Why the House TikTok bill is most likely a ban
And why it's so hard to predict what will actually happen here
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With the quick advancement of the “‘Protecting Americans from Foreign Adversary Controlled Applications Act’’ in the US House, TikTok continues to be the unwelcome test case for a variety of US concerns around China and technology. In 2022, I wrote in The Information that TikTok’s “days of operating with Chinese ownership in the U.S. market are almost certainly numbered.” This is not because I thought ownership was the key to addressing legitimate concerns of data exfiltration or algorithmic manipulation of the public sphere. On the contrary, the most egregious US data losses attributed to China’s government have been breaches of US entities—the Office of Personnel Management, Equifax, Anthem, Marriott. And some of the most concerning authoritarian infiltration of social media platforms happened at pre-Musk Twitter, where an employee was convicted of passing information on dissidents to the Saudi government.
My 2022 prediction was based not on the merits of how to address potential risks posed by TikTok but by the politics around trying to do so. The most promising solution on the table at that point was a deal in the context of an investigation by the Committee on Foreign Investment in the United States (CFIUS). A proposed arrangement called “Project Texas,” the basics of which were revealed in briefings conducted by TikTok, would have all US user data stored in the United States, controlled by a subsidiary called US Data Services with elaborate auditing and monitoring by hired firms and US government offices. Only US citizens would be allowed in certain roles, and the US cloud firm Oracle would play a key role in running the infrastructure. Source code and algorithms would be audited.
The details of Project Texas were never fully made public, so it’s impossible to say whether the design was perfect, but it sounded like a robust set of controls to mitigate (because you can never fully eliminate) the risk of data being accessed by the Chinese government or US discourse being tweaked in an influence campaign. But Project Texas and the associated CFIUS deal was never enough for politicians like Rep. Mike Gallagher and Senator Marco Rubio, who already had rejected it as a solution a year and a half ago.
An alternative timeline in which Congress got it together to write and pass data privacy legislation that would address this kind of risk across all platforms did not come to pass. Indeed, there is so little hope of this happening, that the White House last month turned to the padded mallet of executive action in this game of Whac-A-Mole, moving to block data broker and other transfers of certain types of personal and other data at volume to China. Officials explicitly said this was not a replacement for comprehensive privacy legislation, but that since such a thing is not forthcoming they felt they needed to try something.
So with the CFIUS solution dormant if not dead and a comprehensive law nowhere to be seen, the political winds are still pushing TikTok toward: a) extraction from Chinese ownership, or b) removal from US app stores and network providers that make quick streaming of addictive video content zippy.
I’m not comfortable with predictions in general, so I hedged in 2022, saying TikTok’s Chinese-owned US operation’s “days [were] almost certainly numbered.” I don’t have a deadline in mind, and this could drag out for a long time, but I stand by my uncomfortable prediction that the most likely options are still a) divestment, or b) ban. Option c) “other” could be a return to something like Project Texas or hanging on long enough for legislation that doesn’t fixate on ownership but instead on effective control and access; such an alternative would mean TikTok and others would have standards to comply with and would face consequences (up to perhaps a ban) if they couldn’t. I just don’t know how we get there from here.
Why ‘divest’ likely means ‘ban’
The House bill, which advanced rapidly from committee and is reportedly likely to see a full House vote Thursday, came out of the Select Committee on the Chinese Communist Party. Gallagher, its chair, said: “Through this bill we want to ensure divestment, not censorship.” Ranking member Rep. Raja Krishnamoorthi said: “This bill is not a ban, and it’s not really about TikTok.”
It’s possible that this bill, if enacted, would result in divestment and not censorship, and that it would not result in a ban—but it is manifestly, in clear language, about TikTok (see page 9, line 17). Anyway, there are several reasons I think the law’s effect would more likely than not result in a move to ban TikTok from US app stores. Consider these scenarios:
First, it’s possible ByteDance seeks to divest and succeeds, and the bill sponsors pop champagne.
Second, assume ByteDance decides to try and sell TikTok. This might not work out.
They would need a buyer, for one, and all kinds of mergers-and-acquisitions legal processes would need to work out.
The Chinese government would have to approve. In 2020, when the Trump administration was attempting a shotgun wedding with TikTok going to Oracle, Walmart, Microsoft, etc., the Chinese government added algorithms like those that fuel TikTok’s feeds to a catalog of export-controlled technology. The new spun-out TikTok US would need that technology, and the Chinese government might not allow a sale or licensing agreement (to say nothing of any regular M&A controls it may have—this is not my area).
If these or any other snags stop divestiture, option b) ban would be the law’s effect
Third, assume ByteDance decides to try and sell TikTok. This may not work out in time.
The bill gives 180 days for a “qualified divestiture” to take place. If I’m reading the text right, at 180 days, an effective ban would take place and could be reversed if divestiture is completed.
Option b) ban would be triggered in this scenario about six months down the line.
Third, assume ByteDance decides not to try and sell TikTok, whether because it judges this is not feasible or because it would rather face and then fight a shutdown.
In that case, an effective ban would result.
Readers can assign their own probabilities to these scenarios, but I think it’s unlikely all of the necessary steps would take place within 180 days, leading, at least temporarily, to a ban. I also believe it’s unlikely the Chinese government would approve this forced divestiture (or, from a Chinese perspective, an expropriation at fire-sale prices, a robbery, whatever). If a way around that barrier could be found, it might well take more than six months in combination with the business-side mechanics. Overall, to extend my reluctant prediction, if this law is enacted as written, it’s more likely than not that either divestiture will not be attempted or it will not work. Therefore it is more likely than not that a ban will result.
Why the path ahead is highly uncertain
Why don’t I like making predictions? Because I am something of an uncertainty hawk. While above I’ve offered my view that if the bill becomes law, it will probably result in a ban, there are several sources of uncertainty if we’re looking to what might happen overall. In no particular order:
This bill may not pass Congress, or (seemingly unlikely) it may pass with Biden declining to sign it amidst the campaign.
The bill may not pass Congress this term, and other solutions may be reached before it has a chance to gain momentum again.
The text of a final, passed and enacted law may be substantively different from the House bill.
ByteDance may or may not seek to divest from TikTok. If it does, the Chinese government may or may not move to block such a move, in whole or in part.
If divestiture doesn’t work out, the administration in power probably has some decisions to make about how to enforce whatever the final text says. I’m not a lawyer or legal scholar, so that’s for someone else to address, on top of the uncertainty about the final language.
If enforcement action leading to a ban comes about, the US firms being ordered not to provide TikTok’s app or other services are very likely to challenge the law on First Amendment grounds. How this turns out is uncertain is ways I’m not qualified to guess, but it seems like a pretty epic free speech battle. (Stanford colleagues Evelyn Douek and Alex Stamos discuss this a bit in their recent podcast episode.)
All this is evolving. I welcome your feedback.
About Here It Comes
Here it Comes is written by me, Graham Webster, a research scholar and editor-in-chief of the DigiChina Project at the Stanford Program on Geopolitics, Technology, and Governance. It is the successor to my earlier newsletter efforts U.S.–China Week and Transpacifica. Here It Comes is an exploration of the onslaught of interactions between US-China relations, technology, and climate change. The opinions expressed here are my own, and I reserve the right to change my mind.