The Hypocrisy of The TikTok Ban
Congress' call for "privacy reform" solely targets TikTok at a time when American Big Tech companies have a free rein on customer data.
This week, the US House of Representatives passed a bill calling for TikTok to either divest from its parent company ByteDance or be banned from the United States. Fervour for anti-TikTok legislation has been growing in Washington in recent years, and now reaches a fever pitch as the Capitol looks to ban an app that 170 million Americans use monthly. Lawmakers argue that guardrails are needed in order to protect the privacy of Americans, but this bill - and the solutions it offers - look to exploit that very privacy even more.
Talk of a TikTok ban first started in 2020 when then President Donald Trump tried to ban the app via an executive order. Like today, the former President gave an ultimatum; divest or leave. The executive order was blocked in court, partly because the President lacked clear authority from Congress. The U.S. State of Montana also attempted to ban the app in 2023, but judge Donald W. Molloy shot down the ban, citing a violation of First Amendment rights.
Since then, Wisconsin Republican Mike Gallagher and Illinois Democrat Raja Krishnamoorthi have attempted to resurrect the ban and have seen success. This process was accelerated after the October 7th terrorist attacks in Israel. After the attacks, TikTok was awash with support for the Palestinian civilians who had lost their lives in the ensuing conflicts. Individuals who previously had not expressed a stance on TikTok became worried about the portrayal of Israel in videos and perceived a rise in antisemitic content uploaded to the platform. No doubt a catalyst for the introduction of the Protecting Americans from Foreign Adversary Controlled Applications Act.
The bill would ban TikTok from app stores and web-hosting services in the U.S. if the company doesn’t divest from ByteDance within six months, via a buyer that is approved by the U.S president. It also establishes a process by which the President can prohibit other social-media apps that are “controlled by a foreign adversary.” Incidentally, “foreign adversary” is not defined, opening the door to ever changing interpretations of the term, something that is more than likely by design.
To say that TikTok is popular in America would be an understatement. One-third of U.S. adults say they use the site, and one-third of U.S. adults under 30 say they regularly get their news on TikTok. Even President Biden, despite saying he would sign the ban into law if it made it to his desk, recently started a TikTok channel for his re-election campaign. It’s a moneymaker too, the Financial Times reports that US revenues of the private company grew to $16Bn in 2023. This would make it the 3rd largest US social app by revenue, behind Meta’s Facebook and Instagram.
The Committee on Foreign Investment in the United States is an interagency body that reviews foreign investments for national security concerns. This would typically be the body that deals with a matters of a TikTok ban. For instance, it was a review by the committee that caused a Chinese buyer to reverse its acquisition of the dating app Grindr in 2020.
For years, discussions between the committee and TikTok have revolved around addressing national security issues. Following a directive from President Donald Trump, the committee was tasked with investigating TikTok further. TikTok proposed a solution involving the transfer of all data on American citizens to a U.S. subsidiary under Oracle's supervision. Additionally, Oracle would have been responsible for monitoring TikTok's algorithms and content removal decisions on behalf of the U.S. government. However, the government rejected this proposal for undisclosed reasons, leading to a deadlock in negotiations.
Proponents of the bill will argue that a platform that holds such sway over U.S. public opinion should not be owned by a foreign country. This goes back as far as World War 2, before which a bill was passed limiting foreign ownership of U.S. radio stations. However, TikTok’s parent company ByteDance is a privately-held global company, with roughly 60 percent owned by global institutional investors (such as Blackrock, General Atlantic, and Susquehanna International Group), 20 percent owned by the company’s founders, and 20 percent owned by its employees—including over 7,000 Americans. No government agency appears on the company’s cap table. The same can’t be said for U.S. companies Meta, Twitter and The Walt Disney Company, who are partly owned by the Saudi Arabian sovereign wealth fund.
It is often brought up that TikTok could share U.S. user data with the Chinese Communist Party (CCP). The company has denied this, and to date no proof of any data breaches or sharing agreements with the CCP have been reported.
Forcing a sale of TikTok to a U.S. approved entity would far from solve the privacy issue that Congress is trying to fix. Assuming a revenue multiple consistent with social apps, TikTok’s U.S operation would have a market value of around $150Bn. Even if we apply a forced sale discount, the only American companies capable of making that acquisition would be the Big Tech giants - Meta, Microsoft, Amazon or Google. Most of these companies entire business models involve leveraging customer data to maximize revenues, which would be at odds with what Congress is supposedly trying to accomplish.
Even if the ban was enforced, those 170m users would just default to the social apps that remain. Facebook, Instagram and Twitter have had their fair share of scandals over the years, and entrenching them even further by getting rid of their largest competitors would be counter-productive. In an election year, where Meta recently announced they would be sunsetting Facebook News, this could lead to a misinformation disaster.
In 2015, Facebook came under fire when it was discovered to have given British consulting firm Cambridge Analytica access to user personal data. Political campaigns used the data to target ads. A few years later, a 2018 indictment brought by Special Counsel Robert Mueller detailed the ways in which Russian interests manipulated Facebook, YouTube, Twitter, and Instagram to rally support behind hashtags like #Hillary4Prison, #IWontProtectHillary and, at the other end of the spectrum, #MAGA and #Trump2016. Are these the platforms to be trusted with MORE data of hundreds of millions of young users?
The nature of the double standard was voiced most aptly by U.S. Democrat Representative Sara Jacobs, who after a national security briefing on TikTok for members of Congress, said this to The Associated Press: “Not a single thing that we heard in today’s classified briefing was unique to TikTok. It was things that happen on every single social media platform.”
This is precisely where the problem lies. Privacy reform, a necessary and immediate issue, should protect Americans from all angles. A short sighted bill such as this, would strengthen the current big tech incumbents at the expense of the American people. If reigning in these multi-trillion dollar companies is difficult now, imagine how difficult it could be when one of them either owns the TikTok user base or has a fierce competitor out of the running. Their access over our shopping habits, news consumption and entertainment sources has already done enough damage, why empower them even more?
What would be impactful is setting up fundamental privacy regulations that prevent companies from exploiting our data and empower us to manage the algorithms designed to influence us. Companies from all parts of the world, even those within U.S. borders.
This isn't about privacy, it's about geopolitics. I don't think TikTok would be under such pressure if it was a Western company.
American companies are global. They won't face this type of harassment in other nations ... For now. But these are keeping count, and when the US won't be strong enough to force such policies, they'll do the same to American companies.
I wouldn't be celebrating if I were a competitor. This is bad precedent. Hegemony is fluid, and China is rising regardless.
To push back here slightly:
China won’t allow any US social media products or apps including Uber in their society and yet has free reign to import their views and culture to ours.
TikTok the application is literally banned in China.
Their counterpart, Douyin, inserts educational clips into their algorithm and has a built in time limit.
At a basic trade relations level, the US should not allow any foreign national to import media and culture to our people if we cannot respond in turn, especially if that application has been banned in its home country.
Also disagree above with Patrick that “China’s rise is inevitable”. They are approaching the middle income trap and have huge demographic problems due to years of their “one China policy”
Yes it’s geopolitical. Obviously it’s geopolitical. But when there is a trade imbalance that should be rectified.
Would love your thoughts