Welcome to Nonrival, the newsletter where readers make predictions about the economy.
How it works
- On Sundays, read the newsletter and make a forecast by clicking a link at the bottom.
- On Wednesdays, see what other readers predicted and how your forecast compares.
- Over time, you’ll get scores based on how accurate your forecasts are.
In this issue
- Forecast: Will the US pass a law paving the way for a ban of TikTok?
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The Biden administration has said that TikTok must either be sold or banned. China’s government opposes a forced sale, which raises the prospect that the popular video app might soon be banned in the US.
But there’s a catch: Biden very likely needs help from Congress to actually ban TikTok in a way that will hold up in court. There are multiple bills floating through Congress that would accomplish that. And the Biden administration has thrown its support behind the RESTRICT Act, a bipartisan Senate bill co-sponsored by Sen. Mark Warner (D-Va.) and Sen. John Thune (R-S.D.)
If there’s actually going to be a TikTok ban, it probably will require one of these laws to get passed. And that’s what this week’s forecast is about:
- Will new federal legislation enabling the executive branch to ban or prohibit TikTok from operating in the US become law before Aug. 11?
TikTok launched in 2017, the international version of a Chinese app called Douyin. That same year, Bytedance, the company behind the apps, purchased a US app called Musical.ly for $1 billion to ease its entry into the US market.
TikTok has exploded in the US over the last three years: two-thirds of US teenagers said they used it as of 2022.
Trump tried to ban TikTok in 2020 by executive order, under the International Emergency Economic Powers Act, but US courts overturned it.
Proponents of a ban worry about privacy and disinformation. The fear is that the Chinese government could access sensitive data, including location history, or use the TikTok algorithm to influence US public opinion.
India banned TikTok in 2020; several other countries have banned the app from government devices. In Feb. the US required that TikTok be removed from all devices issued by the federal government.
The Biden administration has demanded that TikTok be sold to a US company or else face a ban, according to a March report. Bytedance had been negotiating with the US government about ways to “ringfence” US users’ data, using servers in Texas. The Biden administration’s demands presumably indicate that negotiation is not going well.
Warner and Thune’s Senate bill would establish a process for the US Commerce Department to review and ban communication technologies that posed a threat to national security. A separate bill called the DATA Act recently came out of committee in the House along party lines—Republicans in support, Democrats opposed—and would amend the authority that Trump tried to use. Current law limits the ability to apply sanctions related to creative expression; DATA would amend that limitation so that TikTok was no longer exempted.
Here’s what other forecasting platforms have to say about a TikTok ban:
The case for banning TikTok:
"First is the threat of Chinese espionage. BuzzFeed found that ByteDance engineers in China had accessed American users’ private data. ByteDance also admitted that employees, including two based in China, spied on journalists and obtained their IP addresses, but said that company leaders had not signed off and that the employees were fired… Second, ByteDance could use TikTok’s algorithms to influence Americans… In the future, lawmakers say, it’s easy to imagine how China could use TikTok to shape American attitudes about Taiwan — or an American presidential campaign." —Lauren Jackson, New York Times, March 2023
And the case against:
“Outlawing TikTok would constitute a disproportionately greater move toward decoupling and might invite retaliation — as compared with outlawing commercial hardware containing surveillance-capable chips. Keeping Chinese enterprises invested in the U.S. economy and its technology pays indirect but powerful geopolitical dividends in the form of dampening China’s willingness to antagonize the United States.” —Glenn Gerstell, CSIS, March 2023
"This whole episode is part of a larger red scare, in which the United States is taking an increasingly confrontational stance against China through economic sanctions imposed in the name of national security. U.S. tech executives and national security leaders have fed into this narrative, warning of an A.I. cold war in which China could surpass the United States in building artificial intelligence. But when you dig into the national security allegations against TikTok, it is telling that most of the charges could just as easily be levied against the U.S. tech giants. And most of the tech companies’ exploitation of data has not been curbed by the government." —Julia Angwin, New York Times, March 2023
Do Americans support a TikTok ban?
"A Washington Post poll finds that 41 percent of Americans support a federal ban of the popular short-video app, while 25 percent say they oppose it. And 71 percent are concerned that TikTok’s parent company is based in China, including 36 percent who say they are 'very concerned.'" —Washington Post, March 2023
Why Biden needs a new law:
The experience we had from the Trump bans — which were quickly enjoined by the courts — shows us that it’s not so easy for the president to just unilaterally ban TikTok under what is known as the International Emergency Economic Powers Act, or IEEPA… IEEPA has a very broad set of powers for the president to prohibit transactions because of foreign policy concerns in an emergency. But there are exceptions… One exception is for personal communications that do not involve a transfer of value. And another one involves information or informational materials, including but not limited to publications, films, posters, artworks, and newswire feeds… The courts, when they were considering Trump’s ban, pointed to those exceptions. Of course, Congress could change the law — could change IEEPA — but we’d still be opening up potential constitutional challenges.” —Timothy Edgar, Harvard Law Today, Feb. 2023
What happens next?
“Considered the most likely to succeed, the [RESTRICT] Act would still likely take at least several months before it could garner enough support for a successful vote and the president's signature. It could also be weakened before it reaches Biden. Even if the RESTRICT Act is passed this year, the Commerce Department has up to six months to begin reviewing transactions with the new authorities, and up to six additional months to complete the reviews and take action.” —Reuters, March 2023
“Democrats will largely decide what happens next to TikTok. The Biden administration is now demanding that the app’s Chinese owners sell it or face an outright ban on all U.S. devices. And the Democratic-controlled Senate has the most developed bill that would grant the White House more power to restrict TikTok and other risky foreign apps. But Democrats remain far from united about what to do. As powerful senators push for aggressive action, some of the more tech-savvy Democrats — particularly in the House — are calling for restraint when it comes to a ban. And they’re instead pushing solutions that would also address the privacy and security risks posed by U.S.-based apps.” —Brendan Bordelon, Politico, March 2023
“TikTok's future in the U.S. is most likely to be determined by the courts, rather than by politicians, executives or influencers… Imagine that Oracle makes a takeover offer so rich that ByteDance's founders can't refuse. Maybe it even throws in some of Larry Ellison's magic immortality beans. The Chinese government could simply say no… The bottom line: TikTok isn't going away any time soon, nor is it likely to have a new owner. But a lot of lawyers will be kept very busy.” —Dan Primack, Axios, March
Will new federal legislation enabling the executive branch to ban or prohibit TikTok from operating in the US become law before Aug. 11?
The fine print
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Deadline: Make a forecast by 9am ET Tues. March 28.
Resolution criteria: The date the legislation would take effect and whether TikTok is actually banned would be immaterial. Resolution will be decided in conjunction with the team at Good Judgment Open.