Proposed Legislation Threatens Ban on TikTok in the U.S. over National Security Concerns
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Source: Bloomberg
The U.S. lawmakers have unveiled legislation that could potentially result in a ban on TikTok, the widely popular social media app. Concerns over national security have prompted Republican Representative Mike Gallagher, along with Democratic ranking member Representative Raja Krishnamoorthi, to introduce the bill. The proposed legislation aims to prevent any “ByteDance-controlled application,” which includes TikTok, from being available on app stores or web hosting platforms unless it cuts ties with foreign entities like ByteDance, the Chinese-owned parent company.
Supported by over two dozen lawmakers from both parties, the bill seeks to address worries surrounding the Chinese ownership of the app. If passed, the legislation would give ByteDance a grace period of 165 days to divest TikTok before facing a ban. This would involve the removal of TikTok from major app stores such as Apple and Google, as well as web-hosting services. Notably, this bill would not target individual users.
Concerns over the potential sharing of TikTok user data with the Chinese government have been raised by the Federal Bureau of Investigation (FBI) and the Federal Communications Commission (FCC). TikTok has responded by asserting that the bill would effectively ban the app and infringe upon the First Amendment rights of its 170 million American users.
This legislation would empower the president to designate apps controlled by foreign adversaries and deemed concerning, if they have more than one million active users. Failure to comply with divestiture requirements could result in bans or restrictions. With the bill advancing towards discussions at an Energy and Commerce Committee hearing, a possible vote is anticipated. Should this bill pass, it would significantly impact ByteDance’s ownership of TikTok, necessitating companion legislation from the Senate.
While the U.S. considers taking action against TikTok, Canada has already banned the app from government-issued mobile devices, following a similar move by the European Commission. Authorities in Canada are also currently conducting an ongoing investigation into TikTok’s privacy practices due to concerns raised by the federal privacy commissioner and three provincial counterparts. Prime Minister Justin Trudeau has not ruled out the possibility of further action being taken against the app.
As the U.S. Congress moves closer to determining the fate of TikTok, all eyes will be on the Energy and Commerce Committee hearing regarding this potential landmark legislation. The outcome of these deliberations will shape the future of TikTok in the United States and could have far-reaching implications for ByteDance’s ownership of the app.
Analyst comment
Positive news for national security concerns in the U.S. Negative news for TikTok and ByteDance as the proposed legislation threatens a ban. Market impact: If the bill passes, it could lead to a significant decrease in TikTok’s user base, affecting ByteDance’s ownership and revenue in the U.S. market.
