No Turning Back the Clock for TikTok and its Broader Business Ramifications
The United States (U.S.) government (USG) has long wanted to enervate TikTok, which hosts short-form videos and whose owner is China’s ByteDance. USG and subnational efforts have come in the form of Presidential Executive Orders, Committee on Foreign Investment in the United States (CFIUS) divestiture orders, proposed legislation in the US Congress, limitations by states like Montana and Texas, and restrictive measures at universities. These actions would or have banned TikTok from app stores and terminated their access to internet hosting and content delivery services, prevented employees from using the app on government devices, and blocked the app from official networks. The most high-profile, recent initiative is the “Protecting Americans from Foreign Adversary Controlled Applications Act,” which passed the US House of Representatives by a wide margin.[1] This “Hot Topics, Cool Analysis” piece discusses the roots of anti-TikTok machinations, the pushback against these efforts as well as some facts justifying concern, and the implication of US maneuvers for businesses.
The drivers of anti-TikTok angst are manifold. There are fears about potential Chinese government access to user data, espionage and blackmail, and disinformation campaigns. There are worries, too, about Chinese government censorship as well as use of the app for targeting. Furthermore, there are fair economic competition concerns.[2] Domestic and international political considerations are hardly absent. For some, suppressing TikTok is a way to demonstrate their China hawk credentials.[3] For others, it is yet another way to blunt the China threat. Pushback has assumed many forms. On the constitutional/legal front, it has been argued that USG and state measures exceed the authority granted by the International Emergency Economic Powers Act, violate the US Constitution’s First Amendment protections of religion, speech, and association, and/or fail to reduce risks in the least burdensome, necessary way.[4] On the economic front, the TikTok coalition has stressed the app’s 170 million strong audience, creation of hundreds of thousands of jobs (directly and indirectly), and benefits for 5 million small businesses as well as artists and content creators.[5] TikTok/ByteDance and China have not been idle. The former spends millions annually on lobbying and even ran a campaign sending app users pop-ups telling them to call members of Congress to oppose anti-TikTok legislation.[6] It also has proposed a multi-billion dollar setup (“Project Texas”) that involves storing data in the US and preventing TikTok and ByteDance employees outside the US accessing it.[7] The latter derides American maneuvers as anti-consumer, political theater, and protectionist and warns they will deter Chinese investment in the US.[8] Others have noted that removing TikTok from the scene would further ensconce dominant platforms like Meta, which, in turn, would decrease competition and innovation.[9] Yet others stress that the problem is not TikTok per se, but rather the US’s abysmal data protection laws and that Washington needs to focus on the whole.[10]
Reports do indicate TikTok has some problems protecting user data, has been used in ways critics have warned, and remains ultimately beholden to China.[11] For example, it has been revealed that TikTok employees exploited user data to spy on US-based journalists.[12] In addition, a New York Times exposé in May 2023 documented that highly personal user information was made widely available on “Lark,” an internal messaging and collaboration tool used by ByteDance employees, including those in China, and that Lark data was stored on servers in China.[13] In its annual national security threats assessment, the U.S. Office of the Director of National Intelligence reported that Beijing is using TikTok for propaganda and election interference purposes.[14] TikTok’s aforementioned pop-up campaign only highlighted for many in Congress TikTok’s potential for disinformation and political interference.[15]
Though they have said nothing publicly, American firms likely have mixed feelings about USG moves against TikTok. On the one hand, those hosting the TikTok app, providing services to TikTok (e.g., Oracle), or getting clickthroughs from TikTok (e.g., Amazon) could lose. American firms in China also might face retaliation. Similarly, companies using TikTok would have to shift to or redo their ad campaigns for new platforms, potentially incurring high costs or losing market share or followers in the process.[16] On the other hand, competing social media platforms like Meta, Snap, and Spotify might gain, a prospect former President Donald Trump divines and denounces.[17] Perhaps the silent are just waiting for clarity. After all, the prospects for US Senate passage of an anti-TikTok bill are uncertain; the history of past US initiatives against TikTok has not yielded any basis for worry, and there will be years of litigation and Chinese government opposition to any divestiture.[18] In any event, speaking out for or against TikTok could alienate the powers-that-be in Washington or Beijing. As for American firms, many are subject to the same criticisms thrown at TikTok so perhaps the idiom “those in glass houses shouldn’t throw stones” is shaping their responses. Even so, some industry associations have not shied away from voicing concerns about the implications of limits on TikTok.[19]
The campaign against TikTok is likely to continue. Therefore, businesses, large and small, should embrace, as banal as it is, the adage “don’t put all your eggs in one basket.” Artists, companies, and creators should diversify their advertising, hiring, and operations locations. Efficiencies and, perhaps, quality, may be lost, but there will be gains for risk management and strategic planning. Businesses also should support USG laws and regulations that give them greater bargaining power against the tech behemoths that so dominate social media.
Image source: Khangdora2809 licensed under the CCA-Share Alike 4.0 International license (https://commons.wikimedia.org/wiki/File:%E1%BA%A2nh_minh_h%E1%BB%8Da_c%E...)
[1] “United States Pursues Regulatory Actions Against TikTok and WeChat Over Data Security Concerns,” American Journal of International Law 115, no. 1 (January 2021), pp. 124-131; Andrew Adams, “Updated: Where is TikTok Banned? Tracking State by State,” Government Technology, December 14, 2022, https://www.govtech.com/biz/data/where-is-tiktok-banned-tracking-the-act... David Shepardson and Michael Martina, “U.S. Lawmakers Push for ByteDance to Divest TikTok or Face Ban,” Reuters, March 5, 2024, https://www.reuters.com/technology/lawmakers-seek-force-bytedance-divest... Brian Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” CNN, March 7, 2024, https://edition.cnn.com/2024/03/07/tech/congress-bill-bans-tiktok-americ... and Sapna Maheshwari and Amanda Holpuch, “Why the U.S. Is Weighing Whether to Ban TikTok,” The New York Times, March 12, 2024, https://www.nytimes.com/article/tiktok-ban.htm.
