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TikTok Divestiture Bill Balances National Security and Competition

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TikTok Divestiture Bill Balances National Security and Competition

March 12, 2024

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When it comes to digital platform regulation, balancing concerns related to consumer welfare, competition, and national security is no easy feat. No app better demonstrates these difficulties than the hugely popular app TikTok, which has provided a counterweight to incumbent platforms owned by Meta and Alphabet, but also has ties with the Chinese Communist Party (CCP) that raise legitimate national security concerns.

H.R. 7521, the Protecting Americans from Foreign Adversary Controlled Applications Act, is the latest and best attempt to address such concerns. The legislation’s forced divestiture of TikTok would both address the app’s national security risks, and boost competition among social media platforms rather than reduce it. House Majority Leader Steve Scalise (R-LA) said that the House of Representatives will vote on the Protecting Americans from Foreign Adversary Controlled Applications Act this week.

The bill allows for any company or investor group to acquire TikTok as long as that company or group is not controlled by a foreign adversary country—a definition set in statute that includes China, Iran, Russia, North Korea, Cuba, and Venezuela. If TikTok is as independent from the CCP as its CEO has claimed, then it should have no problem finding a buyer located in a non-adversarial country that can maximize the platform’s potential, free of spyware concerns. This would ensure that American consumers retain access to TikTok, enjoying its competitive benefits, while addressing the legitimate national security risks raised by TikTok’s connections to the CCP.

The Protecting Americans from Foreign Adversary Controlled Applications Act addresses the national security threat posed by TikTok and similar applications by setting up a binary choice: divest from foreign adversarial ownership or be banned from providing services within the United States. If the legislation is passed and signed, ByteDance will have 165 days to sell the app to another firm or investor group that is not located in or have members affiliated with a foreign adversary country. Unlike other attempts to ban or restrict TikTok, this proposal does not require nationalization or expand federal authority to unilaterally ban technologies it finds objectionable.

The legislation has strong, bipartisan support, from its introduction by Representatives Mike Gallagher (R-WI) and Raja Krishnamoorthi (D-IL), to its unanimous passage out of the House Energy and Commerce Committee. President Biden has stated he will sign the legislation if it comes to his desk. Senators Marco Rubio (R-FL) and Mark Warner (D-VA), longtime critics of TikTok’s connection with the Chinese government, appeared in a joint interview emphasizing the importance of separating control over TikTok’s algorithm and data collection from entities aligned with the CCP.

Strangely, though, the social media platform has gained support from an unlikely ally: former President Donald Trump. While President Trump attempted to ban the app during his time in office, he has shifted gears, claiming that a divestiture would empower Facebook, a platform he views as “a true enemy of the people.”

Trump’s concerns about a TikTok ban empowering rival social media apps like Facebook and Instagram are reasonable. But if ByteDance is truly the independent, profit-driven corporation that it claims to be, there should be no problem finding a qualified buyer, which would promote and strengthen competition among social media platforms. Further, if the CCP steps in to prevent ByteDance from complying with a divestiture, as it has previously stated it will do, it would only strengthen the national security case against the app.

TikTok’s popularity has remained consistent, but assuaging concerns about the CCP’s influence could propel the app to new heights. Since the app’s explosion in Q1 2020, periods of lackluster quarterly downloads have seemed to follow notable public statements or hearings extolling the dangers of the app. As concerns about TikTok grew in the summer of 2020, Trump attempted to ban the app, which corresponded to the fewest quarterly downloads in more than a year. Further, following hearings with TikTok’s CEO in March 2023, quarterly downloads fell again, as 50 percent of Americans supported a government ban.

Considering TikTok’s continued growth and popularity amid controversies, there is no reason to believe the platform would lack viable suitors. Both Microsoft and Oracle have previously attempted, and failed, to purchase TikTok, and former Activision CEO Bobby Kotick has also expressed interest in the company, apparently reaching out to OpenAI head Sam Altman about a potential partnership. Given the Federal Trade Commission’s aversion to social media heavyweights Meta’s and Alphabet’s histories of gobbling up competitors, it is unlikely that an offer by either of them would be given the green light by regulators. This creates a path for a new company to compete for social media supremacy by acquiring TikTok.

H.R. 7521 addresses national security concerns while providing an avenue for digital platform competition to continue. If the app is allowed to be sold, U.S. users will retain access to a valuable platform, wiping away any potential competitive benefit that Facebook, Instagram, or Youtube may receive under a ban. Furthermore, freeing the platform from potential concerns about its use as a CCP influence operation would likely further bolster the platform's popularity and value. The former president fired the opening salvos in the fight against TikTok. Members of Congress now have a chance to finish it.

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