Who Wins If TikTok Loses in the US?

TikTok, owned by Beijing-based ByteDance, is coming under global fire as long-simmering fears bubble over.

The U.K. banned TikTok from government phones Thursday (March 16), citing security concerns that the popular social media platform is being used as a tool of state manipulation and cyber-espionage by China.

“Given the potentially sensitive nature of information which is stored on government devices, government policy on the management of third-party applications will be strengthened and a precautionary ban on TikTok on government devices is being introduced,” reads a statement issued by U.K. Cabinet Office Ministers after conducting a security review.

“Restricting the use of TikTok on government devices is a prudent and proportionate step following advice from our cybersecurity experts,” added U.K. Chancellor of the Duchy of Lancaster, Oliver Dowden.

European Commission employees were also told to delete the app last month, and had until Wednesday (March 15) to do so. The French government is similarly planning to ask its cabinet ministers to avoid using the social media platform, as well as similar apps, on both their personal and government-issued devices.

Now, The Wall Street Journal (WSJ) is reporting that the Biden administration is threatening a possible national ban of the video-sharing app if its Chinese owners don’t sell or divest their stakes in the social platform.

See also: The Social Commerce Love Affair With AI

TikTok’s CEO, Shou Zi Chew, is scheduled to appear before the U.S. House Energy and Commerce Committee next week, where he will address American lawmakers’ questions around long-standing security concerns relating to TikTok parent company ByteDance’s mandate to comply with requests from Beijing to turn over internal user data, including data collected on U.S. citizens.

That’s because China’s national-security law requires Chinese companies to turn over any information requested. Concerns around the use of private companies as a tool for international espionage have already led to the banning of companies like telecommunications provider Huawei from operating or selling products and services in the U.S.

“If protecting national security is the objective, divestment doesn’t solve the problem: A change in ownership would not impose any new restrictions on data flows or access,” TikTok spokeswoman Brooke Oberwetter said in a statement relayed by the WSJ.

PYMNTS’ research in “The ConnectedEconomy Monthly Report: The Who’s Who Of The Digital Social Scene” finds that consumers’ appetite for socializing online is growing faster than any other type of digital activity.

TikTok alone is used by more than 100 million U.S. citizens, and many American businesses large and small consider it a critical way to market their goods and services as well as engage and build loyalty with customers, particularly increasingly valuable younger generational cohorts.

What If US Bans or Restricts TikTok?

The reported ultimatum by the Committee on Foreign Investment in the U.S. (CFIUS) marks a major escalation, although the previous presidential administration also tried, and failed, to ban the platform.

If TikTok were to be banned in the United States, there would likely be several potential “winners” among various stakeholders, first among them being TikTok’s competitors such as Instagram, Snapchat and YouTube, who could all see an increase in user engagement and take advantage of the ban to win greater market share.

Additionally, if a ban on TikTok was successfully enacted over concerns about data privacy or national security, both the U.S. government and its regulatory bodies might consider the ban a victory, as it would address their concerns about the potential risks associated with a foreign-owned app.

Separately, those individuals and organizations that advocate for stronger data privacy and security measures might also see the ban as a win, as it could set a precedent for greater scrutiny of foreign-owned apps and services operating in the United States.

However, it's essential to note that a TikTok ban wouldn’t come without its own set of negative consequences, particularly for the many users, content creators, and advertisers who rely on the platform for communication, entertainment and business opportunities.

There are entire industries (think: influencers and influencer marketing) built around leveraging TikTok’s huge reach and highly engaged user base, and a ban would ruin them, as well as hamstring TikTok parent ByteDance’s valuation and global growth strategy. It would also be an unfortunate outcome for TikTok’s many U.S. employees and contractors.

TikTok has repeatedly underscored that forced sale wouldn’t properly address what it calls a perceived security risk, and the social media company has pledged $1.5 billion to safeguard U.S. user data from Beijing.