Trump issues new order to force TikTok sale: What you need to know

TikTok, well-liked amongst teenagers, lets customers add music and results to brief movies.

Angela Lang/CNET

This story is part of Generation China, CNET’s series exploring the nation’s technological ambition.

President Donald Trump issued a new executive order relating to TikTok that extends the time its dad or mum firm has to promote the US operations of the favored short-video app, after a authorities panel really useful the motion.

Issued late Friday, the brand new order offers ByteDance, the Chinese language dad or mum, 90 days to conclude a deal to divest the US arm. It additionally orders ByteDance to delete any knowledge obtained from US TikTok customers.

The brand new order doubles the period of time TikTok initially had been given to discover a US purchaser after an government order last week raised the prospect the app could be banned subsequent month. The preliminary order bars “transactions” with ByteDance, a transfer that would probably have an effect on Google’s Play Retailer and Apple’s App Retailer, which distribute the software program within the US. (A similar order targets WeChat, a messaging app owned by Chinese language big Tencent.) Trump issued the sooner TikTok order beneath the Worldwide Emergency Financial Powers Act, a regulation that enables the president to manage worldwide commerce after declaring a nationwide emergency.

“The unfold in the USA of cellular purposes developed and owned by corporations within the Folks’s Republic of China continues to threaten the nationwide safety, international coverage, and financial system of the USA,” the initial executive order reads. “Presently, motion should be taken to handle the risk posed by one cellular utility specifically, TikTok.”

Trump’s strikes come after weeks of excessive drama involving TikTok. The president has had TikTok in his sights since early July, when he said he would take action towards the corporate in response to China’s dealing with of the coronavirus pandemic. US Secretary of State Mike Pompeo said earlier that Trump was contemplating the ban as a result of the app may make US person knowledge accessible to the Chinese language authorities. The administration’s focus then turned to forcing a sale of the app to a US firm, and Microsoft entered into discussions with ByteDance to buy a part of the enterprise. (Microsoft declined to touch upon the manager order.)

TikTok blasted the unique government order in a blunt weblog publish that accused the administration of performing in unhealthy religion. 

“For almost a 12 months, we have now sought to interact with the US authorities in good religion to supply a constructive answer to the issues which have been expressed,” TikTok’s blog post reads. “What we encountered as a substitute was that the administration paid no consideration to details, dictated phrases of an settlement with out going via customary authorized processes, and tried to insert itself into negotiations between non-public companies.”

ByteDance, in the meantime, reiterated its dedication to protecting a TikTok presence within the US in a response to the newer Friday government order. 

“As we have stated beforehand, TikTok is cherished by 100 million Individuals as a result of it’s a residence for leisure, self-expression, and connection,” stated an organization spokeswoman. “We’re dedicated to persevering with to convey pleasure to households and significant careers to those that create on our platform for a few years to come back.”

TikTok is getting ready a lawsuit to problem the unique government order, according to NPR. The lawsuit will argue Trump’s motion is unconstitutional as a result of it did not give TikTok the chance to reply, NPR stated. TikTok declined to touch upon the report.

Individually, TikTok staff are raising funds for a possible lawsuit to challenge the order on the grounds it could deprive them of their livelihoods. The workers have signed up distinguished web lawyer Mike Godwin to characterize them. 

Rising issues about TikTok’s potential to entry the private knowledge of US customers come as TikTok sees its popularity explode. The app has gotten a brand new increase from the COVID-19 pandemic, drawing in folks trying to escape the boredom of lockdown. It has been downloaded greater than 2 billion occasions, in response to analysis agency Sensor Tower, with 623 million downloads through the first half of this 12 months. India had been its largest market, adopted by Brazil and the US.

The US is not alone in worrying concerning the app. India has already banned TikTok, and Australia can be contemplating blocking it. Trump cited the India ban in his government order.

In a transfer that would easy issues over with some lawmakers, TikTok stated on July 22 that it plans to hire 10,000 people in the US over the following three years. The corporate stated it could add roles in engineering, gross sales, content material moderation and customer support in California, New York, Texas, Florida and Tennessee. TikTok has additionally stated that it is organising a brand new knowledge middle in Europe and can make investments 420 million euros ($500 million) in Eire.

This is what it’s good to know concerning the political backlash towards TikTok.


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Why the US might try to ban TikTok


Why is the Trump administration worried about TikTok?

TikTok has drawn the attention of the Trump administration, as well as other parts of the government, because of concerns it scoops up information on Americans that could be turned over to the Chinese government. The US Army and Navy have banned service members from downloading the app to government-issued phones. Both the US House of Representatives and the Senate have voted to prohibit the use of TikTok on all government-issued phones. Two senators have also requested that the Department of Justice open an investigation of TikTok, as well as videoconferencing app Zoom. 

The concern stems in part from the perceived inability of Chinese companies to reject requests from China’s ruling Communist Party to access user data. China critics often cite a 2017 law that requires its companies and citizens to comply with all matters of national security. TikTok says all US user data is stored in the US, with a backup in Singapore. TikTok also says none of its data is subject to Chinese law. 

The statements didn’t satisfy the Trump administration.

“TikTok automatically captures vast swaths of information from its users, including internet and other network activity information such as location data and browsing and search histories,” the order reads. “This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.”

