ETtech Explainer: is TikTok staring at a potential ban in the US?

The situation is similar in many other countries, which have either banned the app like India or have increased their scrutiny on its functioning, citing national security concerns and passing of consumer data into the hands of Chinese authorities.

ETtech tries to answer some questions about TikTok and a looming threat of a ban.

Why is TikTok facing the ire of different governments & regulators?

They fear the data collected by the platform will be passed on to Chinese authorities since Bytedance, a Chinese internet company, owns TikTok. In December last year, FBI director Christopher Wray warned that TikTok’s privacy and data collection policies could allow for the capture of sensitive, personally identifiable information.

What is happening between TikTok and the US government?

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TikTok is embroiled in a difficult battle with the US government and different US regulators, with most of them strongly suggesting a blanket ban on the app. A White House-backed Bill was introduced by a dozen senators to give the Joe Biden administration new powers to ban Chinese-owned video app TikTok and other foreign-based technologies if they pose national security threats.The Bill would give the Commerce Department the ability to impose restrictions up to and including banning TikTok and other technologies that pose national security risks said Democratic Senator Mark Warner,

In addition, the US government’s Committee on Foreign Investment in the United States (CFIUS), a powerful national security body, in 2020 unanimously recommended ByteDance divest TikTok because of fears that user data could be passed on to China’s government, and has been at the forefront of executing the ban. However, some legislators are against the blanket ban and want a dialogue with the firm to continue for better solutions.

Which countries have cracked down on TikTok and why?

India was one of the first countries to have banned TikTok following an escalation of a military standoff along its borders with neighbour China. India banned TikTok and nearly 300 other Chinese apps in phases starting in June 2020 over national security concerns. TikTok had more than 200 million users in India then and was considered India’s biggest overseas market.

In an interview with ET, Brendan Carr, Commissioner of the United States Federal Communications Commission (FCC), said India has set an “incredibly important precedent” by banning TikTok and is a ‘guide star’ for other countries.

Apart from India and the US, Afghanistan, Pakistan, Canada, Belgium, and Taiwan, are some of the prominent countries that are either in talks to ban TikTok or have banned TikTok on government-owned security devices and phones of federal employees.

How does this impact TikTok and what has been TikTok’s response?

The hostility between China and other nations for several reasons has not augered well for TikTok. While claims of data collected by the app being passed onto Chinese authorities have not been conclusively proven, it has not stopped different governments from doing their bit to deter the usage of the app in their countries.

A media report in March 2022 said ByteDance Ltd. was anticipating a loss of over $6 billion after three of its apps, including the hugely popular video app TikTok, were banned by India.

TikTok and CFIUS have been negotiating for more than two years on data security requirements. TikTok said it has spent more than $1.5 billion on rigorous data security efforts and rejects spying allegations. TikTok has also tried to allay the fears by stating time and again that users’ data is safe and there is no possibility of it reaching the Chinese government.

However, it criticised the US government’s measure to introduce the Bill to ban it, saying that any “US ban on TikTok is a ban on the export of American culture and values to the Billion-plus people who use our service worldwide”.

TikTok chief executive Shou Zi Chew will be appearing before the US Energy and Commerce Committee to testify on March 23 in what will be his first appearance before a congressional committee.

Meanwhile, the European Union’s executive arm, the European Commission, also issued an order to ban the use of TikTok on its staff’s phones due to cybersecurity concerns. Separately, the European Parliament also banned the app from staff phones.

What is the way forward for TikTok amid such hurdles?

Dialogue with governments and regulators seems to be the best way forward for TikTok. But, that will be an uphill battle considering how most Western countries are skeptical about China, with the US in a full-blown trade war with China.

Further, TikTok is considering separating from parent ByteDance to help address US concerns about national security risks, Bloomberg reported citing people familiar with the matter.

A divestiture, which could result in a sale or initial public offering, is considered a last resort and will be pursued only if the company’s existing proposal with US national security officials does not get approved.