Today, it seems like the we’re closer to a TikTok ban in the U.S. than we’ve ever been. But that’s actually not the case.
In Sept. 2020, the app was hours away from being banned before a judge stepped in and stopped it from happening. We could see something similar again.
I’ll get back to that in a minute, but first, let’s talk about why TikTok is on the chopping block to begin with.
I’m sure you saw the CEO of TikTok get absolutely railroaded by Congress a few days ago.
If you didn’t know it before, it’s probably quite clear to you now that there is a strong bipartisan impetus among U.S. lawmakers to ban TikTok.
Without getting into whether a ban would be good or be bad, the fact of that matter is, in recent years— when it comes to national politics in the U.S.— there’s generally been no downside to being tough on China.
China is broadly seen as America’s number one adversary by the public.
This anti-China sentiment within the country has been building for several years, and it’s the main reason why there’s such strong desire among politicians to ban TikTok—an app owned by the Chinese company ByteDance.
But this is much bigger than just TikTok.
We’ve seen the U.S. government implement a whole host of anti-China economic policies over the past several years.
From the Trump trade war that put tariffs on Chinese imports; to the sanctioning of Huawei, which decimated one of China’s biggest companies; to restrictions on the export of critical U.S. semiconductors—America has been waging an economic war with China for quite some time.
Those massive economic blows made by the U.S. on China were largely ignored by most Americans because they didn’t touch many people directly.
TikTok is different because it’s directly used by tens of millions of Americans. But attempts to ban the app are a manifestation of the same anti-China sentiment that pushed the government to enact all of those other policies.
Improving Relations
It wasn’t always this way, of course. For a several decades, America’s relationship with China steadily improved.
The two countries established diplomatic relations in the 1970s and then the U.S. allowed China to join the World Trade Organization in 2001—a monumental event that helped China become a manufacturing powerhouse and eventually, the world’s second largest economy.
At the time, the U.S. believed that welcoming China into the global economy would lead to its integration into the international community, which in turn could lead to a more open political system in the country—maybe even democracy.
But it didn’t play out the way that America’s political leaders at the time had hoped.
China did take full advantage of its newfound ability to easily trade with America and the rest of the world. Like I said, it became a manufacturing powerhouse and the world’s second-largest economy.
But all of the other assumptions that political leaders made two decades ago were wrong.
Here’s what President Bill Clinton said in a speech he made in March, 2000.
The W.T.O. agreement will move China in the right direction. It will advance the goals America has worked for in China for the past three decades.
And of course, it will advance our own economic interests. Economically, this agreement is the equivalent of a one-way street.
For the first time, our companies will be able to sell and distribute products in China made by workers here in America without being forced to relocate manufacturing to China, sell through the Chinese government, or transfer valuable technology — for the first time. We'll be able to export products without exporting jobs.
Contrary to what Clinton believed, the China-U.S. economic relationship wasn’t a one-way street. The U.S. manufacturing industry suffered as jobs were shipped overseas and as China, in some cases, stole U.S. intellectual property.
And of course, China never became a more politically open society like he and many others had envisioned.
In fact, you could say that it became more closed with ascendence of Xi Jinping, arguably one of China’s more authoritarian leaders of recent Chinese history.
So the grand bargain that the U.S. struck with China a few decades ago didn’t come with the results that the U.S. expected.
China has risen, but not in the way that America’s leader had hoped it would. And this new powerful China is naturally butting heads with the U.S. more frequently.
TikTok Targeted
The relationship between the U.S. and China has deteriorated to its lowest level in decades. And now anything to do with China is looked upon skeptically by a wide swath of Americans.
There are concerns that TikTok— which is used by 150 million Americans—could be used by the Chinese government to harvest users’ data and spread Chinese Communist Party propaganda.
Does that mean the app is toast? Not necessarily.
The U.S. has a relatively open economic system. It’s not easy, nor should it be easy, to ban an app. In fact, it would be unprecedented.
So even though the odds of a TikTok ban are rising quickly, there are many hurdles that the U.S. government must overcome if it wants to make this happen.
The first is getting a bill passed in Congress that makes it easier for the President to ban TikTok.
As the Trump administration found out in 2020, banning the app based on current laws, might not be defensible in the courts.
When Trump tried this in 2020, his orders were blocked by judges who said that he exceeded his authority.
Trump was exercising his powers under the International Emergency Economic Powers Act (IEEPA), a law that grants the President the authority to regulate economic transactions with foreign countries in response to a national emergency.
But while the IEEPA gives the president a lot of discretion to decide what foreign entities Americans can interact with, those powers are limited when it comes to certain types of interactions.
