TikTok: Here’s How Washington Could Do It (Even Without Banning The App)

Washington lawmakers finished 2022 with one of their most aggressive anti-TikTok acts yet: they banned the app from government devices.

While the app’s fast growth is unlikely to diminish, the move may pave the way for fresh action from Washington in 2023. While a nationwide ban is improbable, alternative legal action against the corporation appears to be on the table.

“TikTok is under increasing strain,” said Mark MacCarthy of the Brookings Institution’s Center for Technology Innovation. He adds that the pressure for a strong move against the corporation has been stalled in recent months by tardy corporate investigations, which “froze the Biden administration for a long length of time,” he says.

However, this might change shortly.

TikTok’s US headquarters in Culver City, California, USA, on September 15, 2020. Mike Blake, Reuters

The main worry is if TikTok has been restructured so that all data gathered on Americans is not accessible to the Chinese government, as promised. Also, whether or not there is algorithm transparency to guarantee that China does not affect the media that Americans consume.

The business had previously declared plans to collaborate with Oracle (ORCL) on these concerns, but there was widespread doubt that TikTok, which is still controlled by Beijing-based ByteDance, could ever function free of Chinese negative influence in the US government.

TikTok spokesperson Brooke Oberwetter restated the company’s objection to a comprehensive ban on TikTok in a statement to Yahoo Finance. “We hope politicians direct their efforts on attempts to address these issues holistically, rather than assuming that prohibiting a particular service will answer one of their concerns or make Americans safer,” she added.

“I can’t see that happening.”

Legislation to outright prohibit TikTok is already on the table in Washington, supported by Sen. Marco Rubio (R-FL) and Reps. Mike Gallagher (R-WI) and Raja Krishnamoorthi (D-IL).

“TikTok is digital fentanyl that addicts Americans, captures gobs of their data, and restricts their conversations,” Gallagher explained when attempting to sell his bill.

As the new chair of the House Select Committee on Strategic Competition with China, the Wisconsin congressman will have a larger platform to advocate for a ban in 2023. However, it is uncertain whether there is political will for a complete prohibition (or whether such a ban would even be enforceable).

Republican U.S. Rep. Mike Gallagher (R-WI) speaks to media following a Republican caucus meeting at the U.S. Capitol on January 3, 2023, the first day of the next Congress. Nathan Howard/Reuters

“I don’t think there will be a prohibition from a consumer standpoint,” said Ari Lightman, a Carnegie Mellon University professor of digital media and marketing. “The majority of people don’t care [about security issues], and I don’t think the government will pull it off, especially given how split and disorganized it is.”

“There have been explicit restrictions on Chinese-owned applications in places like India, but I don’t see that occurring in the US,” Lightman noted. Rather, creating comprehensive and equitable privacy laws is far more feasible.”

Attempts to enact greater privacy rules would affect not only TikTok, but also other social media firms. Consider the American data protection law. The bipartisan initiative from 2022, which many believe to be the basis for future discussions, contains measures authorizing the Federal Trade Commission (FTC) to establish a new privacy office inside the agency. It may also impose additional transparency rules, requiring businesses to explain the types of data they gather and how they use it.

Lightman also believes that existing TikTok prohibitions on government devices, including state government devices, should be broadened. “Social sites should be barred from state devices. “TikTok should not be the only one targeted,” he argued. “Audits should be undertaken on a regular basis to discover information about these devices that might be categorized as well as how they are secured.”

TikTok vs. Corporate America?

Another significant source of pressure may be American corporations. MPs Gallagher and Krishnamoorthi recently wrote to ESPN’s CEO over the company’s decision to allow TikTok to sponsor halftime performances.

“Serious doubts regarding ESPN’s decision-making are raised,” legislators said.

“I think you’re going to see this informal pressure” on third-party companies because of their relationship with TikTok, according to Mark MacCarthy of the Center for Technology Innovation, and a front of the effort could be “restrictions on using the TikTok app.” [on work devices] in different organizations.

And, according to Lightman, the actual authority to enforce a ban ultimately resides with American corporations, notably internet giants like Alphabet (GOOG, GOOGL) and Apple (AAPL). “In most situations, bans are issued by app shops such as Google and Apple when programs break their terms of service,” he explained.

For example, suppose Apple outlawed Fortnite. This 2020 restriction rapidly removed millions of iOS and macOS players from the game, prompting Epic Games, Fortnite’s parent business, to file an antitrust complaint. This struggle is still ongoing, as both parties have filed appeals against the court’s latest verdict. Epic Games is reportedly losing more than $20 million per month as a result of Apple’s blanket ban on Fortnite from its App Store.

Inquiries into the Biden administration

Another front in the fight is the Biden administration, which has been fairly mute, in part in response to Donald Trump, who wanted to ban TikTok as president but saw the effort thwarted by court challenges.

On January 13, President Joe Biden departs the White House for a trip to Delaware. (Jonathan Ernst/REUTERS)

However, both the Justice and Treasury ministries are now apparently examining the incident, with authorities expected to publish their findings in the coming months.

Any clear signal from the government “could breathe fresh life into a measure prohibiting TikTok,” according to MacCarthy, who also admitted that the reverse may happen if the administration comes out “and they say, ‘Here’s our remedy.’ That could pull people” in the opposite direction.

The United States Inter-Agency Committee on Foreign Investments (CFIUS), an influential committee entrusted with assessing transactions by foreign corporations operating in the United States, is a significant endeavour. It has been working with TikTok for the past two years.

The talks will continue to “address national security concerns related to TikTok in the US,” according to TikTok’s Oberwetter, who promised a “comprehensive package of measures with levels of government and independent oversight to ensure there are no backdoors in TikTok used to manipulate the platform.”

“These security procedures go above and beyond what comparable firms are doing now,” she added.

Is there anything the Biden administration could do unilaterally? There are few examples, although they are far from straightforward. CFIUS, for example, urged Kunlun Tech, the Chinese-based owner of Grindr, to sell the LGBTQ dating app in 2019, which finally went public in 2022. However, there is no clear precedence for the type of absolute prohibition advocated by some.

However, a signal from the government might also be significant.

During a recent Yahoo Finance Live interview, Sen. Mark Warner (D-VA) expressed interest in joining the movement to ban TikTok. But first, “I’d want to give the Justice Department an opportunity to explain that they can have this separation of information and that your children’s and our personal information are not being held in Beijing.”

Yahoo Finance’s Allie Garfinkle is a Senior Tech Reporter. @agafinks is her Twitter handle. Yahoo Finance’s Washington correspondent is Ben Vershkul.

Yahoo Finance provides the most recent financial and economic news.

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