Washington holds the future of both TikTok and ByteDance in its hands.

Who wouldn’t want to own a piece of the most valuable start-up in the world?

Valued, by some reckonings, at $220 billion last year, ByteDance arguably can claim that title. It boasts a majority ownership that includes financial powerhouses KKR, Sequoia Capital, Susquehanna International, General Atlantic, Tiger Global Management, and SoftBank. Aside from its crown jewel, TikTok, it numbers such popular apps as editing tool CapCut, workplace collaboration tool Lark, and news platform Toutiao among its creations.

And there always appears to be more on the way. ByteDance’s product pipeline rests on a specially designed shared services platform, geared to quickly deploy the right resources to the right project and get the resulting product out of the shop fast, that has attracted wide admiration including a 2022 analysis by Harvard Business Review.

The payoff for the privately held company: reported 2022 revenue of $80 billion and $25 billion in gross operating profit and a 60% profit surge in 2023. Thanks in large part to its most popular app, it was the first Chinese company since tech giant Huawei to establish a truly global brand, and the first to enjoy a resounding success with non-Chinese consumers, points out Fabian Ouwehand, CEO and co-founder of FRL, a social shopping platform, who has worked since TikTok’s debut with clients seeking to use the app to launch businesses.

But much of ByteDance’s rapid success—it only opened its doors a dozen years ago—could be in jeopardy if it finds TikTok locked out of the US by act of Congress. Speculation is rife about the future of the mega-popular video hosting service if it loses that market. It is already banned in over a dozen countries, from Afghanistan and India to the Netherlands and Taiwan; in February, the EU opened a formal investigation of its presence in Europe.

Complicating matters, TikTok is locked in intense rivalry with other social media providers; last month, it launched “TikTok Notes,” a text-and-images app that will compete directly with Meta’s Instagram. Many members of Congress that will decide TikTok’s fate no doubt hold some Meta stock in their portfolios.

But what about the company that birthed the app?

TikTok—along with its counterpart in the Chinese market, Douyin—is more than just ByteDance’s most visible and successful product, close observers say. It is the linchpin of the company’s ambitions to turn itself into a global powerhouse and an innovator in the commercial application of artificial intelligence. While the US market still represents only a small portion of TikTok’s revenue stream, it is vital to BydeDance’s effort to exploit the brand’s global presence, says Ouwehand.

Ivy Yang, founder of New York-based consultancy Wavelet Strategy, goes further. Without the promise of TikTok’s US market—users, advertisers, and more recently Chinese and other e-commerce vendors eager to sell to Americans—its parent will have difficulty attracting the funding it needs for the next stage of its own growth, she argues.

“Because of the potential of a ban, ByteDance is between a rock and a hard place for either placing an initial public offering or continuing to raise money privately,” Yang says. “The US has the largest audience, but it’s important not just because if the sheer numbers but because it’s potentially the most valuable market given the lifetime value of its customers.”

Douyin is still ByteDance’s biggest cash cow, but it is already used by close to half of China’s people, Yang notes, and so probably will not grow as rapidly going forward. Given the decline in consumer sentiment in the country, Douyin’s revenue growth could slow down. That puts more weight on the US in the eyes of investors; a curtailment in that market would make an IPO, which once looked like a logical next step for ByteDance, a tougher sell, Yang says.

It’s been argued that a ban on TikTok could be less of a catastrophe than predicted for its creator; in China, many users of prohibited foreign apps access them via virtual private networks anyway. But while VPNs could keep many if not most of TikTok’s current US users on board, Yang notes that they would add several steps for prospective new users looking to sign up and build user habit, and hence could slow future US growth: still not a good look for an IPO candidate. Additionally, should Congress pass an anti-TikTok bill, ByteDance will probably fight the legislation in court; while it might ultimately win on First Amendment grounds, the price would likely be years in legal limbo and another de-inducement to would-be backers.

Just how much of a negative a US ban would be to ByteDance’s long-term prospects is debatable, Ouwehand counters. E-commerce is a key component of the company’s long-term strategy, and it has had rapid success building its TikTok Shop platform into the app; in just a few years, he predicts, it could surpass Amazon globally, if not in the US. Meanwhile, the slow pace of action on TikTok’s status in Washington gives ByteDance time to figure out its next move.

“If a sale is forced, ByeDance will find a way to structure it so that it benefits them,” he predicts. Besides, the company has found ways around such dilemmas in the past; when TikTok was banned in Indonesia, he notes, it turned around and purchased that big market’s largest e-commerce platform.

Even people who know the company well have faulted ByteDance’s public and government relations strategy for letting matters get to this point, however. “The US is still a small portion of a big, global company, and they didn’t prioritize it for too long,” Ouwehand says. “I think they should be campaigning there every day.”

TikTok’s troubles in the US go back at least to 2020, when then-President Donald Trump ordered ByteDance to divest the app. The incoming Biden administration reversed the decision.

The company responded by spending $1.5 billion to launch “Project Texas,” which transferred all of TikTok’s U.S. user data to Oracle servers located in Austin.

That was a misreading of the problem, charges Yang; ByteDance was attempting to address a geopolitical problem through a technical fix that convinced none of its Washington critics. Efforts to find a US owner for TikTok only beg the question of how “American” the app needs to become to satisfy Congress—which hasn’t yet passed a bill defining this—and ignore Beijing’s firmly stated unwillingness to let TikTok’s valuable algorithm fall into foreign hands.

“At the heart of the issue, China/Bytedance will never allow the source code to be sold to a U.S. tech company, in our view, which makes this all a spiderweb issue for any potential strategic buyer,” Dan Ives, managing director at Wedbush Securities, told Nikkei Asia last month.

For ByteDance, then, much rides on its ability to lobby Congress and regulators not to shut down its biggest product in its most strategically important market, not least the future of its next stream of new products. In February, it launched Coze, a rival to Chat GPT in generative AI. Earlier, it was reported that the company was recruiting American talent for new initiatives in natural sciences and drug development. And in March, ByteDance announced that it was starting to incubate new online games, after having shut down an earlier effort.

Normally, the question would be whether any of these projects would be linked to TikTok in some way; the app is now a news source, not just an entertainment hub. But with the app’s future—at least in part—in the hands of Congress, the larger issue is whether ByteDance can continue to attract the capital it needs to keep innovating, both through TikTok and investors drawn to it.