TikTok has gone another day without being banned in the U.S as the popular social apps parent company Bytedance negotiates a deal with U.S regulators to resolve security concerns. On August 6th, Donald Trump published executive orders targeting the viral video app. The orders declared that the app would be blocked from processing transactions for US citizens and from being downloaded in US app stores on September 20th, due to security concerns. On August 14th, Trump said in a separate executive order that TikTok would face a complete ban if it did not sell to a US company by November 14th. Trump invoked the International Emergency Economic Powers Act for his executive orders to block TikTok from the United States. It was the first time the law has been used against a technology company.
What is TikTok?
TikTok is one of the biggest current mobile applications with 700 million global users as of July 2020. It is used to create short lip-sync, dance, and comedy videos of 15 to 60 seconds. The app has spawned numerous viral trends and Internet celebrities. One in six people in the United States is now a weekly user of TikTok. The app just hit 53.5 million weekly average users in the United States and in the first week of September was the #1 top-grossing app on the iOS App Store globally in the second quarter of 2020.
Why Is TikTok In Trouble?
Lawyers for the Trump administration say it is in the interest of national security to ban TikTok due to links between ByteDance, the app’s parent company, and the Chinese government. A government brief called ByteDance a “mouthpiece” for the Chinese Communist party, and said it was “committed to promoting the communist party’s agenda. Chinese law forces companies to cooperate with the government on national intelligence work, and officials from both parties in the United States said there was a risk that Beijing could access Americans’ sensitive data.
TikTok has denied these accusations, saying US user data is not processed in China and that the company does not give the Chinese government access to US users’ personal information.
In August, TikTok sued the U.S. government and accused the government, saying said that the order violated TikTok’s Fifth Amendment due-process in attempting to ban the app. In the lawsuit, TikTok said it “had no choice but to take action.” as the government gave the company no “notice or opportunity to be heard.” TikTok claims that the order is not based on a genuine national emergency and the administration hasn’t proven that TikTok’s activities meet the legal standard of “an unusual and extraordinary threat” required by the International Emergency Economic Powers Act although TikTok is no longer expected to move forward with the lawsuit.
On September 27th a judge blocked an order from the Trump administration that would have removed TikTok from app stores in the US. Judge Carl Nichols, granted an injunction against the order. ByteDance stated that without an injunction it would suffer “irreparable harm”, even if the ban was eventually lifted. In a statement, TikTok said they “were pleased that the court agreed with our legal arguments and issued an injunction preventing the implementation of the TikTok app ban,”.
How TikTok has survived So Far?
Trump said that TikTok could avoid the ban if it sells US operations to a US company. Microsoft was seeking to purchase the app, but its bid was denied. In a statement, Microsoft said: “We are confident our proposal would have been good for TikTok’s users while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”
Ultimately, Trump gave preliminary approval to a deal that would sell US operations to US companies Walmart and Oracle. The deal puts more control of TikTok into the hands of Americans, with four of the five members of the new board being American. Oracle would also oversee the app and could verify the security of TikTok’s code and any updates. Walmart and TikTok are discussing how to integrate Walmart and TikTok features into each other’s respective apps. The government did not say how the deal would fix its security concerns about TikTok but President Trump said that TikTok would “have nothing to do with China, it’ll be totally secure, that’s part of the deal.”
What Does the Deal mean?
The details on the deal with Oracle and Walmart are still being worked on. Under the current agreement, ByteDance will spin-off US operations into a new company called TikTok Global. Oracle will serve as a data host for the new operation and hold a 12.5% stake in the company. Walmart will hold another 7.5%. But the remaining 80% will be held by ByteDance. Oracle and Walmart would own a cumulative 20 percent stake in TikTok Global, which said it planned to hire 25,000 people in the United States over an undisclosed period and go public sometime in the next year. TikTok has also promised to pay $5 billion to the U.S. Treasury.
Is TikTok Out of the Woods?
Though the initial ban has been blocked, the Trump administration could appeal it, and the November deadline for ByteDance to finalize a deal is drawing closer. In order for a ban to occur the US could have internet service providers block TikTok usage from US IP addresses, as India did when it banned TikTok to make TikTok unusable. TikTok has created numerous social media influencers who have built successful businesses on the app. A TikTok ban would most likely force these influencers to other social media sites. For now, TikTok remains available to the millions of American users as the clock moves toward the November 12th deadline.
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