[2] “United States Pursues Regulatory Actions Against TikTok and WeChat Over Data Security
Concerns,” pp. 124-126; Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” March 7, 2024; and Aynne Kokas in “Time Up for TikTok?” China File, March 15, 2024, https://www.chinafile.com/conversation/time-tiktok.
[3] Annie Karni and Jonathan Swan, “House to Move Ahead with Bill Targeting TikTok as Trump Flips to Oppose It,” New York Times, March 11, 2024, https://www.nytimes.com/2024/03/11/us/politics/trump-tiktok-ban-cnbc.html.
[4] “United States Pursues Regulatory Actions Against TikTok and WeChat Over Data Security
Concerns,” pp. 126-129; Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” March 7, 2024; and Jeremy Daum in “Time Up for TikTok?” China File, March 15, 2024, https://www.chinafile.com/conversation/time-tiktok.
[5] Shepardson and Martina, “U.S. Lawmakers Push for ByteDance to Divest TikTok or Face Ban,” March 5, 2024; Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” March 7, 2024; and various TikTok press releases (see TikTok Newsroom, n.d., https://newsroom.tiktok.com/en-us).
[6] Anna Massoglina, “ByteDance Spends Millions Lobbying, Outpacing Prior Years Amid Crackdown on TikTok’s China Ties,” Open Secrets, July 26, 2023, https://www.opensecrets.org/news/2023/07/bytedance-spends-millions-lobby... Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” March 7, 2024; and Daniel Lippman and Caitlin Oprysko, “TikTok’s Lobbying Firms May be Next Target of Blacklist by Lawmakers,” Politico, March 15, 2024, https://www.politico.com/newsletters/politico-influence/2024/03/15/tikto....
[7] Sapna Maheshwari and Ryan Mac, “Driver’s Licenses, Addresses, Photos: Inside How TikTok Shares User Data,” The New York Times, May 24, 2023, https://www.nytimes.com/2023/05/24/technology/inside-how-tiktok-shares-u....
[8] See, e.g., “Congressional Threat of TikTok Ban a Living Example of Protectionism, Pan-Security: Experts,” Global Times, March 6, 2024, https://www.globaltimes.cn/page/202403/1308306.shtml.
[9] Damien Black, “Tiktok War in US: A 21st-Century Game Of Thrones,” Cybernews, April 13, 2023, https://cybernews.com/editorial/tiktok-battle-washington.
[10] Black, “Tiktok War in US,” April 13, 2023.
[11] On the last point, see FDD, “5 Things to Know about ByteDance, TikTok’s Parent Company,” FDD, March 12, 2024, https://www.fdd.org/analysis/2024/03/12/5-things-to-know-about-bytedance....
[12] Ibid.
[13] Maheshwari and Mac, “Driver’s Licenses, Addresses, Photos (May 24, 2023).
[14] Mallory Culhane, “The Chinese Government is Using TikTok to Meddle in Elections, ODNI Says,” Politico.com, March 11, 2024, https://www.politico.com/news/2024/03/11/china-is-using-tiktok-for-influ....
[15] Rebecca Klar, “TikTok Bill Sponsors Slam Company over ‘Deceptive Pop-up’ Campaign,” The Hill, March 11, 2024, https://thehill.com/policy/technology/4524604-tiktok-bill-sponsors-slam-....
[16] Orianna Rosa Royle, “Founders and CEOs Look at Possible TikTok Ban in Fear: ‘No Other Platform Does this as Successfully,” Fortune, March 28, 2023, https://fortune.com/europe/2023/03/28/founders-ceos-possible-tiktok-ban-...’ Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” March 7, 2024; Max Zahn, “Possible TikTok Ban in US: What’s at Stake and What Comes Next,” ABC News, March 13, 2024, https://abcnews.go.com/Business/possible-tiktok-ban-us-whats-at-stake/st... Derek Saul, “TikTok Ban: Here’s What Wall Street’s Saying—and the U.S. Firms at Risk of Contagion,” Forbes, March 15, 2024; https://www.forbes.com/sites/dereksaul/2024/03/15/tiktok-ban-heres-what-... and Anna Brennan, “What a TikTok Ban Would Mean for Social Commerce,” TotalRetail, March 21, 2024, https://www.mytotalretail.com/article/what-a-tiktok-ban-would-mean-for-s....
[17] Igor Patrick, “Joe Biden Vows to Sign TikTok bill Forcing China’s ByteDance to Divest as Donald Trump Voices Concern,” South China Morning Post, March 9, 2024, https://www.scmp.com/news/china/article/3254769/joe-biden-says-he-would-... Zahn, “Possible TikTok Ban in US” (March 13, 2024); and Saul, “TikTok Ban,” Forbes, March 15, 2024.
[18] David Separdson, “US Senate Not Moving to Fast-Track House Bill for TikTok Divestiture,” Reuters, March 13, 2024, https://www.reuters.com/world/us/us-senate-not-moving-fast-track-house-b... Kokas in “Time Up for TikTok?” (March 15, 2024); and Graham Webster, in “Time Up for TikTok?” China File, March 15, 2024, https://www.chinafile.com/conversation/time-tiktok.
[19] Fung, “House Panel Unanimously Approves Bill that Could Ban TikTok,” March 7, 2024.
*The information used herein is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content in this section does not necessarily represent the official view of the Wong MNC Center, its Board of Directors, or its Advisory Board.