ByteDance told it has 90 days to sell TikTok
U.S. President Donald Trump issued an executive order on Friday giving ByteDance, the Chinese parent company of TikTok, 90 days to sell the popular video-sharing app.
The latest order comes a week after the president signed two orders, which will take effect on Sept 20, prohibiting U.S. companies and individuals from conducting transactions with TikTok and WeChat, over national security concerns.
In the new order, Trump cited the same rationale as before, saying, "There is credible evidence that leads me to believe that ByteDance… might take action that threatens to impair" U.S. national security.
The order also requires ByteDance to destroy all data of American users collected on TikTok's platform and inform the interagency Committee on Foreign Investment in the United States when it has destroyed all such data.
Microsoft, the leading bidder to acquire TikTok's U.S. operations, has said negotiations with ByteDance could be completed by Sept 15, ahead of the previous deadline.
Melissa Hathaway, an expert in cyberspace policy and cybersecurity, said: "Executive orders could be superseded by another executive order that changes or softens the policy. The thing that's important to watch is which of the agencies are given the authority to take action."
For these orders, the power and authority exist in the Department of Commerce, she said, but it's not clear how the government is going to execute the orders, for example by requiring U.S. app stores to remove TikTok and WeChat.
TikTok intends to challenge the legality of Trump's orders through a lawsuit, according to NPR, which cited an unnamed lawyer working for the company.
Another lawyer, Mike Godwin, said in a tweet that he was representing a TikTok employee to sue the Trump administration, on the grounds that under the initial order, TikTok employees would lose their paychecks on Sept 20, and he said this would violate the employees' constitutional rights.
The Trump administration has been scrutinizing TikTok for months, alleging that the platform shares the data of U.S. users with the Chinese government, despite the company's repeated denial of such accusations.
The Committee on Foreign Investment in the United States, which reviews mergers for national security threats, opened an investigation in November into ByteDance's takeover of short-video app Musical.ly in 2017. The acquisition led to the current version of TikTok.
Experts in cybersecurity said the administration lacks transparency and the evidence to back its claims.
Hathaway said the White House is currently defining national security issues very broadly, and that might reflect "a tech fear and a future fear "beyond the current issue itself.
Gary Rieschel, a U.S. venture capitalist who founded Qiming Venture Partners in Shanghai, said, "I look at TikTok again, (and) there's no real history of turning data over to the Chinese government". He added that he believed the real issue behind the national security rhetoric lies with technology leadership.
Rieschel said there's nothing in TikTok's ownership structure to cause concerns, since most of the investment in ByteDance and TikTok comes from international funds, with firms like Sequoia Capital, Hillhouse Capital Group and SIG as primary investors.
"Those are the primary investors, and the vast majority of the cash for those investors has come from U.S. endowments foundations and pensions," he added. "You don't really see any Chinese government entities in the ownership structure."
What's partly driving the reaction of the Trump administration, Rieschel said, is the fact that it's the first time a foreign company is becoming so successful and wildly popular among adolescents. "I think it makes people nervous when you see something get that big, that valuable, that fast," he said.
Hathaway said the current conversation around TikTok should be much more transparent－not just about the U.S. and China, but about the apps broadly.
"The conversation needs to be about the data, not about the app or the company, because that's what it's really coming down to－the data flows, the access to that information and what you can do with it," she said.
"Facebook hasn't had a very good record of protecting our data and/or following their own policies on privacy," Hathaway added. "So you could look at the same challenges in the United States of our companies. Many have had the same concerns of the datasets that they have access to."
Steve Orlins, president of the National Committee on U.S.-China Relations, said the current issues with TikTok and WeChat indicate the Trump administration's lack of expertise on China.
"I actually don't agree with that assumption that the Chinese companies would not resist the request of the Chinese government (to send data back to China)," Orlins said at a recent webinar hosted by his organization.
Whether big companies like Alibaba or smaller companies conduct business in the U.S., "once they took that data and transferred it back to China, their existence outside of China is over," he said.
"So the whole analysis by our government that this just would happen arbitrarily and capriciously is wrong. It's not how the Chinese system works," said Orlins.
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