By Molly O’Connor, International Banker
Whether it’s a dance trend gone viral, a fun and imaginative way to educate the world or a business attempting to breathe new life into its branding strategy, chances are that in 2023, it’s TikTok’s short-form video platform that these creators are leveraging to uniquely express themselves. But despite the billions of users worldwide now part of the TikTok revolution, not every country has received the Chinese social-media app with the same ebullience. And in the case of the United States, that could spell the end for yet another Chinese tech success story operating on American shores.
Owned by the Beijing-based ByteDance and still known in its domestic market by its original name, Douyin, it’s fair to say that TikTok has proven nothing short of a global phenomenon. By the end of last year, the app had more than one billion globally active monthly users, including some 150 million in the US alone. It was also the world’s most downloaded app of any kind last year, with 672 million downloads, 99 million of which were in the US. “We’re honored to be a home for our immensely diverse community in the United States, made up of nearly half the country’s population, including book lovers, foodies, families, emerging artists and so much more,” the TikTok team wrote on the app’s homepage on March 21, in celebration of reaching the 150-million mark. “This milestone would not have been possible without the hard work and unwavering commitment of almost 7,000 TikTok employees in the US, as well as our incredible community in the country and around the world.”
As for US user engagement, TikTok has already sprinted well ahead of its social-media peers, with eMarketer data published in early March revealing that the app had captured the attention of its adult US users for an average of 55.8 minutes a day. This surpassed the 47.5 minutes users spend on YouTube, while those on Facebook and Instagram spend just marginally over 30 minutes per day on each platform. Rival IQ’s “2023 Social Media Industry Benchmark Report”, meanwhile, found that with a median engagement rate of 5.69 percent (such as likes, comments and favorites), TikTok topped the social-media charts last year.
But such figures seem to have done little to curry favour within the corridors of power in Washington, D.C., or indeed across many of the states’ legislative bodies—with Montana becoming the first US state to officially approve legislation on April 14 to ban TikTok on all personal devices, having earlier banned the app on all state-owned devices. Should Montana’s governor sign the bill into law, TikTok will be prohibited from operating within the state starting January 2024, and app stores will also be prevented from making TikTok available for download. Penalties targeting companies (not individual users) could potentially reach up to $10,000 per violation per day.
The ban follows threats by the administration of President Joe Biden to prohibit TikTok should ByteDance not sell TikTok to US investors, alongside the introduction of the Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT) Act in March by the U.S. Senate. The bill would confer broad powers on the president to regulate or even ban technologies deemed a threat to national security. Indeed, many lawmakers have expressed concerns that TikTok could be used as a conduit for the Chinese government to influence Americans, particularly younger Gen Zers, who make up around 60 percent of US TikTok users, as well as for clandestine surveillance and the promotion of propaganda.
Forbes reported in October 2022 that ByteDance was planning to use the app to “monitor the personal location of some specific American citizens”, citing at least two instances in which the company’s internal audit team planned to collect TikTok data about the location of a US citizen who had never had an employment relationship with the company. “It is unclear from the materials whether data about these Americans was actually collected,” the Forbes article added, “however, the plan was for a Beijing-based ByteDance team to obtain location data from U.S. users’ devices.” In response, TikTok spokesperson Maureen Shanahan confirmed that the app collects only approximate location information based on users’ IP (Internet Protocol) addresses to, “among other things, help show relevant content and ads to users, comply with applicable laws, and detect and prevent fraud and inauthentic behavior”.
But many see the US’ punitive measures as a cynical attempt to contain and limit the successes that Chinese businesses are now enjoying in Western markets. Indeed, Chinese apps have never been more popular with American users than they are today. In March, for example, four of the top five most-downloaded apps in the US across Apple’s iOS Store and the Google Play Store were Chinese-owned. Online retailer Temu topped the list and now competes with marketplace giants Amazon and Walmart. It was followed by TikTok, the ByteDance-owned video-editing app CapCut and the fast-fashion retailer SHEIN, which is also likely to find itself in the crosshairs of US legislators as it looks set to launch one of the world’s biggest initial public offerings (IPOs) later this year.
Indeed, given the backdrop of the US-China geopolitical standoff—one that has already claimed Huawei’s American presence—it certainly appears that TikTok is merely the latest chapter in the growing hostility between the two superpowers. Perhaps this hostility has been no more clearly exemplified than by the now-infamous treatment TikTok’s chief executive officer, Shou Chew, received at the hands of the U.S. House Committee on Energy and Commerce. With Democrats and Republicans champing at the bit, the Singaporean Chew was subjected to a procession of withering attacks that covered not only TikTok but also a range of additional hot-button geopolitical issues related to China that went well beyond his purview as chief executive. The hearing soon went viral, with the lawmakers’ conduct being parodied most fervently by, unsurprisingly, the TikTok community.
Nonetheless, Chew sought to reassure lawmakers that many of their fears could be allayed without issue. “I am well aware that the fact that ByteDance has Chinese founders has prompted concerns that our platform could be used as or become a tool of China or the Chinese Communist Party. There have even been calls to ban us or require divestment,” Chew said in his written testimony. “I steadfastly believe that all concerns that have been raised have solutions. Bans are only appropriate when there are no alternatives. But we do have an alternative—one that we believe addresses the concerns we’ve heard from this Committee and others. We do not believe that a ban that hurts American small businesses, damages the country’s economy, silences the voices of over 150 million Americans, and reduces competition in an increasingly concentrated market is the solution to a solvable problem.”
Beijing separately insisted that it “has never asked and will never ask any company or individual to collect or provide data, information or intelligence located in other countries through means that are in violation of local laws,” according to spokeswoman Mao Ning. The Chinese Ministry of Commerce also confirmed its strong opposition to any forced sale of TikTok, adding that such an outcome would seriously dent global investor confidence in the US.
It should be noted that should a federal ban be finalised, the US will not be the only country to have banned TikTok. After a series of border skirmishes with China, India blocked TikTok from operating in the country, along with 58 other Chinese apps, while a handful of other Asian countries have implemented their own bans for various reasons. The Five Eyes anglophone countries with an intelligence-sharing agreement—the United States, the United Kingdom, Canada, Australia and New Zealand—also implemented TikTok bans on government devices in February and March.
But given its singular reputation on the world stage for protecting free speech and expression, any federal ban on TikTok usage would seemingly fly in the face of the US’ very raison d’être. So, it is on the US that all eyes will be fixed. What the country does next could mark a hugely significant step change in how it is perceived globally, particularly if any ensuing legal challenges are also struck down. Indeed, as TikTok spokesperson Brooke Oberwetter stated in response to the Montana ban, the company will “continue to fight for TikTok users and creators in Montana whose livelihoods and first amendment rights are threatened by this egregious government overreach”, adding that the bill’s supporters “have admitted that they have no feasible plan for operationalizing this attempt to censor American voices”. As such, the bill’s constitutionality is set to be decided by the courts.