The answer to that question is a resounding, “well, it’s complicated.” But before we jump into that legal briar patch, let’s take a quick look at the company that has so effectively managed to raise the president’s ire. If you don’t know what TikTok is, go ask literally anybody under the age of 30. The short-form, video-based website is a social media juggernaut. It pales against Facebook or Twitter in terms of monthly active users but TikTok still commands an estimated 70 million users in the US (and around 800 million worldwide). It’s owned by ByteDance, a Beijing-based company founded in 2012.
TikTok was launched internationally in 2017, a year after the Chinese-market version (dubbed Douyin) went live, though the app didn’t make it state-side until after ByteDance merged with Musical.ly in 2018. But when TikTok did hit, it hit hard, quickly becoming one of the most downloaded apps in both the American iOS and Android stores.
Despite its popularity, TikTok has repeatedly run afoul of concerns regarding its vast user data harvesting efforts. Most people think of TikTok as a silly dancing video app, Dr. Karen North, Director of the Annenberg Program on Online Communities at the USC Annenberg School for Communication and Journalism, told Engadget. However, “the reality is that TikTok was engineered in a way that makes it just a phenomenal data collection tool.”
“Not only is it built in a way that allows it to collect amazing data but it appeals to a very sought after demographic: young people who are just starting into having buying power,” she continued. North also notes that since many people today use their real names and real contact information when registering for the app, the data harvested from them will likely influence marketing and advertising efforts against them for years to come.
The reason that ByteDance has different versions of the same app for the Chinese and American markets is due to the two countries’ differing legal structures. Douyin, for example, has data flow back to different servers than TikTok data does in order to comply with China’s censorship requirements. ByteDance claims that TikTok is not available in China and that data collected from it is stored outside the country, the app’s terms of service do reserve the right to share any information with Chinese authorities. In short, the app’s competing dual natures have become untenable.
“There are different laws in China than there are in the United States,” North said. “They’re not just different, they’re in conflict with each other. Those are laws that involve data privacy. And eventually it wasn’t gonna work, even though people are — for the fun of dancing a TikTok dance — willing to give away their privacy.” Those privacy concerns have grown into calls for investigation since January 2019 when American think tank, the Peterson Institute for International Economics, described TikTok as a “Huawei-sized problem.” Since then, TikTok has been the subject of multiple Senate committee investigations as well as by the US Treasury’s CFIUS.
So, on the surface at least, Trump’s authority to “ban” TikTok (he never actually explained what that would entail) on national security and data privacy grounds is somewhat established. The National Emergency Economic Powers Act of 1977, for example, enables a president to declare a national emergency and drastically expand the executive branch’s power, Dr. Nikolas Guggenberger, Executive Director of Information Society Project at Yale Law School, noted to Engadget. As too does the National Security Act of 1947. He also points out that the Federal government has previously taken action against foreign owners of US apps when, earlier this year, it forced a Chinese company which had bought Grindr 2018 to sell its 98 percent stake in the app to a US venture capital firm.
This is not a new tactic for the Trump administration. It has previously leveraged bans — and the threat of invoking them — as cudgels for negotiation against both Huawei and ZTE. In May of last year, Trump declared a “national emergency” as pretext for banning Huawei products, though he eased parts of that trade ban in June following a “truce” with Chinese President Xi Jinping. Huawei has since sued the US, claiming that the trade ban is unfair and incorrect.
But in the end, it may not even really matter if Trump technically has the authority to ban an app from the US via executive order, Guggenberger argues. “There’s a legally sound way to do things and there is a way of doing things and still influencing the course of the development,” he said. In this case, Trump doesn’t even actually need to officially ban the app. The mere threat, when uttered from the Oval Office, is credible enough to pressure the situation into an outcome benefitting the president’s position.
The timing of Trump’s crusade against TikTok has also raised questions regarding his real motivations. Numerous outlets including NBC News, Forbes and Mother Jones have all noted that Trump’s July 31st threat came just over a month after his Tulsa, Oklahoma campaign rally. That rally was the first held since the outbreak of the COVID-19 pandemic and was kind of a big deal to the president. In the weeks running up to the June 20 event, the Trump campaign team proudly crowed about the massive amount of RSVPs it had received for the event — reportedly numbering more than a million.
Over 1M ticket requests for the @realDonaldTrump #MAGA Rally in Tulsa on Saturday.
Before entering each guest will get:
There will be precautions for the heat and bottled water as well.
— Brad Parscale (@parscale) June 15, 2020
The actual turnout to the event was 6,200, per ticket scans conducted by the Tulsa Fire Department and fire marshal. TikTok users from around the world claimed to have coordinated to game the Trump campaign’s RSVP system, flooding it with bunk email addresses and convincing then-campaign manager Brad Parscale that the rally would be an overwhelming success. Parscale was demoted from his position in the campaign shortly thereafter.
Both North and Guggenberger brought up the Tulsa rally — individually and without prompting — during our conversations. North notes that “If I were in the federal government, I could probably come up with excuses to claim that [banning TikTok] is a homeland security issue. But, of course, is it [also] a political battle between Donald Trump, China and TikTok because of Tulsa? That all muddies the waters in a situation where there’s legitimate privacy concerns.”
Guggenberger expressed concern for the First Amendment implications of banning the app. “Shutting down TikTok as a medium does chill free speech in an area that is a crucial tool for young Americans to express themselves and [you could see] how impactful it is — whether you agree with what happened or not — in Tulsa,” he said.
