This story is part of Generation China, CNET's series exploring the nation's technological ambition.
President Donald Trump ramped up pressure on TikTok, the popular short-video app, on Thursday evening, issuing an executive order that would effectively ban the app in the US in 45 days.
The order bans "transactions" with ByteDance, the app's Chinese owner, a move that could potentially affect app stores that distribute the popular software in the US. A similar order targeted WeChat, a messaging app owned by Chinese giant Tencent. Trump issued the order under the International Emergency Economic Powers Act, a law that allows the president to regulate international commerce after declaring a national emergency in response to any unusual or extraordinary threat to the US.
"The spread in the United States of mobile applications developed and owned by companies in the People's Republic of China continues to threaten the national security, foreign policy, and economy of the United States," the executive order reads. "At this time, action must be taken to address the threat posed by one mobile application in particular, TikTok."
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Trump's move comes after a week of high drama involving TikTok. The president initially called for TikTok to be banned, and then gave the app's US operations a reprieve as Microsoft entered into discussions with ByteDance to purchase part of the business. (TikTok didn't respond to a request for comment. Microsoft declined to comment on the development.)
The situation has changed almost as quickly as videos scroll on the app. Microsoft acknowledged over the weekend that it's pursuing a deal for TikTok's operations in the US, Australia, Canada and New Zealand. The deal, however, might be larger, according to The Financial Times, which reported on Thursday that the software giant may also be interested in purchasing all of TikTok's global operations. (TikTok isn't available in China, where a sister app is used.) A deal could be worth between $10 billion and $30 billion, CNBC reported a day earlier. The large range may reflect the different proposed deal structures.
The executive order leaves open the prospects of Microsoft reaching an agreement, since it doesn't go into effect next month. The president has suggested the US should receive a portion of the transaction price if a deal is struck. It's unclear whether the government has the authority to request such a payment. Negotiations could be wrapped up within three weeks, CNBC reported, sooner than the Sept. 15 deadline that the company had initially suggested.
A day before the executive order, the US Department of State unveiled an effort to protect individual and corporate privacy. Dubbed Clean Network, the initiative would include removing from US stores apps that "threaten our privacy, proliferate viruses, and spread propaganda and disinformation." Other companies are also reportedly interested, though it's unclear how seriously they might pursue a deal.
TikTok has drawn the attention of the Trump administration, as well as other parts of the government, because of concerns it scoops up information on Americans that could be turned over to the Chinese government. The US Army and Navy have banned service members from downloading the app to government-issued phones. Both the US House of Representatives and the Senate have voted to prohibit the use of TikTok on all government-issued phones. Two senators have also requested the Department of Justice open an investigation of TikTok, as well as Zoom.
The concern stems in part from the perceived inability of Chinese companies to reject requests from China's ruling Communist Party (CCP) to access user data. China critics often cite a 2017 law that requires its companies and citizens to comply with all matters of national security. TikTok says all US user data is stored in the US with a backup in Singapore. TikTok also says its data centers are outside China and that none of its data is subject to Chinese law.
"TikTok automatically captures vast swaths of information from its users, including internet and other network activity information such as location data and browsing and search histories," the order reads. "This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage."
The rising concerns come as TikTok sees its popularity explode. The app has gotten a new boost from the coronavirus pandemic, drawing in people looking to escape the boredom of lockdown. It's been downloaded more than 2 billion times, according to research firm Sensor Tower, with 623 million coming during the first half of this year. India had been its largest market, followed by Brazil and the US. (TikTok isn't available in China, where ByteDance distributes a domestic version called Douyin.)
The US isn't alone in worrying about TikTok. India has already banned TikTok, and Australia is also considering blocking the app. Trump cited the India ban in his executive order.
In a move that could smooth things over with some lawmakers, TikTok on July 22 said it plans to hire 10,000 people in the US over the next three years. The company said it would add roles in engineering, sales, content moderation and customer service in California, New York, Texas, Florida and Tennessee. On Wednesday, TikTok said that it was setting up a new data center in Europe and would invest 420 million euros ($500 million) in Ireland.
Here's what you need to know about the political backlash against TikTok.
Now playing: Watch this: Why the US might try to ban TikTok 6:28
Why is the Trump administration worried about TikTok?
Politicians are concerned that the Chinese government could use the video app to spy on US citizens. In an interview with Fox News that aired July 6, Secretary of State Mike Pompeo said users who download the app are putting "private information in the hands of the Chinese Communist Party." Trump cited a different reason: punishing China for its response to the coronavirus. Asked about Pompeo's remarks, Trump confirmed the US is considering a TikTok ban. "It's a big business," Trump said during an interview with Gray Television. "Look, what happened with China with this virus, what they've done to this country and to the entire world, is disgraceful."
Trump's and Pompeo's remarks came after TikTok users and K-pop fans said they helped spoil attendance at a June presidential rally in Tulsa, Oklahoma, by reserving thousands of tickets online with no intention of attending. Trump supporters have a visible presence on TikTok, so banning the app could also work against the president during an election year.
