A sale to an American company would only serve to create perverse incentives.
The Chinese-owned video-sharing social media app TikTok has been all over the news recently, as the federal government has been considering banning the app from the US. I am a big proponent of this strategy and laid out the case against TikTok a few weeks back on this blog. This past weekend saw a flurry of activity on the TikTok front, as President Trump first stated that he was planning to ban the app outright before backing off of that position. The current plan du jour is to allow the American technology giant Microsoft to pursue a full acquisition of TikTok’s US operations. A sale to Microsoft would include the app’s American business, as well as the user data which the app collects. This would solve the problem that I delineated, would it not?
I’m as ardent a laissez-faire capitalist as pretty much anyone, but allowing a TikTok acquisition by any American company would not solve the problem inherent in the app; indeed, it would only serve to exacerbate the issue through the creation of perverse incentives. As I stated in my article laying out the rationale for a TikTok ban, the Chinese-owned app is a major threat to the personal privacy of millions of Americans – especially youth – and endangers American national security. It is more than safe to assume that whatever data was collected by ByteDance, TikTok’s Chinese owner, has been backed up and saved on China-based servers. TikTok would assuredly claim that all data not transferred to Microsoft was purged, but this should not be believed given the long history of Chinese government data theft, corporate espionage, and hacking. To me, this data is permanently lost to the Chinese Communist Party and should thus be treated as a sunk cost in any discussion of TikTok. Without the ability to regain the private data of Americans, the rationale for a sale of TikTok begins to crumble. The focus on the app’s American operations is myopic, as this app is being used to spy on the populations of our allies as well. TikTok is popular with youth on all populated continents and has made significant inroads into China’s neighbors in Asia, as well as American allies in Europe. Splitting off the American market from these other important regions would not solve the overall issue, as Chinese Communist espionage hurts our friends as well. The security of those nations is critical for American national security and cannot be ignored when working to solve this problem.
The biggest issue that I have with a potential sale of TikTok is the perverse incentives that it will undoubtedly create. ByteDance to this point has been one of China’s marquee technological success stories and has created billions in wealth for itself and the Chinese government by creating and propagating spyware (like TikTok) throughout the world. Rewarding that malign behavior with billions more dollars coming straight from American corporate coffers would be like presenting an arsonist with gasoline as a prize for burning down a building – it would only serve to incentivize and accelerate further instances of the negative behavior. ByteDance should face heavy financial penalties for its activity on behalf of the Chinese government, not be paid billions of dollars for their success at espionage. Rewarding ByteDance would create incentives for that company and others related to the Chinese Communist Party to craft more insidious and pervasive spyware services under the guise of ‘social media’ apps and proliferate them throughout the world. We need to put our foot down and stamp out the remnants of Chinese espionage in this country, not pay a ransom to those who wish to continue to do us harm.
Banning TikTok outright, and pressuring our friends and allies to do the same (India is way ahead of us, and Japan is on the same page), will cause serious harm to ByteDance and will penalize it appropriately. In fact, banning more apps which have links with the Chinese Communist Party, including the popular messaging app WeChat, would drive a significant downturn in the Chinese technology sector, something which should be a national objective of ours (I will detail more strategies for pushing back on China in the coming weeks). China prides itself on its government strategies for increasing technological dominance in hardware and software; striking at the heart of this policy by refusing to allow that nation’s apps into our lucrative market is the best possible move here. There has been much talk of how a ban could come into effect, and this article by University of Texas law professor Bobby Chesney is a great primer on the subject. Professor Chesney breaks down the legal avenues by which TikTok could be banned and does so in great detail. My favored approach would involve using the International Emergency Economic Powers Act (IEEPA) to add ByteDance (and other CCP-linked tech companies) to the sanctioned entities list so as to prohibit American companies from doing business with them. This addition, alongside pressure against internet providers and smartphone developers, would serve to effectively ban the app inside the United States, as well as causing other problems for the app globally. This is eminently doable and should have broad-based bipartisan support under the rubric of national security.
To end, I’d like to touch on the idea that President Trump is looking to ban TikTok solely because he either dislikes the popular comedians making fun of him on the app or the teenagers who supposedly trolled the Trump campaign through the app. I find these theories conspiratorial, silly, and naive. Banning an app from the United States is not a simple task and cannot be done by presidential fiat; it requires a major process that involves Congress. If there was no reason to ban the app besides our thin-skinned President’s hurt feelings, the app would not stand a chance at being banned. However, there are myriad reasons to be suspicious of TikTok and wish to punish ByteDance and the Chinese government for their espionage activities. The threat of the Chinese Communist Party is more direct, immediate, and existential than any other danger which we face on this planet. The next century will be dominated by the conflict that results from China’s rise, and taking steps now to deter and punish that evil regime is necessary to limiting the damage done in the future. Forcing a sale of TikTok will only serve to incentivize the creation of a dozen Chinese spyware apps. Banning it outright will launch a warning shot across the bow of the Chinese Communist Party and protect the security and privacy of all of us here in the US and across the free world.