Young people love TikTok but the Trump administration fears it. Earlier this week, Treasury Secretary Steve Mnuchin confirmed that the social app had been subjected to a national security check to determine if it could be a channel for Chinese intervention. On Friday, Bloomberg reported that Trump will sign an order instructing TikTok’s Chinese owner Bytedance to sell the service. “We may ban TikTok,” Trump told Reporters in the White House on Friday, adding, “We are looking for many alternatives.”
Several reports indicate that Microsoft is discussing the purchase of TikTok. Any deal that is likely to be worth billions would require TikTok̵
TikTok critics say the app threatens the US because it may send data back to China, help spies, or allow China to curate the service’s short videos for political reasons. Bytedance does not deny that it censors its Chinese services according to government regulations, but says that it operates TikTok, which is not available in China, differently. TikTok has indicated that user data is only stored in the United States and Singapore. In a statement on Friday, the company said it did not comment on “any rumors or speculation.”
The TikTok, which is loved by hundreds of millions today, has a mixed heritage. Bytedance launched the original TikTok app in 2017 as an international version of its Chinese short video sharing app, Douyin. In November 2017, Bytedance acquired Musical.ly, a fast-growing lip sync app in the U.S. and Europe, which was founded in Shanghai but set up offices in California. Musical.ly’s service – and all of its users – were integrated into TikTok in August 2018, and the app became increasingly popular.
Political controversy followed as US politicians on both sides of the aisle became more suspicious of China and its technology companies. In October 2019, Senators Tom Cotton (R-Arkansas) and Chuck Schumer (D-New York) asked the U.S. Director of National Intelligence to investigate whether TikTok could be exploited by Chinese intelligence agencies. Last month, India banned TikTok and 58 other Chinese apps after a deadly border skirmish and cut off millions of Indian TikTokers.
Tensions between the United States and China have increased in recent years and have recently reached a new intensity. Trump has taken a tough line on trade, national security and competition since taking office. The relationship has reached new lows in recent months with allegations of the Covid 19 pandemic, China’s suppression of political protests in Hong Kong, and discrimination against Uyghur Muslims in northwest Xinjiang.
Trump could ask Bytedance to process its takeover of Musical.ly through a powerful federal agency called the Committee on Foreign Investment in the United States. The group is led by the Secretary of the Treasury and can reverse acquisitions that threaten US security. In 2019, a CFIUS review forced Chinese gaming company Kunlun to sell the Hollywood-based gay dating app Grindr it had acquired the previous year. In April 2019, the iCarbonX group, a Shenzhen-based company supported by technology giant Tencent, commissioned its majority stake in PatientsLikeMe, a company that collects genomic and other data.
Mnuchin confirmed on Wednesday that CFIUS has reviewed the acquisition of Bytedance’s Muscial.ly. Reuters had reported that it was underway in November 2019. CFIUS can make its own decisions, but can also forward a transaction to the President for decision.
The president “has the power of attorney to force a foreign company controlled by the U.S. to divest if he finds that there are unresolved national security concerns with the control,” said Kevin Wolf, partner at Akin Gump and a CFIUS expert. “Such authority has existed since the beginning of CFIUS.”