Back in the main bar, a bunch of German officers are loudly playing and singing a patriotic German song.
At Victor's behest, the club's orchestra (uh, yeah, clubs had orchestras back then, it seems) starts playing the "Marseillaise" at the same time. Oh—anthem-off! The French national anthem takes this one, no contest.
It's a brave and poignant moment as the refugees stand and belt out the patriotic song.
Strasser, now further convinced that Victor's presence in town will do nothing but inspire the populace and make things harder for the Reich, commands Renault to shut down Rick's and order everyone out.
Which he does. It's probably best; it was starting to feel a bit too much like a karaoke bar in there.
As the place is clearing out, Strasser corners Ilsa and tells her that her and Victor's safety—and life—are threatened unless he's given over to him so that Strasser can bring Victor back to occupied France. The snarl and harsh tone show that he can definitely be trusted.