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Business News/ News / World/  TikTok Braces for US Divest-or-Ban Law — And a Fresh Legal Fight

TikTok Braces for US Divest-or-Ban Law — And a Fresh Legal Fight

After years of working to assure the US government that its popular social media app isn’t a threat to national security, TikTok’s loss in that fight now seems almost inevitable.

TikTok Braces for US Divest-or-Ban Law — And a Fresh Legal FightPremium
TikTok Braces for US Divest-or-Ban Law — And a Fresh Legal Fight

(Bloomberg) -- After years of working to assure the US government that its popular social media app isn’t a threat to national security, TikTok’s loss in that fight now seems almost inevitable.

The US House of Representatives on Saturday put legislation requiring TikTok’s Chinese parent company, ByteDance Ltd., to divest its ownership stake in the app on a fast track to become law, tying it to a crucial aid package for Ukraine and Israel. The Senate is expected to vote on the bill in the coming days. President Joe Biden has said he will sign the legislation promptly.

That action would be an unprecedented move by Congress to use legislation to threaten the ban of a large consumer technology platform. If it’s signed into law, ByteDance intends to fight the effort in court and exhaust all legal challenges before it considers any kind of divestiture, people familiar with the matter have said. 

In the meantime, TikTok has again turned to its most powerful contingent — its tens of millions of users — to help pressure lawmakers. Users who search for “TikTok bill" on the app are shown a banner on the screen encouraging them to “Stop the TikTok ban." Those who click are directed to a page where they can enter their zip code to find and call their senators.

Instead of hitting the airwaves on traditional news media channels popular with the DC set in the days leading up to the House vote, the company gave a TikTokker an interview with Michael Beckerman, TikTok’s head of policy and a key part of its lobbying efforts. In his discussion with Lisa Remillard, who goes by the username The News Girl, Beckerman reiterated familiar talking points: The company believes it’s doing enough to protect user information by storing it on US soil and allowing third parties to review the app’s code, and that Congress instead should consider comprehensive data privacy policies that apply to all internet companies.

“We’re here at the table and we’re happy to work with Congress and show even more about what we’re doing, be more transparent," Beckerman told Remillard.

Talks Fall Short

TikTok and ByteDance have been conveying similar messages to lawmakers behind closed doors for years through a massive lobbying effort led by TikTok Chief Executive Officer Shou Chew. They haven’t been enough to convince a bipartisan coalition worried about the app’s collection of data on more than 170 million Americans — and the potential for the Chinese government to use it to disseminate propaganda.

The company’s failure to stave off the legislation after years-long talks with the US government means the challenge now shifts from discussions into litigation. Following the House vote over the weekend, Bloomberg News reported that TikTok is preparing to remove Erich Andersen, the US-based general counsel for TikTok and its Chinese parent ByteDance, who has led the years-long talks with the American government meant to show the app was doing enough to prevent China from accessing US users’ private details or influencing what they see on their feeds.

TikTok has argued that the legislation now close to becoming law would violate the First Amendment and pointed to its spending of $2 billion on data privacy efforts to try to allay national security concerns. The company has brought creators and small business owners to the US Capitol to argue they say would suffer economic losses without TikTok.

‘Free Speech Rights’

“It is unfortunate that the House of Representatives is using the cover of important foreign and humanitarian assistance to once again jam through a ban bill that would trample the free speech rights of 170 million Americans, devastate 7 million businesses, and shutter a platform that contributes $24 billion to the U.S. economy, annually," a TikTok spokesperson said Saturday.

The broad legislation, which passed on a 360 to 58 vote in the House Saturday, also would place new restrictions on data brokers selling information to foreign adversaries, and authorize the confiscation of frozen Russian assets to aid Ukraine.

“This bill protects Americans and especially America’s children from the malign influence of Chinese propaganda on the app TikTok," said bill author Michael McCaul, a Texas Republican. “This app is a spy balloon in Americans’ phones."

Opponents of the bill, such as Senator Rand Paul, a Kentucky Republican, could still try to strip out the TikTok measure from the larger bill in the Senate, but such efforts aren’t likely to be successful.

Scrutiny Spans Years

TikTok rose to prominence during the pandemic as a place to share entertaining, short videos without the expectation of perfection that hangs over apps like Instagram. Its algorithmically curated feed, tailored based on peoples’ interests — not who they follow — was a new, captivating way to scroll on social media, particularly popular among younger consumers. That idea has since been copied by Meta Platforms Inc., owner of Facebook and Instagram, and Alphabet Inc.’s YouTube. 

Years of scrutiny over the app’s connection to China spans presidential administrations, political parties and arms of the government. Former President Donald Trump tried to ban TikTok via an executive order that was set aside under Biden, whose administration oversaw a review by the Committee for Foreign Investment in the United States.

Multiple bipartisan ban bills were proposed in Congress and then forgotten. The divest-or-ban framework seems to have finally threaded the needle.

The legislation passed Saturday gives ByteDance nearly a year to divest itself of the social media platform, with 90 of those days subject to a presidential waiver — longer than the six-month time frame in a version of the legislation the House passed earlier this year. That extended deadline means TikTok won’t have to divest or be shut down before the election, to the dismay of some lawmakers who say they worry China could use the app to meddle in US politics.

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©2024 Bloomberg L.P.

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Published: 22 Apr 2024, 06:02 AM IST
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