Specifically, the Berman Amendments limit the President's authority under the IEEPA to regulate or ban "informational materials" from foreign countries. This includes materials that are protected under the First Amendment, such as books, newspapers, and yes, videos.
The Berman Amendments were designed to prevent censorship and protect freedom of speech, so any TikTok ban will have to find a way to get around them.
Now, if you look at President Biden’s recent threat to ban TikTok, it looks very similar to the ultimatum that Trump gave in 2020.
What we’ve heard is that the Biden administration has told TikTok that unless its parent company, ByteDance, sells the app to another company, they will seek to ban it.
But at this moment, that isn’t a very forceful threat because, as we know, Trump tried to ban TikTok and it didn’t work.
So Biden probably won’t try to ban the app unless he has stronger legal authority—authority that he could potentially get from Congress.
The bad news for TikTok is, as we all saw a few days ago, Congress seems hellbent on banning TikTok. So, there’s at least a decent chance that it passes a bill that would make it easier for the president to ban the app.
The DATA Act and the RESTRICT Act were introduced to Congress over the past couple of months, and both bills make it easier for the president to do that.
The Biden administration has backed the RESTRICT Act, which is a very broad, somewhat controversial bill that would allow it to ban many different types of technology products and services, including TikTok.
So let’s say that bill passes. What happens then?
Well, at that point, Biden will have to decide: does he exercise the powers granted by the law? If he does, well, then TikTok has two choices.
The first is it could quickly try to find a buyer. In 2020, Microsoft, Oracle and even Walmart were in talks to buy TikTok. We could see similar companies try to make a play at TikTok this time around.
The only problem is—even if those companies offer to buy TikTok and TikTok is willing to sell to them—any acquisition would have to be approved by the Chinese government.
And from everything we’ve heard from the Chinese government, they would be opposed to a forced sale of TikTok.
From what they’ve indicated, they would rather see TikTok shut down in the U.S. than see it torn out of the hands of a Chinese company because of anti-China American politics.
But, of course, there’s a chance that the Chinese government changes its tune and allows a sale, especially since the U.S. operations of TikTok could be valued at around $50 billion today.
Would the Chinese government rather see that value disappear or go to ByteDance?
You might think the answer is easy: it’s better to have a Chinese company take that $50 billion than to see it evaporate.
But I’m not so sure about that. Based on what we’ve seen the Chinese government do to their own companies, you get a sense that money isn’t always their number one priority.
In 2020, President Xi Jinping personally halted what would have been China’s largest IPO to get back at the company’s founder, Jack Ma, who made some comments that were critical of the government.
Over the next couple of years, China took a lot of actions that hurt its top companies in order to advance the government’s political goals.
So there is precedent for the Chinese government to look after its own interests ahead of the interests of Chinese companies.
And while we’re talking about a sale of TikTok, I will mention one other possibility, and that’s a scenario where China allows a sale of TikTok but without the app’s coveted algorithm.
I’m not sure what the technical feasibility of that would be, but you can imagine that another company would pay a lot of money just to acquire TikTok’s user base. And once they do that, they could incorporate their own algorithm into the app.
But, again, this is all speculative. Right now, all we know is the Chinese government is very reluctant to allow ByteDance to sell TikTok.
Freedom of Speech
So, let’s say the sale isn’t allowed to happen. Does that mean TikTok gets banned?
No, that still doesn’t mean the app would get banned right away because we would expect that TikTok would sue the Biden administration, just as they sued the Trump administration in 2020.
While the Biden administration would potentially have the benefit of a freshly-passed bill from Congress to back their case—something like the RESTRICT Act— TikTok could still use the First Amendment to make its case.
At that point, this becomes a constitutional issue for the courts to decide. Does banning TikTok violate the First Amendment?
In 2020, a judge blocked another Chinese App, WeChat, from being banned by the Trump administration on free speech grounds.
Maybe TikTok could escape a ban for similar reasons.
If attempts to get TikTok banned go that far, where this issue ends up in the courts, it could take quite some time for it work its way through the system. There’s even the possibility that this case could end up in front of the Supreme Court.
This whole process—from passing a bill in Congress; to Biden making an ultimatum to TikTok; to the Chinese government preventing a sale of TikTok; to Biden pulling the trigger to ban the app; and finally, to a TikTok lawsuit again the administration—could take a while, and might even extend past the next presidential election in 2024.
And that’s assuming that the Biden administration even goes through with the TikTok ban. We don’t know what’s running through their minds and whether they think it’s worth it to go through with something that might anger a lot of Americans, especially young Americans who Democrats rely on to vote for them.
So the bottom line is this: the odds of a TikTok ban have risen, but it’s far from inevitable.