What’s Next for TikTok as Political Tension Broils?

Devin Dinh, Staff Writer


image by The Drum

TikTok, the new social media platform, has dominated the devices of many Americans, especially high schoolers. During the pandemic, TikTok reached over two billion downloads on the Apple App Store and Google Play Store as reported by Forbes, making a milestone as the most downloaded app ever and continues to grow as its popularity rises.

However, TikTok isn’t without controversy. The United States has been placing side-eyes on the app owned by the parent company, ByteDance, due to the company being Chinese-based, a “threat” to national security, some may say. ByteDance, based in Beijing, China, reached an estimated valuation of $100 billion, as reported by TechCrunch. Funding from backers such as Morgan Stanley, Goldman Sachs, and SoftBank among many have also helped TikTok raise through the charts.

President Donald Trump announced an executive order to ban TikTok unless ByteDance divests the famed app to an American buyer by September 15, 2020. Eventually, President Trump has extended the deadline till November 12, 2020––however, still refers to the September 15 deadline on most accounts. The announcement places a strenuous task for the social media platform, as it will be the first experiment in splitting a social media platform into three parts: between China, between Europe, and between the Americas and Oceania.

While the app does not constitute a traditional national security threat, the Trump administration has the right to do this, using the International Emergency Economic Powers Act (IEEPA) –allowing presidents to tackle emergency national security concerns. Unfortunately gives TikTok a tight margin to decide with an imminent deadline. TikTok stated that “The executive order is not rooted in bona fide national security concerns.”

TikTok has also mentioned, “The executive order placed by the Trump administration, threatens the creation of 10,000 American jobs and harming the entertainment of many Americans.” TikTok touts itself as having an American presence and no ties to China –having an American executive and utilizing domestic servers with Google Cloud to spend over $800 million on Cloud services. 

There is demonstrated interest by various American companies such as Cisco Systems, Microsoft, Twitter, and Walmart. As of Wednesday, August 26, 2020, TikTok CEO Kevin Mayer, has stepped down due to the political climate with the battle between TikTok and the Trump administration as well as a change in the corporate structure. And within internal documents to employees show that TikTok is prepared to see a resolution soon.

A likely buyer for TikTok seems to point towards a joint partnership with Microsoft and Walmart, turning the famed app from Chinese to American ownership. If the purchase goes through, Microsoft and Walmart will take over the U.S., Canada, Australia, and New Zealand division of the app and be a strenuous task for the company as it may be a political battle to hold the app.

The Microsoft and Walmart partnership won’t be the first time that the two giants have teamed up previously in tackling Amazon in placing Microsoft Office 365 across Walmart’s business.

According to CNBC, Walmart believes TikTok will be beneficial towards their ecosystem.

“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets. We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” Walmart said in a statement. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”

If investment from Microsoft and Walmart comes towards TikTok, it will come as a challenge as it will be the first time in which we see a social media platform divided among various countries. Microsoft has planned to finalize or drop the deal for TikTok by September 15. 

In a twist of events, China has decided to introduce new policies regarding artificial intelligence (AI) technology in its export-control rules that will lay more even more trouble for TikTok. Beijing released an amendment for its tech export laws to cover “recommendation of personalized information services based on data,” as noted by Digital Trends. TikTok’s algorithm is the key player that everyone is aiming to get a piece of, and now making that piece more sorrow as any company interested must get approval from the local government in China.

All eyes now point towards the complicated battle to purchase TikTok. As ByteDance will most likely need to obtain government permission to sell TikTok to a foreign company, with the likely being the Microsoft-Walmart joint venture.

ByteDance General Counsel Erich Andersen said in a statement that the company is studying new regulations. “As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the US and China,” he added.

TikTok will have to weigh its new options due to the increasing factors with political conflict with both the Trump administration and Chinese officials. The broil comes for ByteDance as the November 12 deadline approaches in a matter of weeks.