Presidential pettiness aside, Trump’s actions against TikTok are only the latest in a series of attacks aimed at social media companies and how they are regulated. In May, following Twitter’s decision to add fact-checking banners to Trump’s disingenuous tweets, the president took a swing at Section 230 of the Communications Decency Act of 1996. That section states, “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Essentially, it indemnifies social sites like Twitter, Facebook and TikTok from being held liable for content posted by their users.
“It’s unclear what to make of this because, to a certain extent, you can’t just issue an executive order and overturn on a whim 25 years of judicial precedent about how a law is interpreted,” Kate Klonick, law professor at St. John’s University, told the NYT.
Trump’s executive order on the matter, “was clearly garbage on substance,” Guggenberger declared. “But again the question is, ‘does it really matter and to what extent can you make policy based on garbage orders?’ The executive order back in May regarding section 230, if you looked at it closely, it had barely any content.”
The executive order did little more than direct executive agencies to review their ad spending on online platforms and demand that the DOJ “establish a working group regarding the potential enforcement of State statutes that prohibit online platforms from engaging in unfair or deceptive acts or practices.” The order lacked teeth, so to speak.
“And yet the discussion around it,” Guggenberger continued, “and the pressure that it puts on social media companies that have been attacked, does shape public discourse. It does distract from the egregious failures of the administration in other instances.”
Speaking of egregious failures, Trump compounded his ban threat on Monday by asserting that the US Treasury should be compensated for its role in ‘facilitating’ Microsoft’s potential purchase of TikTok’s US operations.
“It’s a little bit like the landlord/tenant; without a lease the tenant has nothing, so they pay what’s called ‘key money,’ or they pay something,” Trump told reporters during a press event at the White House. “But the United States should be reimbursed or should be paid a substantial amount of money, because without the United States they don’t have anything, at least having to do with the 30 percent [Microsoft had been considering purchasing a 30 percent stake in the company rather than buying it outright].”
Guggenberger wouldn’t go so far as to characterize it as extortion outright, “I’m not entirely sure whether there’s not some sort of tax levy that the administration can impose on sales by foreign investors to American companies,” he admitted. “That is something I simply don’t know.”
“What’s appalling is the bundling,” he countered. “Even if there were some sort of toll or some sort of tax that they could levy on the transaction, bundling that to a threat to ban something, then nudging a US company into buying the foreign entity, and then levying a tax… even if you found a legal basis for doing so, bundling that is beyond anything that’s even halfway legally sound.”
Despite this situation’s legally ambiguous nature, the parties directly involved all have something to gain from the transaction’s eventual success. Trump can play up his reputation as being a “master negotiator” ahead of the November elections should the sale go through while TikTok will be able to continue its operations beyond the illuminating glare of multiple congressional investigations. But the biggest winner in this situation is clearly Microsoft.
As North explains, Microsoft is one of the most dominant computer firms in history. However, the company has struggled to make an impact in the social and digital entertainment space, losing pace to both old rivals like Apple and upstarts like YouTube, Hulu, Instagram and Twitter. Microsoft has made inroads in recent years, first acquiring Minecraft (with its 100 million-plus MAUs), followed by LinkedIn.
“Minecraft I think was a great acquisition for Microsoft because of Xbox,” North said. “Now they have this, phenomenally popular game in Minecraft. it brings in generations now of streaming digital players.“
“It keeps coming back and it keeps holding on to older and older players,” she continued. “My kids are in high school. They grew up with Minecraft and they’re still on Minecraft… some of these influencers are now in their ‘20s, or even ‘30s, they’re getting married and having kids, and they’re still on Minecraft.”
Between Minecraft, Xbox, and LinkedIn, Microsoft appears to have the cradle-to-cubicle pipeline pretty well locked down. However, “[TikTok’s audience] is still missing, especially the young adult crowd,” North argued. “They’re completely not part of Microsoft’s digital demographic and nobody’s really identified the company as a leader. So if Microsoft brings in TikTok, then they actually become a company to watch.”
TikTok’s new CEO, Kevin Meyer, is also sitting in the catbird seat. The former Disney executive who helmed the development of Disney+ only to be passed over for the seat vacated by now retired-CEO Bob Iger. “I was happy with my job at Disney,” Mayer told the NYT in May. “The magnitude of this opportunity was just something I couldn’t pass up.” Especially now that he has a chance at potentially earning a C-Suite office in Redmond.
Facebook is another unexpected winner from this sale. Though not party to the transaction itself, the Silicon Valley social media company did just so happen to have its TikTok clone, Reels, loaded up and ready to release right as Trump’s bellowing hit its climax. Weird how that worked out so conveniently.
But you know who isn’t happy about all of this? That’s right, China. ”China will by no means accept the ‘theft’ of a Chinese technology company, and it has plenty of ways to respond if the administration carries out its planned smash and grab,” per an op-ed published on Wednesday in the state-run newspaper China Daily.
“President Trump is turning the once great America into a rogue country,” Hu Xijin, the editor of (also) state-owned Chinese paper, the Global Times, tweeted on Monday. As Guggenberger concedes, there’s not a whole lot preventing China from turning the tables on the US and demanding similar sales ie, demanding that Microsoft sell its China-based business ventures to a Chinese firm if it, as a whole, wants to keep operating in the country.
So while there are clearly winners and at least one loser in this national fire sale, the future effects and implications for American civil rights, not to mention the nation’s relationship with near-peer China, won’t likely be resolved before November’s elections. Unfortunately, neither will Tim Wu’s insightful question, posited on Monday, “which is more anticompetitive: letting TikTok to be banned altogether in the US, or letting it be absorbed into one of the 5 giant tech conglomerates we call big tech?”
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