The Supreme Court’s recent decision to support the proposed TikTok ban may have serious repercussions not only for the app’s owner, but also for major American technology firms and the overall U.S. stock market.

As Donald Trump is set to be back in the White House the day after the ban is expected to start, it’s uncertain how the new administration will approach the enforcement of this law. Nikolas Guggenberger, a law professor at the University of Houston, highlighted that it will be intriguing to see Trump’s response, especially since he did not enact the ban himself, and following through with it could be unpopular with the app’s 170 million users. Notably, TikTok’s CEO Shou Zi Chew intends to attend Trump’s inauguration.

Initially, the company indicated intentions to suspend its operations in the U.S. come Sunday; however, after the Supreme Court’s ruling on Friday, Chew expressed gratitude to Trump for his efforts in “finding a solution” to keep TikTok running in America.

“We appreciate having the support of a president who genuinely understands our platform — one who has utilized TikTok to express his views and connect with the global audience, gathering over 60 billion views of his content,” Chew stated. “We have been dedicated to defending the constitutional right to free speech for the 170 million Americans who engage with our platform daily to connect, create, discover, and realize their aspirations.”

Enforcement could lead to U.S. servers ceasing TikTok support

The Biden administration’s choices regarding the ban’s enforcement will significantly impact many American firms such as Oracle, Apple, and Google, which may incur fines as steep as $5,000 for each user if they continue operating servers for the app.

Guggenberger noted that while TikTok would be removed from app stores, it might still be accessible on devices of existing users. However, its functionality remains uncertain. He speculated that U.S. servers may stop rendering support for the app, which could lead to diminished performance over time.

Without intervention, Guggenberger warned that “the medium to long-term outcome is likely that the app will certainly become nonfunctional,” as TikTok would be unable to push updates through the app store.

What’s the impact on the U.S. stock market?

Experts predict that U.S. social media companies may gain traction if a TikTok ban is enforced post-Supreme Court ruling on Sunday.

The Supreme Court affirmed a law that could ban TikTok unless its Chinese parent company, ByteDance, agrees to sell it. President Joe Biden, who enacted this legislation, has chosen not to enforce the ban and is allowing President-elect Donald Trump to determine the course of action once he assumes office on Monday.

During a Supreme Court hearing last week, TikTok attorney Noel Francisco pointed out that Trump wouldn’t have authority until his term officially begins, which may result in TikTok going offline as soon as Sunday, rendering it unavailable for download and without service support. It remains unknown how Trump might resolve the ban or what actions are within his legal authority.

Analysts believe that around 170 million TikTok users in the U.S. could be attracted to alternative platforms.

“U.S. users are likely to flock to applications that promise substantial audiences and closely mimic TikTok’s features, such as Instagram and YouTube Shorts,” remarked Damian Rollison, SOCi’s market insights director. “These platforms, along with others like Snapchat that are already well established in the U.S., are likely to adjust their offerings to capture TikTok’s audience – a trend that is subtly occurring already.”

The share prices of Meta, which owns Facebook and Instagram, and Alphabet, the parent company of Google and YouTube, rose by about 3% midday Friday. Meanwhile, shares of Snap, which owns Snapchat, dropped over 1% due to a non-public complaint from the Federal Trade Commission regarding the potential risks its My AI chatbot presents to young users, a matter the FTC is referring to the Department of Justice.

A potential Musk acquisition?

Previous reports have indicated that ByteDance might be looking to sell TikTok to Elon Musk, the owner of X.

“Given the strengthening relationship between Trump and Musk, this potential avenue isn’t entirely surprising as the Trump administration is reportedly exploring alternatives soon after taking office next week to seek a solution,” remarked Wedbush Analyst Dan Ives. “Musk’s association with Beijing’s Xi Jinping may provide additional assurance regarding this potential deal.”

What might the TikTok ban entail?

According to a Trump adviser, the President-elect may halt the ban, highlighting that the law permits a 90-day extension for ByteDance if considerable progress is made towards a sale. However, Noel Francisco had informed the Supreme Court during a hearing on January 10 that Trump wouldn’t be able to intervene until Monday, risking TikTok going dark as early as Sunday — which would mean the app would no longer be available for download, and service support would cease.

The company has previously stated intentions to shut down the app, where users launching it would encounter a notification directing them to a website with information concerning the ban, according to Reuters, relying on sources who requested anonymity due to the confidential nature of these actions.

Sources have indicated that TikTok would also allow users to download their personal information to keep records of their data.

Companies supporting TikTok may face challenges

Other technology firms could potentially benefit from advertising revenues and users if the ban is imposed, as some analysts suggest.

“If the U.S. Supreme Court verifies the TikTok ban, unless it divests from ByteDance, the ruling will likely advantage platforms like Meta, YouTube, Snap, and possibly other digital media entities, as advertising expenditures would shift to these platforms,” stated Emile El Nems, Vice President at Moody’s Ratings, in a note prior to the court’s ruling. “Should the company pursue a sale, the number of potential buyers may be limited due to the company’s valuation and antitrust issues associated with major technology firms.”

While social media competitors vying for TikTok users may gain opportunities, firms that support the Chinese app could see negative effects.

For instance, Oracle provides cloud services for TikTok, and in its last annual report, the tech giant noted that “if we are unable to provide services to TikTok, and cannot reallocate that capacity promptly, our revenues and profits would be adversely affected.”

Additionally, Microsoft has reportedly benefited significantly from TikTok, with its cloud AI business generating 25% of its revenue from the platform last summer.

Amazon could face scrutiny if the TikTok ban persists. The company was questioned by Congress last September about its growing relationships with the Chinese company in a confidential meeting, according to Bloomberg.

Through their partnership, TikTok users can purchase products from Amazon directly within the app via ads, and they can easily link their accounts on both platforms to facilitate future purchases.

Free Speech or a threat to privacy?

Guggenberger is among a group of free speech advocates who signed an amicus brief in the Supreme Court case, urging the court to invalidate the law. He noted that the court’s ruling on Friday seemed to heavily concentrate on privacy concerns related to surveillance and data flows rather than the potential risk of propaganda spreading through the app.

“This represents a significant shift from any regulatory measures we’ve encountered before,” Guggenberger mentioned to YSL News. “Although similar ownership restrictions have appeared in other media, like television and radio, this level of scrutiny regarding internet platforms is unprecedented.”