After the novel coronavirus pandemic prompted stay-at-home orders across the globe, millions of people turned to social video app TikTok to cure their cabin fever.
Not everyone, though, is pleased with the app’s growing popularity — especially amid data privacy concerns connected to Beijing-based parent company ByteDance, which is currently worth upwards of $100 billion. President Donald Trump is among the detractors and on Aug. 6 issued an executive order that would bar “any transaction by any person” with ByteDance or any of its subsidiaries.
According to the order, TikTok “captures vast swaths of information from its users,” which could allow the Chinese government “to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.” Trump’s order also said that TikTok “reportedly censors” content and “may also be used for disinformation campaigns.”
TikTok on Aug. 7 issued a statement saying that it was shocked by the order and it would take the matter to court if necessary.
“The text of the decision makes it plain that there has been a reliance on unnamed ‘reports’ with no citations, fears that the app ‘may be’ used for misinformation campaigns with no substantiation of such fears, and concerns about the collection of data that is industry standard for thousands of mobile apps around the world,” reads the statement. “We have made clear that TikTok has never shared user data with the Chinese government, nor censored content at its request.”
The company — which operates its U.S. headquarters out of Los Angeles and hired Disney veteran Kevin Mayer as its CEO this spring — said it has been working with the government for nearly a year to find solutions to the concerns, including expressing a willingness to sell its U.S. operations to an American company.
“What we encountered instead was that the Administration paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses,” TikTok said. “We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly — if not by the Administration, then by the US courts.”
TikTok previously said that it stores the data of its American users on servers in the U.S. and Singapore. It also promised to open a transparency center in Los Angeles where it would provide more context on how it moderates the content that appears on its app. Though many users use TikTok to dance, tell jokes and cook, some use it as a political platform. It also served as a communication tool during the Black Lives Matters protests that spread through the country in June following George Floyd’s death.
“There is serious reason to believe that the executive orders concerning TikTok and WeChat are motivated at least in part by a desire to censor and not simply to preserve national security,” says entertainment and media litigator John-Paul Jassy. “TikTok is used by an estimated 100 million Americans for all sorts of expression, including mocking the President and coordinating an effort to tank his Tulsa comeback rally.”
He continues, “Given the President’s prior stances antagonistic to social media platforms, as well as his demand that the U.S. government get a percentage of any sale of TikTok, and his 45-day delay in actually implementing an order that is supposedly a national emergency, there is plenty of reason to doubt the motivations behind these orders.”
Trump’s order points to perceived national security threats and cites the International Emergency Economic Powers Act and the National Emergencies Act as providing his authority to take this action.
In order to invoke the IEEPA, he’d have to declare a national emergency. Back in May 2019, through an executive order on securing the information and communications technology and services supply chain, Trump declared an emergency on the basis that unrestricted use of technology owned, manufactured or controlled by “foreign adversaries” gives those foes the ability to “create and exploit vulnerabilities” in those services that threaten national security, foreign policy and the economy.
Once a national emergency has been declared, and amid “an unusual and extraordinary threat,” the IEEPA gives Trump the authority to investigate, regulate or prohibit certain business transactions between those subject to U.S. jurisdiction (companies and citizens) and foreign-owned entities.
There are limits, though. There’s a carve out that specifically says the powers do not include the authority to regulate or prohibit, directly or indirectly, “any postal, telegraphic, telephonic, or other personal communication, which does not involve a transfer of anything of value” or to block “the importation from any country, or the exportation to any country, whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds.” There could be debate over whether TikTok streams that generate revenue from paid partnerships are, in fact, transferring something of value and therefore aren’t merely sending personal communication in 15-second installments — but it’s harder to argue that they aren’t transmitting information.
Jassy is dubious that the NEA and IEEPA apply here.
“The International Emergency Economic Powers Act applies to ‘unusual and extraordinary threats,'” says Jassy. “If the threat were so unusual and extraordinary, why did it take this long to issue an Executive Order, and why is it on hold for 45 days? A similar question arises under invocation of the National Emergencies Act.”
While the exact ramifications of the order remain unclear, Electronic Frontier Foundation Civil Liberties Director David Greene says it’s difficult to imagine a version that wouldn’t be problematic with regard to free speech.
“If the effect of it is to make it illegal for U.S. persons to use TikTok that raises serious First Amendment concerns,” he says. “When people use TikTok they’re speaking. It’s also a serious First Amendment issue if it would make it illegal for the app stores to distribute TikTok. The app stores themselves have a First Amendment right to distribute speech and the apps themselves are speech.”
Julie Shapiro, director of Loyola Law School’s Entertainment and Media Institute, agrees that it’s too soon to know for sure that the effect of Trump’s order would be an outright ban — but, if it is, the effects could be widespread.
“If TikTok is banned, then the App will be removed from the Apple and Google stores, or disabled entirely for U.S. users,” she says. “Social influencers will move to competitors (Instagram, Triller); commercial brands and professional sports teams will move their marketing money to competitors. There will be no music royalties generated for publishers and artists. If U.S. personal data collected by Chinese companies poses a security risk, banning TikTok is not the answer. A broader and more global consensus is necessary.”
First launched as Douyin in China in 2016, TikTok soon began to spread to other countries under a different name. It came to the U.S. in 2018 after ByteDance acquired a similar app called Musical.ly for as much as $1 billion. The app, which was recently banned in India, has been downloaded more than 2 billion times around the world, according to third-party analytics firm Sensor Tower.
TikTok has taken off with young Americans who find its interface easy to navigate, lowering the barrier to making entertaining content. Its powerful algorithm can also turn a little-known TikToker into an overnight viral sensation by promoting them via the personalized “For You” feed that users see when they first open the app. That’s how Charli D’Amelio, the 16-year-old dancer from Connecticut, became the most-followed creator on the app with nearly 80 million followers.
While ByteDance is fighting Trump’s TikTok ban, the company has also been fielding acquisition offers for the app’s U.S. business. Microsoft was first to emerge as a contender for the business. Satya Nadella, CEO of the Redmond, Washington, based company, spoke with Trump after he said he was considering banning the app. In a statement, the company said it “fully appreciates the importance of addressing the President’s concerns” regarding TikTok and that it would seek to close a deal before his 45 day cut-off. Notes Shapiro, “If the transaction happens, then the national security concerns promulgated by Trump would be reduced.”
Twitter has also reportedly held talks about acquiring the business. Though Trump uses Twitter frequently, the platform recently began labeling tweets of his that contain misinformation. The company is also considerably smaller and has shallower pockets than Microsoft. The deal talks come three years after Twitter shuttered a similar product, Vine.
While Greene says he does believe there are legitimate security concerns surrounding TikTok, he doesn’t believe “that security concern justifies a total ban on the application.”
He also warns that Trump’s parallel executive order targeting WeChat should put the entertainment industry on alert. WeChat is owned by Chinese media conglomerate Tencent, one of the largest companies in the world. The White House reportedly later clarified that order was only intended to affect WeChat, but so far there has been no further explanation.
“Tencent owns fully or in part several video game companies with popular games in the U.S.,” says Greene. “It will be interesting to see if there will be similar pressure on Tencent to sell off its U.S. pieces.”
Tencent currently owns stakes not only in Riot Games (League of Legends) and Epic Games (Fortnite) but also companies like Spotify and Universal Music Group — and it has distribution deals with major Hollywood players (its credits include A Beautiful Day in the Neighborhood, Wonder Woman and the upcoming Top Gun: Maverick) and a $1.5 billion five-year deal with the NBA to stream pro basketball games in China.
This article was originally published by The Hollywood Reporter.