The US House of Representatives has taken a significant step by voting in favor of banning TikTok unless its Chinese parent company, ByteDance, sells the social media platform. This decision, passed with a substantial majority of 352-65, puts the future of TikTok in a state of uncertainty and poses potential dissatisfaction among younger voters, a key demographic for Congress. The move illustrates the complex interplay between market optimism, as reflected in rising asset prices, and the looming long-term risks such as geopolitical tensions, domestic politics, climate change, and technological innovations. This juxtaposition is creating a volatile investment climate, with TikTok at the center, highlighting the costs associated with geopolitical risks and unpredictable US policymaking.

ByteDance, once valued at approximately $300bn, has seen its valuation plummet to around $180bn following these developments. Investors are now grappling with not just short-term monetary policy challenges but also the need to forecast and hedge against unpredictable political risks, leading to heightened interest in safe-haven assets like gold and bitcoin.

In response to the House’s decision, US investors in ByteDance, including prominent firms like General Atlantic and Sequoia Capital, are exploring strategies to take control of TikTok by potentially excluding ByteDance from its operations, subject to approval from the Chinese government. Drawing parallels with National Amusements’ relationship with Paramount, these investors are considering the involvement of a US technology partner to safeguard user data against Chinese influence, with Oracle being a possible collaborator. Efforts to spin off TikTok to a US entity involving Walmart and Oracle had previously failed under the Biden administration. Despite investor movements and initiatives led by former Treasury Secretary Steven Mnuchin to bid for TikTok citing national security issues, the stance of ByteDance’s founder and the opposition from Beijing to a forced sale based on export regulations complicate the situation further. Inquiries for comments from investors like Susquehanna, General Atlantic, and Sequoia have not been addressed.