WSJ Tech News Briefing: TikTok Had a Tumultuous Year. What’s Ahead in 2025?

Podcast Information:

• Title: WSJ Tech News Briefing
• Host/Author: The Wall Street Journal
• Episode: TikTok Had a Tumultuous Year. What’s Ahead in 2025?
• Release Date: December 31, 2024

1. Introduction and Overview

In the December 31, 2024 episode of WSJ Tech News Briefing, host Julie Chang delves into the precarious situation surrounding TikTok in the United States. The discussion centers on TikTok's potential ban, the legal battles it faces, its strategies to navigate geopolitical tensions, and its broader business challenges as the company looks toward 2025.

2. Legal and Political Battles Over TikTok in the US

Julie Chang opens the discussion by outlining the imminent Supreme Court decision on a law that threatens to ban TikTok over national security concerns, specifically its Chinese ownership. The proposed ban mandates that TikTok shed its Chinese parent company, ByteDance, failing which the app would be prohibited from operating in the US.

Georgia Wells, WSJ's tech reporter, engages with her colleague Bell Lin to unpack the intricacies of this scenario.

Key Points:

• Historical Scrutiny: TikTok has been under scrutiny since 2020 when then-President Donald Trump attempted to ban the app via an executive order, which was later overturned in court. This set a precedent for ongoing investigations into TikTok’s operations in the US.

• Current Legal Proceedings: The Supreme Court is scheduled to hear oral arguments just days before the proposed ban's enforcement on January 19th. The core legal question revolves around whether the ban violates the First Amendment.

Notable Quote:

"Trump recently asked the Supreme Court to pause this whole TikTok shutdown process, and he said that keeping TikTok operating would preserve the First Amendment rights for the tens of millions of Americans who are using TikTok."
— Bell Lin [02:50]

3. TikTok's Strategies and Alliances

In a strategic move, TikTok's CEO has sought counsel from billionaire entrepreneur Elon Musk regarding navigating the incoming Trump administration's policies. Bell Lin elaborates on the significance of this alliance.

Key Points:

• Elon Musk’s Influence: Musk, known for his strong business ties with China through Tesla, presents a potential ally for TikTok. His involvement could influence the administration's stance given his unique position bridging American and Chinese business interests.

• Geopolitical Crosshairs: TikTok is navigating a complex geopolitical landscape, balancing American regulatory pressures and Chinese government interests, placing the company in a challenging position.

Notable Quote:

"If TikTok sees an ally in Elon Musk, clearly that's like a way to get to Trump. One of TikTok's challenges is not only do they have to satisfy kind of American concerns about their ownership, but any action TikTok takes also will have to ultimately get approved by the Chinese government."
— Bell Lin [03:26]

4. Impact on Users and Operation

The potential ban’s implications for TikTok users in the US are significant. Bell Lin discusses how the ban might be implemented and its effects on the app’s functionality.

Key Points:

• Implementation of the Ban: If enforced, TikTok could remain on existing devices but would be delisted from app stores like Google and Apple. This would prevent new downloads and updates, leading to an outdated and potentially insecure app over time.

• User Base Reaction: Despite these looming threats, TikTok's predominantly younger user base appears largely indifferent to the national security debates, focusing more on the app’s content and community.

Notable Quote:

"Initially it would remain on devices where it's currently downloaded, but the app stores, so Google and Apple would have to delist it so they wouldn't have new people coming on."
— Bell Lin [04:32]

5. Business Challenges and Growth

Beyond legal battles, TikTok faces internal business challenges that could impact its future trajectory.

Key Points:

• Slowing User Growth: For the first time, TikTok is experiencing stagnating user growth in the US, a stark contrast to its historically rapid expansion.

• Ad Sales Performance: Advertiser interest has plateaued, with ad sales meeting but not exceeding growth targets, indicating a potential saturation in the market.

Notable Quote:

"Slowing growth has been one of the issues for TikTok as a business... it's interesting to see that the company is also having to face some of the more cut and dry business challenges that other social media companies tend to face as they get bigger."
— Bell Lin [07:00]

6. ByteDance's Valuation and Financial Implications

The financial health of TikTok’s parent company, ByteDance, is another focal point of concern.

Key Points:

• Valuation Drop: ByteDance’s valuation has declined to $300 billion, reflecting the heavy weight of geopolitical risks and regulatory uncertainties impacting investor confidence.

• Future Valuation Prospects: Should TikTok navigate the current challenges successfully and mitigate geopolitical tensions, there is potential for ByteDance’s valuation to rise. However, the path remains fraught with uncertainty.

Notable Quote:

"Valuation is how much this geopolitical risk has been weighing on some of its assets... if they found a way to remain in the U.S. that also seemed to satisfy other countries, we could expect to see their valuation grow even further."
— Bell Lin [07:52]

7. TikTok's Status in Other Countries

TikTok’s challenges are not confined to the United States. The platform faces varying degrees of regulatory scrutiny globally.

Key Points:

• Canada's Approach: The Canadian government is attempting to shut down TikTok’s offices within the country while allowing the app to remain accessible to users, a nuanced strategy to mitigate geopolitical risks without outright banning the platform.

• India's Stance: India has previously banned TikTok, reflecting broader regional tensions and divergent regulatory environments.

• Global Implications: A US ban could trigger similar actions in other major markets like the EU, UK, and Japan, potentially crippling TikTok’s global operations.

Notable Quote:

"If the US market became like a bellwether, like a domino effect among other countries and other markets like the EU or the UK or Japan, then TikTok would have a really serious problem on its hands."
— Bell Lin [08:30]

8. Future Outlook and Supreme Court Decision

As the Supreme Court prepares to hear the case, the future of TikTok hangs in the balance. Georgia Wells and Bell Lin emphasize the significance of this decision not just for TikTok but for the broader landscape of foreign-owned digital platforms in the US.

Key Points:

• Judicial Precedent: The Supreme Court's ruling could set important legal precedents regarding the intersection of national security and First Amendment rights in the context of digital platforms.

• Emerging Challenges: Regardless of the outcome, the rise of other Chinese apps means that the issues TikTok faces will persist, necessitating ongoing legal and regulatory evaluations.

Notable Quote:

"I'm keeping my eyes squarely on the Supreme Court because they've said they're going to hear the case... it's really interesting moment for Americans to watch the Supreme Court kind of grapple with a lot of these novel issues."
— Bell Lin [09:21]

Conclusion

The WSJ Tech News Briefing episode provides an in-depth analysis of TikTok's tumultuous year, highlighting the multifaceted challenges the platform faces—from legal battles and geopolitical tensions to slowing growth and shifting valuations. As 2025 approaches, the Supreme Court's impending decision will be pivotal in determining TikTok's fate in the US, with significant repercussions for the global digital landscape.

Produced by: Julie Chang
Supervising Producer: Katherine Milsop