US lawmakers say TikTok won’t be banned if it finds a new owner. But that’s easier said than done

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This article was published 12/03/2024 (937 days ago), so information in it may no longer be current.

U.S. lawmakers are threatening to ban TikTok but also say they are giving its Chinese parent company a chance to keep it running.

The premise of a bipartisan bill headed for a vote in the U.S. House of Representatives is that TikTok fans in the U.S. can keep scrolling through their favorite social media app so long as Beijing-based ByteDance gives up on owning it.

“It doesn’t have to be this painful for ByteDance,” U.S. Rep. Raja Krishnamoorthi, an Illinois Democrat and bill co-sponsor, recently posted on X. “They could make it a lot easier on themselves by simply divesting @tiktok_us. It’s their choice.”

But it’s not going to be as simple as lawmakers are making it sound, according to experts.

WHO WOULD BUY TIKTOK?

While some people have voiced an interest in buying TikTok’s U.S. business — among them “Shark Tank” star Kevin O’Leary — there are a number of challenges including a 6-month deadline to get it done.

“Somebody would have to actually be ready to shell out the large amount of money that this product and system is worth,” said Stanford University researcher Graham Webster, who studies Chinese technology policy and U.S.-China relations. “But even if somebody has deep enough pockets and is ready to go into negotiating to purchase, this sort of matchmaking on acquisitions is not quick.”

Big tech companies could afford it but would likely face intense scrutiny from antitrust regulators in both the U.S. and China. Then again, if the bill actually becomes law and survives First Amendment court challenges, it could make TikTok cheaper to buy.

“One of the main effects of the legislation would be to decrease the sale price,” said Matt Perault, director of the University of North Carolina’s Center on Technology Policy, which gets funding from TikTok and other tech companies. “As you approach that 180-day clock, the pressure on the company to sell or risk being banned entirely would be high, which would mean probably the acquirers could get it at a lower price.”

HOW WOULD IT WORK?

The bill calls for prohibiting TikTok in the U.S. but makes an exception if there’s a “qualified divestiture.”

That could only happen if the U.S. president determines “through an interagency process” that TikTok is “no longer being controlled by a foreign adversary,” according to the bill. Not only that, but the new U.S.-based TikTok would have to completely cut ties with ByteDance. That includes no more “cooperation with respect to the operation of a content recommendation algorithm or an agreement with respect to data sharing.”

It reflects longstanding concerns that Chinese authorities could force ByteDance to hand over data on the 170 million Americans who use TikTok. The worry stems from a set of Chinese national security laws that compel organizations to assist with intelligence gathering.

It’s an unusual bill in the way that it targets a single company. Typically, a government group led by the Treasury secretary called the Committee on Foreign Investment in the United States, or CFIUS, will review whether such a sale would pose any national security threats.

HASN’T THIS HAPPENED BEFORE?

Yes. The Trump administration brokered a deal in 2020 that would have had U.S. corporations Oracle and Walmart take a large stake in TikTok on national security grounds.

The deal would have also made Oracle responsible for hosting all TikTok’s U.S. user data and securing computer systems to ensure national security requirements are satisfied. Microsoft also made a failed bid for TikTok that its CEO Satya Nadella later described as the “strangest thing I’ve ever worked on.”

Instead of congressional action, the 2020 arrangement was in response to then-President Donald Trump’s series of executive actions targeting TikTok.

But the sale never went through for a number of reasons. Trump’s executive orders got held up in court as the 2020 presidential election loomed. China also had imposed stricter export controls on its technology providers.

Incoming President Joe Biden in 2021 reversed course and dropped the legal proceedings. Now Biden says he’s in favor a bill that would ban TikTok if ByteDance won’t divest, and Trump is not.