TikTok's Been Restricted, But Will Byte Dance?

A foreign aid package has been signed by the US government, also happens to contain a TikTok ban clause, forcing the app to be sold to an American company.

On the 20th April, 2024, the Houses of Congress passed a foreign aid package that contained an Act that would effectively ban TikTok. This package is the “21st Century Peace through Strength Act”, under the National Security Act. It contains the PAFACA Act, or the Protecting Americans from Foreign Adversary Controlled Applications. Isn’t it interesting how this major political move has to be nestled inside another totally unrelated Act in order to get passed? In a previous letter, I discussed some of the problems with “logrolling” and government overreach in some detail.

TikTok Has Been Restricted: A Necessary Bill or Gratuitous Grafting?

This means that ByteDance, the owner of TikTok, has 270 days to either remove it from app stores or sell the app to an American owner. At the heart of this contentious possibility of selling is the problem of the algorithm. If ByteDance no longer has access, exclusive or otherwise, to the recommendation algorithm, as well as the collaborative and content filtering algorithms, that drive the TikTok engine, then it no longer has a source of revenue.

Back to the Act. Typically, foreign aid packages get bipartisan support from both chambers. By boxing in the TikTok ban with an $95 billion dollar aid package to Ukraine, Israel and Taiwan, the US senate is pressured to act quickly with a combined vote. This is because rewriting the bill to exclude the provisions for TikTok would delay foreign aid. It’s also worth mentioning some of it is going to Gaza but at the same time, it’s unclear how much of this will actually end up helping humanitarian efforts in the region. Indeed, 79 senators voted in favor and 18 against. The bill passed in the House by a margin of 360 to 58. The bill then went to President Biden’s office, where he signed it into action. The problem is that rather than having a carefully placed effort to deal with the problem of TikTok, through a transparent and democratic process, it has instead been logrolled into a totally unrelated Act.

For a while now, there has been a strong case to be made of some version of a TikTok ban. This particular Act, not only logrolled or ensconced in unrelated bill, also seems to go beyond the pale. It gives the President serious power when it comes to these social media platforms. As a young person myself, I see the value in short-form content. For example, exposing real life scenarios in ways that mainstream journalism cannot. Also, it’s a platform for people to express creative projects and pursue business prospects. Still, it’s highly addictive, with a study by the University of Trinidad and Tobago concluding that although the majority of users (68.2%) in its sample were classified as having “no risk” of TikTok addiction, 25.4% of them were seen as being at “low risk,” and 6.4% as being “at-risk.”

Modern businesses also rely on it for social media marketing. In fact, one shrewd CEO has somewhat immortalized himself through the use of TikTok as a sales and marketing engine, as described in a letter I wrote earlier this month.

Old Businessman Uses TikTok to Sell 1940s Workers' Flasks To Hipsters

What’s more pressing perhaps is the company behind the app. ByteDance is a Big Tech company with strong ties to the Chinese Communist Party (CCP). Subject to a national security law, the company is required to share data with Chinese officials. The company’s vice president serves as the CCP Committee Secretary. The company is also partially owned by the Chinese state, through a ‘golden share’ investment, which gives them the ability to outvote other shareholders. This reveals a conflict of interest, and may change how TikTok is used on the global population. In one case, social media influencers pushing propaganda, who receive the bulk of attention on TikTok for their content. Then a research report from Miburo, a firm analyzing foreign disinformation operations, found that “At least 200 influencers with connections to the Chinese government or its state media are operating in 38 different languages." Taking a leg up on Russian bots, it would appear the Chinese government is leveraging actual personalities to push their agenda, as many of these influencers promote everything from tourist attractions in Mainland China, to anti-Taiwan and anti-Ukraine messaging straight from the CCP’s state-controlled media. There is a long and extensive history of TikTok’s data privacy violations which I explore in detail in a letter from last year.

To Restrict TikTok: a Necessary Evil or a Trojan Horse?

Naturally, the TikTok ban puts ByteDance in a sweaty situation. According to Wedbush Securities, the app itself is worth around $100 billion. Interestingly, this is almost the same amount as the foreign aid package containing the TikTok ban is worth…

This valuation, centers around TikTok’s algorithm almost as much as thirteen-year-old girls do. ByteDance has suggested that it would rather shut down the app in the US marketplace than sell it. The US provides about a quarter of TikTok’s global revenue and just five percent of ByteDance's daily active users across all of its media platforms across the globe. Even if they wanted to, export restrictions for tech developed in China requires the CCP’s permission to sell the software. If a rival company or political entity gets their hands on TikTok’s algorithms, that would be a huge competitive disadvantage. A bit of an “uno reverse card”. So, selling the platform is more trouble than it's worth. So ByteDance, actively trying to avoid having its toes stepped on by this bill, is waging a legal battle to try to avoid having to sell its algorithm. Even some US Senators are calling the forced sale a kind of “breach of the first amendment”.

What I’m particularly alarmed and concerned about is Palestinian coverage. A lot of Palestinians use the app, after all, short-form video content reveals their daily lives and obstacles in a way that mainstream media can’t.

At the same time, the risk of misinformation across these social media platforms is very real. That doesn’t mean, however, that TikTok should be treated differently to Facebook, X, or Trump’s Truth Social. This sneaky bill also contains billions of dollars to help Israel, while also having a disproportionate detriment to people who use TikTok to cover, give voice to, or provide journalism for the Palestinian people. It’s a dicey situation and I hope that we can use other apps and platforms to continue covering the on-the-ground events in Gaza and any other place with civilians that are hurt by conflicts outside of their control.

As we look toward the upcoming elections this year, it’s clear that TikTok is a major element of modern politics. We have to consider the impact of such legislation on our digital freedoms and privacy. While it is crucial to protect citizens, especially young ones from potential threats, there is very much a threat of internal government overreach. In other words, the TikTok ban is a good idea packaged inside a highly questionable bill.

If you found this to be an engaging read, check out the rest of my articles in the Digital Landscape, covering everything from TikTok, marketing, media, psychology and more.