will be listed once the foreign adversary-controlled application completes a divestiture which ensures that the application is no longer controlled by the foreign adversary, China, and is no longer operationally dependent on a company controlled by the Chinese government.

While TikTok pledged to challenge the law in court on constitutional grounds, experts explain that TikTok’s divestiture faces numerous practical difficulties. Valued in the billions, acquisition of the social network will only be possible for the very few companies able to afford it. Internet giants such as Facebook or Google will likely be precluded on anti-trust grounds. Additionally, in recent years, the Chinese government issued export control bans on TikTok’s algorithm and underlying technologies, to block the very divestiture that the new U.S. law is pushing for.

Click here to read the Protecting Americans from Foreign Adversary Controlled Applications Act (from page 141).