Congress voted Wednesday to ban the popular social media app TikTok, following approval last week by the House Energy Committee. The bill requires any company controlled by a “foreign adversary” to be divested within 180 days.
Pressure against the app, owned by Chinese parent company ByteDance, has been mounting for years. Security concerns have focused on the app’s ability to spread misinformation and ByteDance’s data handling practices.
THE I count proposes to sell TikTok to a US-based company. If ByteDance refused to sell, US-based app stores and web hosting services would be barred from offering the app, with the companies risking fines for non-compliance.
Although the House overwhelmingly supported the bill, consideration by the Senate remains uncertain. If passed, it would mark the first legislative attempt to actually ban a major social media platform like TikTok, which has about 170 million American users.
Issues with TikTok regarding privacy and data storage extend beyond the US, raising concerns in the UK, where TikTok had to pay a huge fine last year for ignoring the protection of children’s data – and across the EU.
The use of the app is prohibited by employees of the European Commission, which based its ban on “cyber security threats and actions” that could be exploited for use in cyber attacks.
TikTok has already invested $1.5 billion in a restructuring plan, creating a U.S. subsidiary with 1,500 employees amid growing scrutiny of its ties to China.
TikTok a “major threat”
Adam Marrè, CISO at Arctic Wolf, says TikTok poses a heightened threat that operates beyond U.S. regulatory safeguards.
“This lack of control means they can use all the data they collect and manipulate their algorithm, subtly shaping public opinion, particularly among young people, with total impunity,” he explains.
According to him, the platform’s ability to covertly influence society’s perceptions, coupled with its potential to exploit the immense amount of detailed data they collect in ways harmful to US interests, increases the risk.
“It operates under a foreign jurisdiction known to exploit information for its own benefit, thus intensifying concerns about its unchecked power,” Marrè says.
Narayana Pappu, CEO of Zendata, says TikTok has confirmed in the past that user data is stored in China.
“This ban and potential divestment could change where U.S. user data is stored,” he says.
This could also mean better controls over who has access to user data and the removal of potential backdoors, another common practice with services associated with China and the Chinese Communist Party.
From Pappu’s perspective, involvement and guidelines from federal governments help protect users and create better guardrails with accountability to platforms.
“These services, as well as the data collection, targeting and sharing networks that support them, are extremely complex,” he says.
While noting the widespread popularity of the app and the logistical challenges of implementing a full ban, Marrè says a more workable solution would be for ByteDance to avoid the ban as outlined in the current bill and divest its US operations to a American company.
“Implementing a total TikTok ban presents significant logistical challenges,” adds Marrè.
According to him, Congress’ failure to regulate domestic social media companies has opened the way for foreign entities to operate apps like TikTok without limits.
“If Congress had passed rigorous, clear, and robust rules that protect user privacy and give users control over the collection, storage, and use of personal data, we would have more effective oversight of foreign-owned apps and a likely ban it wouldn’t be necessary,” says Marrè. .
TikTok generates billions in revenue in the small business sector
Oxford Economics reported this last week TikTok generated $14.7 billion in revenue for small businesses in 2023, contributing $24.2 billion to the U.S. GDP along with 224,000 jobs, with significant impacts in California, Texas, Florida, New York and Illinois.
Small businesses’ use of TikTok has generated $5.3 billion in tax revenue, with 39% considering it crucial to their existence and 69% citing an increase in sales.
Additionally, TikTok’s US operations contributed $8.5 billion to GDP, generated $2 billion in taxes, and supported over 59,000 jobs.
Chris Olson, president of The Media Trust, says that while the ban is not yet a sure thing, brands that depend on TikTok for the majority of their revenue should obviously reconsider that reliance, stressing that uncertainty is a business risk .
“That said, other than ethical considerations, there is no real reason for them to shut down their operations until the last possible second,” he explains.
First, the bill as written does not ban American companies from using TikTok’s commercial or advertising services, and second, Olson points out that it’s uncertain how well the bill would actually work even if passed.
He explains that if ByteDance refused to divest TikTok, it would still be hosted on non-US servers, accessible via the web and possibly even via unofficial apps.
If it sold TikTok, no ban would be enforced and no change in business operations would be necessary.
At the same time, the app could still maintain its ties with Chinese partners (governmental and non-governmental) through other channels.
“This tends to demonstrate the permeability of our digital borders, the difficulty of actually excluding foreign influence, and the need for greater control,” Olson says.