On July 12, White House trade adviser Peter Navarro told Fox Business that TikTok and messaging app WeChat "are the biggest forms of censorship on the Chinese mainland" and to expect "strong action on that." He didn't specify if a ban was coming.
TikTok's access to US users' data may well be worth investigating. There'll always be concerns when apps from foreign companies collect large amounts of user data, said tech policy expert Betsy Cooper, director of the Aspen Policy Hub.
But, she added, "it's unclear how much effort the administration will put into actually investigating the seriousness of the specific security concerns with the app versus using this as a threat for broader geopolitical leverage."
How has TikTok responded?
Concerns about privacy and national security aren't new to TikTok, and it's tried to push back against political scrutiny. In a 2019 blog post, TikTok emphasized that all US user data is stored in the US with a backup in Singapore. TikTok says its data centers are outside China and that none of its data is subject to Chinese law.
"TikTok is led by an American CEO, with hundreds of employees and key leaders across safety, security, product, and public policy here in the US," a TikTok spokesperson said in a statement addressing Pompeo's comments. "We have never provided user data to the Chinese government, nor would we do so if asked."
On July 29, TikTok CEO Kevin Mayer promised more transparency around how the app work, and pledged to make its algorithm available to experts. He called on other companies to do the same thing.
Following comments from Trump on July 31 about a TikTok ban, ByteDance reportedly floated a proposal to the White House in which it would completely divest TikTok's US operations, and Microsoft would take charge of those operations and of protecting the data of TikTok's US users.
TikTok's far-flung creators, however, are clearly nervous and many are trying to encourage their followers to migrate with them to other platforms, such as YouTube and Facebook-owned Instagram. Instagram recently launched a new feature, called Reels, designed to attract creators.
Can the US make ByteDance sell its US operations?
In general, the federal government can demand the sale of a company through the Committee on Foreign Investment in the United States. This panel, part of the US Department of Commerce, is already investigating TikTok with regard to national security concerns. The investigation, first reported in November 2019, could end up requiring changes to TikTok's substantial operations inside the United States, including a sale of its US operations.
The committee has jurisdiction because it reviews foreign ownership and control of companies in the US. ByteDance got its foothold in the United States when it purchased Musical.ly, a US company that ByteDance acquired in 2017 for $800 million and subsequently rebranded as TikTok. The acquisition helped TikTok gain traction with US teens.
There's recent precedent for Chinese companies selling off sections of their businesses. In March, Chinese company Kunlun agreed to sell its controlling stake in gay dating app Grindr after the committee raised national security concerns.
Are there other ways the US government can take away TikTok?
The government could also try to find a legally sound reason to request that Apple and Google pull TikTok from their app stores, according to analysts. And the companies could put up a fight.
"The tech community will be very hesitant to go along with this app ban," said Wayne Lam, an independent technology analyst. "It sets a precedent for the government to ban other apps or even for other global apps to be inaccessible to the US market."
Even if the app were banned, users can install apps on Android devices without downloading them from the Google Play Store, said Carolina Milanesi, a tech analyst at Creative Strategies.
"I don't know at that point how you police that," Milanesi said.
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The US Commerce Department could also put TikTok on its "entity" list, restricting the company's access to US technology, she said. Chinese tech company Huawei is already on that list. Adding TikTok to the list would mean the app wouldn't be allowed on Google's or Apple's store, she said.
Lam said that the US government could block traffic to TikTok but that such an approach would be "unlikely to succeed given our legal systems."
Can the government outlaw the use of a specific app?
The administration has limited authority to make illegal any specific piece of software, like an app. But it could potentially lobby Congress to enact legislation that targets TikTok, said Kurt Opsahl, general counsel at the Electronic Frontier Foundation, an advocacy group.
Currently, Opsahl said, "there is no law that would authorize the federal government to ban ordinary Americans from using an app."
Other countries do ban specific apps, and some have the ability to block them from working on the internet at the network level. This would be extremely difficult to accomplish in the US, said Arturo Filasto, a co-founder of the Open Observatory of Network Interference, who analyzes internet censorship in countries around the world. "There is no central place where you can go to and implement a unified filtering strategy, like there is in places like China and Iran," Filasto said.
Instead, the government would have to order all ISPs in the country to block the app. Even if they all complied with the order, there's no guarantee that TikTok wouldn't find a way to get around those blocking efforts, Filasto said.
Sounds like a ban would prompt challenges by TikTok and the app stores. What would they likely do?
Any scenario would create opportunities for legal challenges. A law or executive order that targets TikTok could spur a challenge under the First Amendment, Opsahl said. The challenges would be based on previous court rulings that show "code is speech," Opsahl said. Such rulings include Bernstein v. DOJ, in which the court found a computer scientist had the First Amendment right to publish an encryption algorithm.
Additionally, Apple and Google could push back on any orders to remove TikTok from their app stores, challenging a potential executive order or any fines charged by the Commerce Department after placing TikTok on the entity list.
Apple and Google didn't immediately respond to requests for comment on Thursday's order.
Update, Aug. 6: Adds Trump executive order.
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