U.S. wants TikTok’s Chinese owner ByteDance to divest over security. Is it too late?

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TikTok is once again facing calls to divest itself from its Chinese-based parent company over national security concerns that are prompting more Western government bans of the popular video-sharing app.

But experts say forcing ByteDance into a sale of its most prized asset will likely take years, face legal challenges, and may come too late for an app that is already used by over a billion people worldwide each month and is a key resource for young people and advertisers.

“I don’t think that any of this will happen quickly in the event that it does occur,” said Aynne Kokas, an associate professor of media studies at the University of Virginia and the author of Trafficking Data: How China is Winning the Battle for Digital Sovereignty.

“I think this is an opening salvo to perhaps try to enhance the overall protections against the app.”

The Wall Street Journal reported Wednesday that the Committee on Foreign Investment in the U.S. (CFIUS) — part of the Treasury Department — was threatening a U.S. ban on the app unless ByteDance divests its stake.
The White House would not confirm the demand was made, but press secretary Karine Jean-Pierre told reporters the Biden administration has “concerns, as we have said many times before, about this particular software platform.”

Both the FBI and the Federal Communications Commission have warned that ByteDance could share TikTok user data — such as browsing history, location and biometric identifiers — with China’s authoritarian government.

A 2017 Chinese law requires companies to give the government any personal data relevant to the country’s national security, though the law itself is murky about what that threshold is.

There’s no evidence that TikTok has turned over such data, which China’s foreign ministry pointed out Thursday in response to the report while accusing the U.S. of spreading disinformation about data security and seeking to suppress the app’s success.

But ByteDance itself has faced increased scrutiny since December, when the company said it fired four employees who accessed the data of two journalists from Buzzfeed News and The Financial Times while attempting to track down the source of a leaked report about the company.

TikTok dismissed the Wall Street Journal report in a statement to Global News, with a spokesperson saying divestment won’t address the broader concerns.

“If protecting national security is the objective, divestment doesn’t solve the problem: A change in ownership would not impose any new restrictions on data flows or access,” Maureen Shanahan said.

Instead, TikTok is urging U.S. lawmakers to support its “Project Texas” data security regime that would store U.S. user data locally with “robust third-party monitoring.” The company launched a similar strategy in Europe, dubbed “Project Clover,” earlier this month.

That hasn’t been enough to placate U.S. lawmakers in Congress, who are moving to pass legislation that would give the Biden administration more power to enact a national ban of TikTok, which the White House says it supports.

But implementing the Project Texas strategy will take years, Kokas says — as has CFIUS’s still-ongoing national security review.

In the meantime, more countries are moving forward with banning TikTok from government-issued mobile devices.

On Thursday, the United Kingdom joined the U.S., Canada, the European Union and Belgium in ordering the app be removed from employees’ phones, calling the move “a precaution.” New Zealand followed suit on Friday.

Provinces and states in Canada and the U.S. — but not all — have also enacted bans within their own governments.

In Canada, TikTok is currently the subject of a joint investigation by the federal privacy commissioner and privacy watchdogs in Quebec, British Columbia and Alberta focused on its data collection practices.

A spokesperson for the office of Innovation, Science and Industry Minister François-Philippe Champagne would not confirm if TikTok is currently the subject of a national security review in Canada, similar to CFIUS’s.

“The establishment of new businesses by non-Canadians in Canada are subject to review under the Investment Canada Act, including companies such as ByteDance (TikTok),” Laurie Bouchard told Global News in an email.

“Due to the confidentiality provisions of the ICA, we cannot comment on reviews.”

TikTok currently has offices located in Toronto and Vancouver, which are among the over 200 offices ByteDance manages from its global headquarters in Beijing.

Randolph Mank, a fellow at the Canadian Global Affairs Institute who once led BlackBerry’s business expansion into Asia, says Canada and other Western countries are wrestling with how to walk the fine line between personal freedoms and national security.

“We always have this dilemma in the West, don’t we?” he said. “We believe in free speech and free competition in the marketplace, and yet we don’t want our data to be scooped up and used for nefarious purposes.”

He said any further action by Canada over TikTok would likely mirror the response to Chinese telecom firms Huawei and ZTE, which have been banned from Canada’s telecommunications networks and government networks but whose devices are still allowed for personal sale and use.

“I suspect we’ll wind up in the same place on TikTok, especially if the United States moves to ban it,” he said.

In 2020, then-President Donald Trump and his administration sought to force ByteDance to sell off its U.S. assets and ban TikTok from app stores. Courts blocked the effort, and President Joe Biden rescinded Trump’s orders but ordered an in-depth study of the issue.

Kokas says First Amendment challenges by influencers whose incomes rely on the app will most likely be launched again if the White House were to resume a push for a ban.

A planned sale of TikTok’s U.S. assets was also shelved as the Biden administration negotiated a deal with TikTok that would address some of the concerns over national security.

If that deal falls through and a divestment is forced, Kokas says it wouldn’t be without precedent.

In 2020, the Chinese gaming company Beijing Kunlun Tech sold the popular gay dating app Grindr to an investor group amid U.S. pressure — also over fears of data sharing. But that sale took over a year to complete and is not nearly as popular as TikTok is.

“This is really very much, at least historically, a process of ‘hurry up and wait,’” she said.

Ultimately, experts like Kokas say the likeliest path forward for an app that is currently used by two-thirds of teens in the U.S. alone is to address the national security concerns head-on, suggesting it might be too late to rid the West of TikTok entirely.

She pointed to India, whose government banned the app across the country in 2020 amid a border dispute with China. At the time, the app had over 200 million users in India but, Kokas says, had not become an integral part of the digital ecosystem the way it has in Western countries.

“I wonder if maybe we missed the boat,” she said.

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