The US calls time on TikTok
There was big news in the US this week as the House of Representatives voted to ban TikTok.
This is only the first step along a long road towards a ban being signed into law, but it does feel like a significant moment in the evolution of technology and the simmering war being fought on many fronts between the US and China.
Cross-aisle appeal
On Wednesday, the US House of Representatives voted to ban the use of TikTok in the US, a decision that was the culmination of many months of wrangling both out in the open (in front of Congress, for example) but also in darker, diplomatic Washington DC back channels.
The bill now moves to the Senate, which will, likely, align with the House. If/when it passes it will be handed either to President Biden, who has promised to sign it as soon as it hits his desk, or President-to-be Trump, who is (currently) against it.
Whoever is President, the massive support that the bill gained in the House means it will likely be signed into law at some point. 197 Rs. and 155 Ds. voted for it, and this level of cross-party agreement is pretty astonishing given the polarisation in US politics, and when you consider how its target is (ostensibly, little more than…) a platform for sharing dance trends and food challenges.
Small but hugely significant
TikTok was created in 2016 by ByteDance, a Beijing-based firm, registered in the Cayman Islands, that was founded in 2012. An American/Singaporean, Shou Zi Chew, is TikTok’s CEO, although it’s rumoured that ByteDance founder, Zhang Yiming, really runs the show.
For those still on MySpace or without teenage children (like me!), TikTok allows users to edit and post short videos, and it surged in popularity through the late 2010s as a place for dance, comedy, cooking and faddish memes and challenges. It’s grown into a platform where content creators (e.g. fitness instructors, chefs, tutors etc) post content and monetise it by selling products via TikTok Shop, which TikTok says is used by more than 7mn businesses in the US.
In 2023, TikTok battled Instagram to be the world's most downloaded app, and it currently has +170mn active US users. It’s small compared to, say, Facebook, but its influence is significant.
Project Texas
It is the data being generated by these users that’s the reason for the bill being voted through by the House, which was brought to the floor at a time when US-China tensions glow red hot.
Chinese companies are, by law, required to share data with their government. TikTok reassured US regulators that it was doing all it could to ensure the data of its US users had been walled off from ByteDance employees in China. Shou Zi Chew said the Chinese government has never asked TikTok for its data and that it would refuse such a request. He also stated that he was committed to keeping the platform "free from outside manipulation".
As part of a plan to provide the necessary reassurance, TikTok spent $1.5bn over 3 years on Project Texas with US tech firm, Oracle, drawing up a restructuring plan to safeguard the data of US users from Chinese infringement. The unit where this data is stored is up and running, but it has failed to assuage all fears.
Sell or get banned
Despite their (supposed) best efforts, Shou Zi Chew concedes that ByteDance in China can access some US data, with a WSJ report finding the system "porous". There have also been concerns over Beijing’s ability to manipulate TikTok algorithms, which allows Chinese authorities to push news and content to users, which is a worrying prospect in a US election year.
These concerns led Republican, Mike Gallagher, to co-author the bill, saying the US could not "take the risk of having a dominant news platform in America controlled or owned by a company that is beholden to the Chinese Communist Party". The House agreed, and if the bill passes into law, ByteDance will have 6 months to sell TikTok to a non-Chinese company or it will be banned from app stores. But a sale needs approval from China, which Beijing has vowed to oppose.
A ban would not stop most users using the platform immediately. However, in time, old versions would become obsolete, and content creators (including small businesses) would have to move their ecommerce business elsewhere. You can see why US-based shopping platforms, including giants like Meta and Amazon, have enjoyed this week’s outcome (and lobbied for the ban).
Caution and concern
I’m not a TikTok user, although as I recently divulged, the pulling power of short-videos has kept me on Instagram, so the popularity of TikTok is no surprise. Without doubt, it is an incredible tool for creators and small businesses worldwide, so inhibiting access to tools that help entrepreneurs is a concern.
Of course, the motivations for the ban are way bigger than stopping chefs uploading recipes and fitness gurus posting workouts. It is first and foremost about national security, but I’d wager there is a further compounding factor whereby lawmakers don’t believe apps are “good” for society, which is a sentiment I sympathise with. The extent to which these apps can track and store user data is concerning, and, dystopian fiction aside, we don’t yet know what happens at the conclusion of the social media/data experiment we’re currently running.
On the flip side, banning tech from other countries feels like a further lurch towards de-globalisation, which is a growing trend in recent years. Personally, I find this worrying and sad. I feel for content creators, who have built great businesses via the platform, and a part of what fuelled the growth of TikTok (and similar platforms) is the promise of technology that allows individuals, brands or companies to scale and go global. The point where this promise collides with geopolitics is a difficult line to tread, and it seems like the US is erring on the side of security and isolationism. You can’t blame them – but it does point to a more cautious and slower growth next chapter for the global technology sector.