TikTok’s access to US users’ data may well be worth investigating. There’ll always be concerns when apps from foreign companies collect large amounts of user data, said tech policy expert Betsy Cooper, director of the Aspen Policy Hub.

But, she added, “it’s unclear how much effort the administration will put into actually investigating the seriousness of the specific security concerns with the app versus using this as a threat for broader geopolitical leverage.” 

Intelligence agencies have determined Chinese authorities could collect data through TikTok, but there is no evidence that they have done so, according to The New York Times. The Wall Street Journal found that the TikTok app for Android surreptiously collected device identfiers known as MAC addresses, although the practice ended in November. (TikTok told The Journal that it is committed to the “privacy and safety” of its users.)

What has TikTok done to address those concerns?

The company’s blog post following the executive order makes clear it isn’t happy. 

“We have made clear that TikTok has never shared user data with the Chinese government, nor censored content at its request. In fact, we make our moderation guidelines and algorithm source code available in our Transparency Center, which is a level of accountability no peer company has committed to,” TikTok said. “We even expressed our willingness to pursue a full sale of the US business to an American company.”

TikTok has emphasized its ties to the US and its independence from China. On July 29, TikTok CEO Kevin Mayer, an American, promised more transparency around how the app works, including making its algorithm available to experts. He called on other companies to do the same thing.

Following comments by Trump on July 31 about a TikTok ban, the company proposed selling the US operations to an American company. That would put the data of TikTok’s US users in the hands of a domestic company. 

Still, the app’s far-flung creators are clearly nervous about its future. Many are encouraging their followers to migrate with them to other platforms, such as YouTube and Facebook-owned Instagram. Instagram recently launched a new feature, called Reels, designed to compete with TikTok and attract creators. (TikTok hilariously trolled Instagram with a well-timed tweet on the day of the launch.)

Can the US make ByteDance sell its US operations?

A government panel called Committee on Foreign Investment in the United States reviews investments by foreign companies in the US for national security risks. If it does, the president can block the deal or ask for changes to it.

The CFIUS panel was investigating TikTok because ByteDance got its foothold in the US by purchasing in 2017 for $800 million. That business was subsequently rebranded it as TikTok and became the sensation that swept up US teens. The CFIUS investigation of TikTok was first reported in November 2019.

“Today the President issued an order prohibiting the transaction that resulted in the acquisition of, now known as TikTok, by the Chinese company ByteDance,” Treasury Secretary Steve Mnuchin, who chairs the panel, said in a statement after the second executive order. “The order directs ByteDance to divest all interests and rights in any assets or property used to enable or support the operation of TikTok in the United States, and any data obtained or derived from TikTok or users in the United States.”    

There’s recent precedent for Chinese companies selling off sections of their businesses. In March, Chinese company Kunlun agreed to sell its controlling stake in gay dating app Grindr after the committee raised national security concerns.

(If you’re super interested in CFIUS, the law firm Latham & Watkins has a detailed guide available here.)

What’s the status of a sale of TikTok?

The situation has changed almost as quickly as videos scroll on the app. Microsoft has acknowledged that it’s pursuing a deal for TikTok’s operations in the US, Australia, Canada and New Zealand. The deal, however, might be larger, according to The Financial Times, which reported the software giant might also be interested in purchasing all of TikTok’s global operations. (TikTok isn’t available in China, where a sister app is used.) A deal could be worth between $10 billion and $30 billion, according to CNBC. The large price range may reflect the different proposed deal structures.

The executive order leaves open the prospects of Microsoft reaching an agreement, since it doesn’t go into effect until next month. The president has suggested the US should receive a portion of the transaction price if a deal is struck. It’s unclear whether the government has the authority to request such a payment

Negotiations could be wrapped up within three weeks, CNBC reported, sooner than the Sept. 15 deadline that the company had initially suggested.

Other companies, including Apple and Twitter, are also reportedly interested, though it’s unclear how seriously they might pursue a deal.

Will this order completely take away TikTok? 

The government could use the executive order to require Apple and Google to pull TikTok from their app stores. But the companies would likely put up a fight. (Apple and Google didn’t respond to requests for comment on Thursday’s order.)

“The tech community will be very hesitant to go along with this app ban,” said Wayne Lam, an independent technology analyst. “It sets a precedent for the government to ban other apps or even for other global apps to be inaccessible to the US market.”

Even if the app does disappear from app stores, users can install apps on Android devices without downloading them from the Google Play Store, said Carolina Milanesi, a tech analyst at Creative Strategies. 

“I don’t know at that point how you police that,” Milanesi said.

The government also can’t make a specific app illegal for everyday folks to use, said Kurt Opsahl, general counsel at the Electronic Frontier Foundation, an advocacy group.

“There is no law that would authorize the federal government to ban ordinary Americans from using an app,” he said.

The US can’t keep the app from working on the internet, which some other countries can do, said Arturo Filasto, a co-founder of the Open Observatory of Network Interference. “There is no central place where you can go to and implement a unified filtering strategy, like there is in places like China and Iran,” Filasto said.

The government could order all ISPs in the country to block the app, but there’s no guarantee that TikTok wouldn’t find a way to get around those blocking efforts, Filasto said.

The US Department of State recently unveiled an initiative dubbed  Clean Network that’s designed to protect individual and corporate privacy. The program includes provisions to remove from US stores any apps that “threaten our privacy, proliferate viruses, and spread propaganda and disinformation.”

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Queenie Wong