top of page
  • Writer's pictureEdward Lehman

Avoiding Future Entanglements with Chinese APPs

TikTok’s Chinese parent company has scrapped its plans to sell the video-sharing APP's operations in the United States, with the Beijing-based ByteDance stating it shelved a proposed deal with American firms Oracle and Walmart now that former President Donald Trump is out of office.

The news from ByteDance came mid-February after efforts to ban TikTok under then-President Donald Trump were put on hold on Wednesday, as the Department of Justice signaled in a new court filing that President Joe Biden and his administration are backing off the pressure on the Chinese-owned video-sharing APP.

The Justice Department filed a motion in a federal appeals cases between the government and TikTok indicating that the Biden Administration may drop the cases entirely.

Biden has said that he has some concerns with TikTok, and the administration is scrutinizing other Chinese tech companies and trade practices, but indicated taking action on a sole APP like TikTok is not expected to be the focus.

Terminating the deal with Oracle and Walmart means TikTok can now continue with “business as usual,” and it should give pause to future moves by the U.S. executive branch to get directly involved with legal entanglements concerning foreign Internet APPs and the collection of the personal data of U.S. citizens, especially given the outcome of TikTok.

In January 2019, an investigation by the American think tank Peterson Institute for International Economics described TikTok as a "Huawei-sized problem" that posed a national security threat to the U.S. given the APP's popularity with American users.

This included armed forces personnel, and TikTok's ability to convey location, image and biometric data to Chinese parent company ByteDance, which is legally unable to refuse to share data with the Chinese government under the country's national security laws.

In response to national security, censorship and compliance concerns, Senator Marco Rubio (R-FL) asked the Committee on Foreign Investment in the United States (CFIUS) to open an investigation into TikTok and parent company ByteDance. At the same time, Senators Tom Cotton (R-AR) and Chuck Schumer (D-NY) sent a joint letter to the Director of National Intelligence requesting a security review of TikTok.

Senator Josh Hawley (R-MO) introduced the National Security and Personal Data Protection Act to prohibit TikTok's parent company and others from transferring personal data of Americans to China. Senator Hawley also introduced a bill to ban downloading and using TikTok on government devices because of national security concerns.

In December 2019, the United States Navy as well as the U.S. Army banned TikTok from all government-issued devices. The Transportation Security Administration also prohibited its personnel from posting on the platform for outreach purposes.

By July 2020, the U.S. Department of the Treasury admitted that TikTok was under CFIUS review.

That same month, then U.S. Secretary of State Mike Pompeo announced that the government was considering banning TikTok.

By the end of July 2020, then President Donald Trump announced a decision ordering China's ByteDance to divest ownership of TikTok, and threatened to shut down its U.S. operations through executive action by August 1 should the company not comply.

In August 2020, ByteDance — which initially sought to maintain a minority interest in a sale to a U.S. buyer — agreed to divest TikTok outright to prevent a ban in the U.S. and in other countries — including Japan, Pakistan and Australia — where restrictions were also being considered because of privacy concerns related to its ownership by a China-based firm.

On August 6, Trump signed an executive order banning the platform in 45 days if it was not sold by ByteDance.

By August 17, Oracle entered the race to buy TikTok's operations in the United States, Canada, Australia and New Zealand.

On August 24, ByteDance filed a lawsuit against the Trump administration's order. The suit contended the Trump Administration's order was motivated by the president's efforts to boost re-election support through protectionist trade policies aimed at China; that TikTok/ByteDance was deprived of due process rights under the Fifth Amendment that apply to foreign and domestic businesses; failed to provide evidence that TikTok was a bona fide security threat or provide "justification for its punitive actions"; and that the purported national security threat identified by CFIUS was based on "outdated news articles," and did not address demonstrative data security documentation provided by TikTok.

On August 28, the Chinese government's Commerce and Science and Technology Ministries updated their export control rules, restricting the export of "technology based on data analysis for personalized information recommendation services."

The new rules were seen as an effort to delay or prohibit a full sale of TikTok, which would now require ByteDance to undergo a government-reviewed licensing procedure if parts of TikTok were sold to a company based outside China.

On September 13, TikTok chose Oracle to act as the former's "trusted tech partner," a partnership that would be structured as a spin-off independent company of TikTok with a minority stake held by Oracle. TikTok had hoped this would address the Trump Administration's concerns over data security, and avoid an outright sale of its business and technological assets, which the Chinese government would likely oppose.

On September 23, TikTok filed a request for a preliminary injunction to prevent the APP from being banned by the Trump Administration. The preliminary injunction was approved September 27.

On December 7, a U.S. District Court blocked an attempt by the U.S. Commerce Department to stop the TikTok APP from being downloaded from U.S. APP stores, citing threats to national security.

On January 20, 2021, President Joe Biden began his term as the 46th president of the United States, at which point the new administration began reviewing its approach to TikTok.

AmChamUS supports government legislation that encourages both domestic and international business. The singularly focused approach to the TikTok APP by the executive branch of the federal government threatened U.S.-based jobs and commerce from that company without adequately looking at the entire marketplace.

Additionally, AmChamUS disapproves of any branch of the federal government taking unilateral legislative measures into its own hands and singularly applying them against foreign businesses who are domiciled in non-democratic countries without evidence-based merit. Such actions threaten U.S. firms conducting business in non-democratic countries, and unnecessarily open them up to retaliatory measures where legal recourse may not be a protective measure, such as it is in the U.S.

1,135 views0 comments


bottom of page