For some time now, we’ve always thought that TikTok was likely going to have a problem in the United States as the trade war between the US and China continues. The FBI came out last year to discourage American citizens from using it and since they couldn’t everyone to stop using the China originated app, they asked Federal employees to stop using it. But now President Donald Trump is taking this a step further by announcing yesterday night aboard Airforce One that he would be banning the app outrightly.
Microsoft had offered to buy the popular social media platform but with the plan to outrightly ban the service in the United States, it looks like even the Microsoft plan may be in jeopardy at this point. The President said “As far as TikTok is concerned, we’re banning them from the United States” which potentially kills Microsoft’s plan.
In the United States, the President is granted emergency economic powers and this empowers whoever occupies that office to reject mergers and acquisitions that may seem to be a threat to the US economic and national security. So, he could issue an executive order asking ByteDance, TikTok parent company to sell its United States operations or in other cases stop operating in the US altogether.
With reports of a ban coming, ByteDance reportedly has been considering making changes to its corporate structure which may mean that it would sell its majority stake in TikTok to an American company in order to
appease the American government. But it looks President Trump is rejecting the idea of an American company even taking a majority stake or potentially acquiring the company.
TikTok took everyone by surprise when it launched internationally in 2017. It got about 315 million downloads in its first three months making it the first Chinese service outside of China to achieve that. Since then they now have about 800 million active users globally with its app downloaded by two billion people in the App Store and Play store combined. With these numbers you can see how the United States will be concerned about data being shared with the Chinese government. China has a national security law that forces tech companies to share data with the government should the need arise unlike in many Western societies where tech companies can seek redress in court should such orders come from the government. China is close to a dictatorship so companies don’t have the luxury of suing the government. This is the same problem Huawei had with the West that has now seen it lose its 5G network participation privileges in the United States and United Kingdom and we suspect many other nations will follow suit.
TikTok critics say these data in the hands of the Chinese may pose a greater risk to national security of Western nations but TikTok says its stores data outside China and in fact that US data in stored in the US and that it would resist any attempt by the Chinese government to force it to share the data.
“TikTok US user data is stored in the US, with strict controls on employee access. TikTok’s biggest investors come from the US. We are committed to protecting our users’ privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform,” TikTok spokesperson Hilary McQuaide told CNN.
Other experts believe that TikTok has proven beyond doubt that it stores data outside China and that should convince the West. But the truth is that there’s an ongoing trade war between the US and China which just means that the US will use every tool at its disposal including Chinese tech giants at the negotiation table. China wants to be global power and it needs to keep expanding its companies and initiatives abroad to achieve this. No matter how they spread its influence to developing nations, it still needs the developed West to achieve its global power status mainly because of the wealth in that part of the world. But this war could force China to change some its stringent national security laws that forces companies to share data with it upon request. China also has a big protectionist problem that makes it difficult for Western tech companies to thrive over there and so maybe this would make them reconsider how they interact with the rest of the world.
But there is a potential political risk to President Trump too this close to the November presidential election. The core users of TikTok in the United States are aged 18-35 and this is a huge voting bloc as this could be seen as a retaliatory move against TikTok teens who have been accused of derailing his post COVID-19 gradual reopening Tulsa rally.