Tuesday, May 28, 2024

TikTok’s fate in the U.S. hangs in the balance. What would the sale of the popular app mean?

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TikTok could soon be inaccessible to its more than a hundred million users in the U.S., after the U.S. House of Representatives Wednesday voted to pass a law forcing the app to be sold by its Chinese parent company or face a stateside ban. 

Much like other social media apps, including those owned by U.S. companies, concerns abound over the vast amount of personal user data collected by TikTok’s Beijing-based parent company, ByteDance, posing a national security threat. 

Under the proposed legislation, ByteDance would have six months to divest TikTok or face a nationwide ban. If the app is effectively banned in the U.S., it would likely take time before TikTok disappeared given that ByteDance would be expected to exhaust all of its legal options to challenge the law.

Would a sale solve the issue? Not entirely, but it would mark a step in the right direction, according to cybersecurity experts.

“It would only solve the first problem, which is the accessibility of Americans’ data to Chinese authorities,” Ivan Tsarynny, a cybersecurity expert who testified before the House Committee to recommend that TikTok either be sold or banned in the U.S., told CBS MoneyWatch.

Still, a new owner of TikTok could illegally transfer users’ data to the Chinese government, according to Tsarynny.

“We’d have to make sure every person who has access to TikTok’s data on Americans is accessing it for the right reasons, and is not part of a covert operation,” he said. 

Engineers, data scientists and other workers at a hypothetical American parent company with direct access to users’ data would have to be rigorously vetted “to ensure they are using the data for legitimate reasons and not stealing it and siphoning it back to China,” Tsarynny added.

With House lawmakers approving the bill, called the Protecting Americans from Foreign Adversary Controlled Applications Act, some analysts expect the Senate to follow suit and pass the measure. 

“The bipartisan nature and size of the House vote make Senate passage more likely than not,” Blair Levin, a telecom analyst with New Street Research, told investors in a report.


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If ByteDance does sell TikTok, U.S. users could seamlessly continue to use the app. “It could be very non-intrusive, and users may not even notice that ownership of the company has changed,” Tsarynny said. “And in the mid- to long-term, a sale has a very strong possibility of eliminating China as a threat.”

Yet some experts note that all social media companies — including U.S.-owned ones — pose some security risks. 

“Any company that collects this amount of sensitive, personal information from this many Americans is going to pose data privacy and security risks. So there are still many other avenues for bad actors and foreign governments to access this info,” said Caitlin Chin-Rothmann, a researcher of the impact of technology on geopolitics and society at the Center for Strategic and International Studies. 

“A sale would solve the question of ownership, but wouldn’t necessarily make personal information any safer,” she added. 


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Any deal to sell TikTok would also face challenges given the potential cost and regulatory hurdles.

“Any company that buys TikTok is going to have to be very well-resourced, very wealthy, and will need a strategic interest in purchasing TikTok without raising antitrust concerns around mergers and acquisitions, Chin-Rothmann said. “There’s a good chance a deal wouldn’t go through.”

Under the proposed legislation, the alternative to ByteDance selling TikTok would be its being banned from app stores in the U.S. President Biden has said he will sign the bill if it passes the Senate, but it remains to be seen whether a nationwide ban of the hugely popular app — if it came to that — would be possible. Previous efforts to do so have been blocked by legal challenges and concerns over free speech.

Levin of New Street Research noted that social media companies have previously invoked the First Amendment to convince courts to overturn state and federal efforts to restrict how they operate. Although such a legal challenge would be a “close call,” he said, “there is a better than even chance the courts will find it violates the First Amendment.”

What a ban would mean for TikTok users

If TikTok were banned in the U.S., the more than 100 million users who have downloaded the app would likely still be able to access it. New users would also potentially be able to download it using a virtual private network. Even with the app’s removal from app stores, experts think that TikTok’s devoted and resourceful U.S. fans would still find ways to continue using it.

“It would be inconvenient and harm its reach, but realistically there’d probably still be some way to access it,” said Justin Cappos, a professor of computer science and engineering at New York University’s Tandon School of Engineering. 

“Tech savvy young people would find ways to circumvent the ban and TikTok might still subsist in some form in the U.S. market,” Gabriel Wildau, senior vice president and China political risk analyst at Teneo, told CBS MoneyWatch. “Its ban from app stores would hobble the app, but it wouldn’t be a fatal blow.”

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