Why TikTok?
On 31st July, Trump told reporters aboard Air Force One that he planned to personally ban the app using his own authority, instead of potentially forcing its Chinese owner to divest it, due to concerns of how much access and influence the Chinese government has over the app's user data and content moderation[1].
Trump had issued executive orders sanctioning TikTok and WeChat (another Chinese social media and messaging app) and banning “transactions” between US entities and the parent companies (ByteDance for TikTok and Tencent for WeChat). Leaving many unanswered questions, Trump poses a threat to the companies and their development.
After declaring this situation as a ‘national emergency’ due to privacy concerns (some would argue it came from a political standpoint, too), Similar to how the administration punished Huawei, Trump invoked the International Emergency Economic Powers Act (IEEPA) at the start of August which requires less proof that ByteDance have done something wrong.
Trump stated that apps developed by Chinese firms "threaten the national security, foreign policy, and economy of the United States" by capturing “vast swaths of information from its users"; in response, TikTok said it would "pursue all remedies available" to "ensure the rule of law is not discarded". With the US Government stating that the data collection “threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information”, the executive order claims that the apps gather data on Chinese nationals visiting the US, allowing Beijing "to keep tabs" on them.
How do companies get banned?
Company sanctions and bans are usually put in place for trade violations, espionage, or the proliferation of IP theft – not usually because one may be suspicious that a company may be “keeping tabs”.
But some Governments obviously have the power to ban companies; an example: China and Facebook. But what about western governments, which often pride themselves in liberality and freedom for the people? We all know the reaction that occurs when Twitter blocks the President’s tweets. It is a violation of one’s freedom of speech. So, how, or why rather, do companies, especially tech companies, get banned?
Teaching national security law and holding an LLM in National Security & US Foreign Relations Law, Matt C. Pinsker says that normally, the President cannot unilaterally ban a private company, even a foreign-owned one. “The difference here is that in Communist China, unlike most western nations, there is not a clear distinction between privately owned companies and state actors.”
And without this distinction, TikTok (via its owner ByteDance LTD), may be treated as a foreign state actor instead of a privately owned company. As such, just as the President can expel foreign diplomats, it can also expel other foreign actors operating inside the US. “Famously, the US Supreme Court recognised that in foreign affairs, the President has "plenary power" (see Dames & Moore v. Regan, 453 U.S. 654 (1981). This is especially true when there is a national security issue raised by the foreign power”, explains Matt.
Rather, the concern of these new executive orders is primarily focused around data security and data privacy.
Will TikTok be banned?
Speaking to The Verge, James Lewis, Director of technology policy at the Center for Strategic and International Studies, says putting TikTok on the list would be extreme, unusual, and legally dubious. “You can’t just do it because you’re mad at a company,” says Lewis[2].
But other jurisdictions, such as India, have banned TikTok, again over security concerns. In fact, India has banned over a dozen of Chinese apps, including banning them from app stores, ordering network operators in the country, like Vodafone, to block the app on their wired and wireless internet networks, effectively making it impossible for users to access TikTok even if they have already downloaded the app[3].
Blocking communication between TikTok servers and US users, however, is an unprecedented legal move for the States and with the company being an app and not a traditional ‘product’ or ‘company’, there would be practical restrictions on it being banned, especially if the First Amendment labels the ban as an ‘unconstitutional restriction of speech’.
Speaking to David Reischer, Esq. Attorney & CEO of LegalAdvice.com, he explains how President Trump's recent executive orders which ban TikTok and WeChat from the US market due to alleged "national security concerns" appear broad in their scope, but actually make a lot of sense as the traditional issues associated with national security, such as access to classified information are not in play with these executive orders.
“Rather, the concern of these new executive orders is primarily focused around data security and data privacy. Data security and data privacy are fast becoming important concerns for policymakers in Congress”, says David. There are already other recent laws passed by Congress that are addressing the corporate use of customer data, so these new executive orders are not a surprise, especially for a foreign entity with access to US customer data.
“Trump's executive orders in the context of a general increased protection and oversight of customer data and increased acknowledgement of customer privacy rights make a lot of sense”, he tells us.
With many of Trump’s executive orders being immediately challenged (such as his ‘Muslim ban’) and declared unlawful, it is hard to say if a ban will actually occur. It is difficult to impose a flat “ban” on a free social media app already in use by millions of Americans and CFIUS cannot outright “ban” TikTok. However, in more recent weeks, there have been talks of companies, such as Microsoft and Softbank buying TikTok. This is because the CFIUS can force changes to mitigate data privacy concerns, including restructuring the corporate relationship in order to place TikTok’s US data outside ByteDance’s (China’s) reach.
