Lawmakers in the U.S. House of Representatives on Wednesday passed legislation aimed at forcing Chinese internet company ByteDance to sell popular social media app TikTok.
The vote is the latest development in a years-long new tech cold war between the United States and China, as the two sides compete for control of key technologies from computer chips to artificial intelligence. Lawmakers and the White House have expressed concerns about the national security risks posed by Chinese ownership of TikTok, as the Chinese government could use the app to obtain data on Americans or conduct disinformation campaigns.
The bill faces a tough prospect in the Senate. The Senate’s Democratic leader, New York Sen. Chuck Schumer, has not yet committed to putting it on the ballot.
Why Do House Members Support This Bill?
Many of them worry that the Chinese government will demand that ByteDance provide Americans’ data, which ByteDance must do under Chinese law.
Lawmakers including Wisconsin Republican Rep. Mike Gallagher and Virginia Democratic Rep. Mark Warner, co-sponsors of the bill, also said China could use TikTok’s powerful algorithm to instill political propaganda into its users. FBI Director Christopher Wray and Director of National Intelligence Averell Haines also raised these concerns last year.
The bill, co-sponsored by Gallagher and Rep. Raja Krishnamurthy, D-Ill., has bipartisan support.
TikTok said the concerns were unfounded. It noted that about 60% of its shares are held by institutional investors around the world, including financial giants Haina International Group and BlackRock. The company also said there are three Americans on its five-person board of directors. According to the company, it has spent more than $1 billion on a plan to store sensitive U.S. user data on servers operated by U.S. cloud computing company Oracle.
How Would the Bill Force Bytedance to Sell TikTok?
The bill essentially stipulates that TikTok must be sold to a buyer that satisfies the U.S. government within six months. The outcome of the sale would be to ensure that ByteDance no longer has any control over TikTok or its algorithm for recommending content to users.
If ByteDance is unable or refuses to sell TikTok, it will become illegal for app stores and website hosting companies to distribute or update the app in the United States. The U.S. Department of Justice can punish any company that cooperates with TikTok or provides downloads of its applications.
Is It Easy for Bytedance to Sell TikTok?
It probably would not be easy.
TikTok has 170 million users in the United States alone, so the price will be high and few companies or individuals can afford it. If forced to sell, it’s unclear whether ByteDance would sell off the app’s entire global business or just its U.S. operations.
Some companies that may be able to afford TikTok include Microsoft, Google, and technology giants such as Meta, which owns Facebook and Instagram. But the Biden administration has repeatedly tried to use antitrust laws to prevent these companies from getting bigger.
Even if ByteDance can find a buyer for TikTok, China may no longer allow the sale to take place. When U.S. officials first tried to force the sale of TikTok in 2020, the Chinese government enacted new technology export rules to impose export restrictions on technology that sounded similar to TikTok’s content recommendation algorithm. The Chinese government had expressed opposition to the sale last year.
“ByteDance cannot be forced to dispose of its property rights,” said James Lewis, senior vice president at the Center for Strategic and International Studies.
What Are Bytedance’s Options for TikTok?
In addition to a sale, ByteDance may pursue other options, such as spinning off TikTok through an initial public offering.
Details of the sale are likely to hinge on a key question: whether ByteDance sells or spins off TikTok’s entire global business or just the portion of the app that operates in the United States. Selling U.S.-only apps could raise some big questions, from how the algorithms that recommend content to users work to whether content from other countries can be displayed.
What Are the Political Implications of a TikTok Ban?
The ban has received bipartisan support as Republicans and Democrats alike worry about China’s influence.
But what is surprising is that former President Trump has expressed opposition to TikTok legislation in recent days. It’s a U-turn from his stance on the app in 2020 when he tried to ban TikTok.
“Trump’s opposition is a significant new headwind to getting the bill into law,” said Paul Galante, policy analyst at TD Cowen. “A lot will depend on whether he fights as hard on this TikTok bill as he did on the border security bill.”
Free speech groups also opposed the bill, saying they feared the ban would restrict speech.
What Does This Mean for TikTok Users?
If the bill passes both the House and Senate and is then signed into law by the president, it would impose civil penalties on app stores, such as those run by Apple and Google, that let users download or update TikTok.
The app is already installed on millions of U.S. phones, but restrictions on updates are likely to diminish the quality of the app for users.
There will also be a measure banning web hosting companies from helping distribute the app.