Is Beijing-based ByteDance, the company that owns TikTok — the largest social media app in the US — obtaining private user data for the Chinese Communist Party? Rattled by national security concerns, the United States thinks so, and therefore has mandated all government-issued mobile phones in the country to delete the Chinese-owned social media app within 30 days; this period expires within a week. Going by the seriousness with which the US government views the threat, it is very likely the app will be totally banned. Notwithstanding China’s own strict privacy laws that forced Western technology companies to leave or reduce operations in the communist country, Beijing has accused Washington of abusing state power. What is the US government's stand on TikTok? On February 27, the White House issued a “guidance” to all federal agencies to remove TikTok from government devices out of serious security concerns. Notably, several agencies, including the Department of Defense, the Homeland Security and State, and the White House, already have the restrictions in place. Welcoming the move, the Office of Management and Budget has termed “guidance” a critical step forward in addressing the risks presented by the app. Defending the “guidance,” the US federal chief information security officer Chris Derusha said the measure is to secure the US digital infrastructure and to protect American people’s security and privacy. Earlier in December last year, TikTok, in a statement, called the “No TikTok on Government Devices Act” passed by the Congress as politically motivated. “The ban of TikTok on federal devices passed in December without any deliberation has served as a blueprint for other world governments,” a TikTok spokesperson said in Washington, on the day the “guidance” was issued by the White House. Canada, Britain, and New Zealand have immediately followed suit by banning the use of TikTok on all government-issued devices, whereas the EU announced it has temporarily banned the use of the app from phones used by employees as a cyber-security measure. What is the US government demanding from TikTok? TikTok, a Chinese company which moved its headquarters to Singapore in 2020 and enjoys a market value of about $220 billion, was recently in a political controversy when the Biden administration asked ByteDance to sell its shares in TikTok or face the risk of being banned in the United States. Following the Chinese company’s flat refusal, the Foreign Affairs Committee of the US House of Representatives passed yet another Bill aimed at disabling TikTok. Disregarding opposition from lawmakers from both parties and from the American Civil Liberties Union (ACLU), the Deterring America’s Technological Adversaries (DATA) Bill was passed in the US Congress on February 24, just a few days before the White House “guidance” was released. Interestingly, the DATA Act of 2023, also called the Warner Bill – named after Democrat Senator Mark Warner of Virginia – formally facilitates government agencies to “deter, disrupt, prevent, prohibit, investigate, or otherwise mitigate” services they deem threatening, as long as they have access to “sensitive personal data” from more than 1 million people in the US. In other words, though DATA does not explicitly name TikTok, it empowers the secretary of Commerce to ban foreign technologies and companies from operating in the US if they present a threat to national security. “Today, the threat that everyone is talking about is TikTok, and how it could enable surveillance by the Chinese Communist Party,” Warner told the media on the day the Bill was passed. So who exactly owns TikTok? At another level, giving a new twist to the ongoing fight between the US and China to wrest control of TikTok, an article in FTChinese.com last Thursday raises doubts about the company being owned by China. “TikTok’s encounter with the US government is not only related to the rights and interests of the parent company ByteDance but greatly concerns its majority foreign shareholders,” the article in Chinese claims. Citing a statement issued by ByteDance, the article further said its foreign investors own about 60% of the shares and the remaining 40% of shares are equally divided between its employees and company founders, respectively. Yang Fangxi, the article’s author, a management graduate educated and trained in the US, is an expert in planning communication strategies, public opinion, and public policy and is widely respected in both mainland China and the United States. Yang writes in the article that the US has politicised the ownership of ByteDance’s “political gene.” “From the perspective of equity structure business operations can ByteDance even be considered a Chinese company?” Yang asks. ByteDance’s majority foreign shareholders include high-profile investment companies such as Coatue Management, General Atlantic, Susquehanna International Group, and Sequoia Capital. Furthermore, most of these well-known companies have rich experience and have been doing business in China for long. For example, since the year 2000, General Atlantic has had a total investment of $6.7 billion in China and is invested in 34 companies. Coatue, on the other hand, led a round of investment in Heytea, a local Chinese consumer brand. Additionally, the four foreign companies also serve as members on the board of ByteDance, and ByteDance too occupies a considerable share of their investment in China. Back in America, the CEOs of these companies are politically well-connected and they actually actively lobbied for TikTok in 2019 when the Trump administration called for TikTok’s ban and disinvestment. And how does this play into US-China ties? As mentioned, TikTok is the most popular social media app in the US and almost half the number of Americans are its active users. The app is also the world’s most popular short video-sharing app and has over 1 billion active users worldwide. It is expected to generate $10 billion in revenue globally – in America alone its advertisement revenue is likely to exceed $2.7 billion. Following the skirmishes on the India-China border in the remote Himalayas in 2020, the app along with WeChat and other Chinese digital apps was banned by the government in India. Meanwhile, just hours before Singapore-born TikTok CEO, Shou Zi Chew, was to make a high-profile appearance before the US House Committee on Commerce and Energy on Thursday to challenge the potential ban on and oppose the forced sale of TikTok, the Chinese Ministry of Commerce spokesperson has said, “If the news [of the ban on TikTok] is true, China will resolutely oppose it.” Last Tuesday, Shou took to Instagram and posted a video recording urging its 150 million American users to tell the House Representatives “what they love about TikTok.” Clad in casual jeans and seen grinning in the video message, Shou said banning the app could take TikTok away from all its 150 million users. Following tensions across the Taiwan Strait, the more recent “spy balloon” controversy, and frequent accusations by the US that China is supplying lethal weapons to Russia in the war against Ukraine, the potential banning of TikTok has emerged as one focus of conflicts between China and Western governments over technology and security that are disrupting processor chip, smartphones and other industries. Against this backdrop, it would be interesting to wait and see how the world markets and tech industries react to what action the authorities in Beijing resort to “if the US actually bans TikTok.” Dr Hemant Adlakha teaches Chinese at JNU, and is Vice-Chairperson and Honorary Fellow at the Institute of Chinese Studies, Delhi.