Speaking to Preethi Sekharan, Partner at Gunster, Member of Globalaw, they discuss how an American President invoking emergency powers against an app is "groundbreaking but not necessarily illegal". The President cites national security concerns as the basis for his executive order. The President’s deadline set before issuance of the report by The Committee on Foreign Investment in the United States (“CFIUS”) finding evidence of wrongdoing, could set a financially disastrous precedent for US Software Companies.
"TikTok does have a history of misusing information, including those of minor children. The FCC settled the dispute with TikTok, imposed a huge fine, and extracted a written promise from TikTok never to misuse children’s information again. The FCC is currently investigating whether TikTok breached that agreement.
"The CFIUS investigation has been ongoing for the past year. CFIUS has been investigating concerns of improper data collection and disinformation, and improper ties between BYTEDANCE (TikTok’s parent company) and the Chinese government. Simply put, CFIUS is investigating whether TikTok is being used by Chinese intelligence to intercept Americans’ data for the Chinese Government", explains Preethi.
The President cites national security concerns, but the real issue at play here may be censorship, expands Preethi. Opponents of the President’s action argue that TikTok’s alleged moderation practices constitute actual censorship, something that flies in the face of standard American Journalistic Practices. TikTok is supposed to be a “fun” app, and therefore imposes restrictions that prevent users from sharing politically charged or inflammatory posts. "You’re supposed to lip sync Billy Joel tunes on this app, not bash Presidential candidates. Because it is unclear whether there is an evidentiary basis for the President’s actions, opponents are concerned that a ban like this could set a very dangerous precedent. They warn that if a social network used by millions can be banned by Presidential decree, this could set a disastrous precedent for US software companies", Preethi tells us.
Proponents of the President’s actions argue that TikTok’s alleged modification practices are warranted given TikTok’s purpose, and welcome in light of the inflammatory and dangerous propaganda spreading like wildfire through social media. "They point to the failures of Facebook and Twitter to control the spread of false information.
"The question then becomes whether censorship is appropriate under our current standards and laws. We suspect the report by CFIUS is going to prove critical in this case. Should CFIUS find a nexus between TikTok’s misuse of information and the Chinese Government, the President’s actions will have been warranted and the censorship question could be avoided entirely. If CFIUS finds no nexus between the misuse of information and the Chinese Government, then the question of censorship will likely have to be addressed", concludes Preethi.
As mentioned, the US could force a de-platforming of TikTok from iOS and Android app stores pursuant to the International Emergency Economic Powers Act, the statute that undergirds almost all U.S. sanctions programs, using Executive Order 13873, which authorizes the Commerce Department to block any “acquisition, importation, transfer, installation, dealing in, or use” of information and communications technology and services based on an “unacceptable risk” to US national security. This won’t stop users who have already downloaded the app from using it, however, but it will prevent the app from being maintained and updated, making it less appealing for current users[4].
The Trump administration could enforce action via legal enforcement, but this will open a door full of lawsuits – which could be on the way, given that TikTok is reportedly seeking to sue[5].
Nonetheless, the above could all be disregarded due to Trump originally giving ByteDance until mid-September to find a buyer for its US TikTok business; he has since moved the deadline date to 12 November. Even though TikTok announced it will sue the Trump administration to prevent the forced sale, if the company finds a buyer, it could potentially resolve the security issues[6]. However, in recent news, ByteDance has rejected offers from Microsoft, leaving Oracle in the running for the time being. Only time will tell how it will proceed and whether or not a ban will be put in place.
This article was last updated on 14 September 2020.
[1] https://www.theverge.com/2020/8/10/21358505/trump-tiktok-wechat-tencent-bytedance-china-ban-executive-order-legal-sanctions-rules
[2] https://www.theverge.com/2020/7/9/21315983/trump-pompeo-ban-tiktok-bytedance-chinese-social-media-national-security-censorship-methods
[3] https://www.cnbc.com/2020/07/10/could-the-us-government-ban-tiktok.html
[4] https://foreignpolicy.com/2020/07/24/trump-cant-ban-tiktok-free-chinese-apps/
[5] https://www.bbc.co.uk/news/business-53660860
[6] https://fortune.com/2020/08/25/tiktok-deal-transform-microsoft/
