Without radical changes, TikTok could vanish in the US
Another push for TikTok to sell its US operations, along with government bans, are raising questions about the future of the platform's US business.
www.businessinsider.com
Paayal Zaveri
Dec 29, 2022, 8:28 AM
A display from the TikTok booth at the Hangzhou International Ecommerce Expo in October 2021. CFOTO/Future Publishing via Getty Images
- There is again a push to get TikTok to sell its US operations amid security and privacy concerns.
- Meanwhile, government bans on TikTok are raising questions about a full ban for US consumers.
- Experts are split on whether a ban is possible, but agree that at least something needs to change.
According to The Wall Street Journal, Pentagon and DOJ officials are pushing for the government to force TikTok to sell its US operations due to security and privacy concerns about ByteDance, its China-based parent company. The Journal's story comes as the Committee on Foreign Investment in the US, or CFIUS, continues to press TikTok to guarantee that the Chinese government does not access or use US consumer data.
Meanwhile, the House of Representatives and 19 state governments have banned the app from government devices. Another bill, pending President Joe Biden's signature, prohibits TikTok on all federally owned devices.
But the most significant debate is on whether the US government should completely ban TikTok. Experts are split on if a total ban on TikTok for consumers is likely. Some think there aren't many other options left, while others believe the drawbacks of a ban would outweigh the benefits. But there is a consensus that something needs to change to address the ongoing privacy and security concerns.
The complicated logistics of a total consumer ban
Most experts Insider spoke to said that at the very least, TikTok will likely be banned for government and corporate devices."I believe there will be a TikTok ban on all devices of employees engaged in critical infrastructure like banking, energy, healthcare, transportation, in addition to the military," Patrick Moorhead, the CEO and chief analyst of Moor Insights and Strategy, said.
Moorhead said TikTok will likely need to open up to more scrutiny to avoid a total consumer ban. "If TikTok doesn't agree to random, deep inspections, I could see it getting banned entirely," for consumers, he said.
While a ban on TikTok is a definite possibility, several Wall Street analysts and industry experts think a negotiated settlement between the US and TikTok is more likely.
Logistically, to completely ban TikTok, the government needs to cite a specific law TikTok is breaking. That's what happened when India banned TikTok citing a law that allowed India to block websites and apps in the "interest of sovereignty and integrity of India," after a geopolitical dispute between India and China.
However, that kind of law doesn't exist in the US, Mark Shmulik, a senior analyst at Bernstein, said.
The other option is to show that TikTok is a national-security risk, which has been the strategy so far, he said.
"I would put the probability of an outright ban quite low at the moment," Shmulik said. "Though a change from the current state of operations is feeling increasingly likely by the day."
Other analysts agreed, saying that TikTok is hugely popular with young voters who tend to skew Democratic, and the Biden administration likely doesn't want to risk losing them.
"From a political perspective, Biden administration officials need to balance the need to be hawkish on China with the risk of alienating young voters," analysts from Evercore ISI, an investment-banking advisory firm, wrote in a recent note to clients. "Both the substantive and political tradeoffs are thorny, which could lead to prolonged indecision."
Walling off data as a compromise
Analysts said that one compromise could be to enforce stricter rules around how TikTok shares and stores data in the US. While the deal with Oracle to host all of TikTok's US user data was a way to assuage lawmakers' concerns around privacy and security, it hasn't solved all the issues.TikTok was found to be tracking journalists from the Financial Times and BuzzFeed and accessing their personal data and IP addresses.
"The bottom line is we need tighter rules, policies, and enforcement," Daniel Newman, the principal analyst of Futurum Research, said. "This is a chance to show that we can actually have this type of strategy for managing data without fully shutting down an app."
Would China let ByteDance sell?
It's unclear how successful a push for sale would be because ByteDance and the Chinese government would likely oppose it, Evercore ISI analysts wrote in their note.That's why some experts think a ban is the only course of action left. David Glancy, a professor at The Institute of World Politics, said he thinks a ban is inevitable in the next six months to a year because of how China's political-influence campaigns are evolving.
"China's political warfare, strategic-influence campaigns, have become more aggressive," Glancy said. "In the last couple years, it's come out that they're trying to interfere in elections. They're actually becoming more aggressive and adopting some of the techniques that the Russians have been using."
It's a tricky situation for both the US government and TikTok. Whatever decisions legislators make will have immense implications for the future of tech regulation, for America's relationship with China, and for the growing ecosystem of creators on the app.
"The ban is possible," Newman said. "My intuition is that we're going to land at some sort of compromise that will keep TikTok as a running application in the US, probably with some pretty strict covenants on data."
