The Supreme Court upheld the law that will ban TikTok unless the popular short video app China-based parent company sells its U.S. operations. The ruling sets the stage for a TikTok ban beginning Sunday, an outcome analysts expect could benefit social media stocks such as Meta Platforms and Snap.
TikTok challenged the law on First Amendment grounds after it was approved by Congress last spring.
"There is no doubt that, for more than 170 million Americans, TikTok offers a distinctive and expansive outlet for expression, means of engagement, and source of community," the unanimous Supreme Court decision concluded. "But Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok's data collection practices and relationship with a foreign adversary. For the foregoing reasons, we conclude that the challenged provisions do not violate petitioners' First Amendment rights."
The decision came in as expected by analysts. The ruling confirms that China-based ByteDance must sell TikTok's U.S. operations to another company. If it doesn't, the TikTok app will be banned in the U.S. starting Sunday.
What Happens Next For TikTok Ban?
Despite the court's ruling, some lawmakers are maneuvering to save TikTok from going dark Sunday.
Reports indicate that both President Biden and President-Elect Donald Trump are weighing options to prevent an immediate shutdown. A Biden administration official told ABC News late Thursday that it "will be up to the next administration to implement," the ban-or-sell bill.
Trump, who will be inaugurated Monday, is considering an executive order that would delay enforcement of the TikTok ban-or-sale law by 60 to 90 days, the Washington Post reported Wednesday, citing unnamed sources. Trump attempted to ban TikTok during his first term but appears to have shifted from that view. He publicly opposed the TikTok ban while on the campaign trail last year.
"The Supreme Court decision was expected, and everyone must respect it," Trump wrote on his Truth Social platform Friday. "My decision on TikTok will be made in the not too distant future, but I must have time to review the situation. Stay tuned!"
The law requires app stores stop offering TikTok starting Sunday.
Users would likely still have access to the app if it is already downloaded on their phone. But it is possible TikTok decides to shut down the app proactively, according to reports from The Information and Reuters.
TikTok did not immediately respond to a request for comment following the Supreme Court decision.
Meta Stock Wavering
The twists and turns in the TikTok ban saga have moved some social media stocks. (Here's a more in-depth look at what stocks analysts expect will benefit – as well as one that could take a hit – with a TikTok ban in the U.S.)
Investors may still be counting on a last-minute reprieve for the popular short-video apps. Analysts at Wedbush took that view in a client note Thursday.
"We ultimately believe this ban will be delayed by the Trump Administration looking at myriad executive actions that will postpone the ban by up to 90 days until a sale/partnership/technology resolution can be reached with ByteDance," wrote Wedbush analyst Dan Ives in a client note. "It is also possible the Biden Administration may look to do something in his last days in the White House as pressure is growing from users in the U.S. as the ban date nears."
Shares of Facebook and Instagram parent company Meta Platforms were wavering in morning trading on the stock market today. Meta stock was initially lower by less than 1% following the decision. But shares edged back up to a slight gain in recent action.
Meta stock lost 1% to close at 611.30 on Thursday. The action followed news that Trump was looking for ways to delay the TikTok ban.
Snapchat parent Snap was down 2.5% at 10.94 in recent action. Shares lost 5% Thursday to close at 11.23.
