BusinessExlainer

Why is TikTok facing a ban in the US?

National security grounds are cited for seeking change of ownership of the social media platform

American lawmakers have passed a bill that could lead to TikTok being banned in the United States if its Chinese owners do not divest any US assets of the app.

Ciara O'Brien's face
Ciara O'Brien
Thu Mar 14 2024 - 13:32

There is a sense of deja vu in the US. Not only is Donald Trump running for president, but TikTok is once more facing a ban on national security grounds.

Granted, there are some differences this time around. The action is coming through the House of Representatives, rather than an executive order, with the house overwhelmingly backing the measure this week. And they aren’t calling it a ban, rather than they want a change in ownership.

Regardless, the future once more looks uncertain for the social media platform.

Why is TikTok facing a ban?

The main reason lies in its ownership. Bytedance is a Chinese company and, as such, is subject to Chinese laws, prompting fears in some quarters that it would co-operate with the Chinese government if compelled to do so.

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[ US House approves Bill to ban TikTok over national security concerns ]

The US wants Bytedance – and by extension, any links it is perceived to have with the Chinese Communist Party – out of the picture.

In the US, fears about access to the vast quantity of data gathered by TikTok – and, it must be said, other social media platforms – have preceded this attempt at a ban.

Already the app is barred from US government officials’ phones on security grounds, and the US is not the only country to take this step.

Linked to the questions over its ownership is its size and influence. Hugely popular with younger users, TikTok also has a significant engagement rate with users, giving it more influence than other platforms.

There have been concerns about the platform’s algorithms being manipulated to suit certain interests, and possibly spreading disinformation at a state’s behest.

What has TikTok done in response?

To no one’s surprise, TikTok is not happy with the move. “This process was secret and the Bill was jammed through for one reason: it’s a ban,” the company said in a statement.

“We are hopeful that the Senate will consider the facts, listen to their constituents, and realise the impact on the economy, seven million small businesses, and the 170 million Americans who use our service.”

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TikTok has repeatedly denied that it would co-operate with the Chinese government on handing over data, and its chief executive has publicly said it has never been requested to do so.

In recent years, TikTok has put a number of measures in place to try to persuade various governments that it is not a risk to national security.

In Europe, there is Project Clover, a plan to ringfence personal information from its users in the European Economic Area, the UK and Switzerland in data centres in Ireland and Norway, The work will be independently verified by European security company NCC Group, including auditing data controls, monitoring data flows and reporting incidents.

In the US, there is Project Texas, a plan that effectively walled off US data from the rest of the company, safeguarding user data in an attempt to allay any concerns.

However, that has not been sufficient to keep US interests happy.

What will the bill do?

The bill, as it currently stands, will compel Chinese owner ByteDance to sell its stake in TikTok’s US business within six months or face being shut down in the country.

That means app stores operating in the US would not be allowed to carry it, at the risk of a significant fine, and ISPs would have to block traffic.

The latter could be easily solved with the use of virtual private network to hide internet traffic and location – ironically, something that many users in China of US social media companies just to get around the Great Firewall that blocks access – blocking the app from app stores would create a problem.

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While those with the app already installed wouldn’t see it disappear from their devices, there would be repercussions. First, no new users for TikTok in the US, where it currently has 170 million active users, meaning it would stagnate.

It doesn’t end there though. While the company could possibly deal with lack of growth in the US, the ban would also prevent any updates from being sent out to users. That means no new features, and any software bugs would go unfixed. If users change phones too, they would not be able to redownload the app.

Will it happen?

TikTok has already faced a ban at state level. Last year, Montana banned the app, requiring its removal from app stores inside the state.

But TikTok fought back, and before the bill came into effect on January 1st, a federal judge blocked it. Montana is appealing the decision, but the outcome is far from certain.

In 2020, the Trump administration gave TikTok 90 days to spilt from its Chinese ownership, or face a ban. That too was blocked by the courts, and the executive order that gave effect to the measure was rescinded by Joe Biden.

This latest action is a broader swipe at the company and its Chinese owners. It had broad support from both sides of the aisle in the house, although it still must get through the US senate.

TikTok, for its part, is mobilising its user base. The platform TikTok has more than 1 billion active users, and 170 million of them are in the US. While that adds up to a fraction of the user base, the US accounts for a larger proportion of the company’s revenue.

Some of those 170 million users have made their objection to this action known, particularly smaller business owners who use the platform to take advantage of the growing social commerce trend that has allowed companies to reach new markets.

Is a sale likely?

Last time around, Microsoft and Oracle were mooted as the potential buyers of the US business. But that was back in 2020, when the platform was less valuable than its is now.

Plus the moves to break up the influence of big tech companies, both in the US and Europe, would make buying TikTok less attractive for those with deep enough pockets to fund the purchase.

Even if someone did want to buy the company, any sale would have be approved by Chinese authorities. China has already said it would not back an enforced sale of the US business.

Actually carrying out the sale wouldn’t be an easy task either, not in a relatively short time frame. And then there is the messy task of detangling TikTok US and the rest of the world – would the services exist separately? Would it retain its appeal to users?

Will there be repercussions?

If a sale is forced through, there may be retaliation from China. While Meta-owned services such as Facebook and Instagram are already banned, along with Twitter, Snapchat and Google, there are some US companies that operate in China.

Apple, for example, manufactures iPhones and other devices there, although the company has been shifting to other markets, such as India.

Anything else?

Although Donald Trump was initially behind a TikTok ban in 2020, he has now changed his mind. And current US president Joe Biden said he will sign the bill if it passed. But his campaign is also using TikTok to reach out to younger voters. So there’s a lot of hedging of bets going on here, with a healthy dose of hypocrisy.

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