Sydney: TikTok’s owners are once again facing a troubled situation in the US, where the US House of Representatives has issued an ultimatum to divest within six months or face shutdown. In Australia, opposition leader Peter Dutton and Senator James Patterson, shadow home affairs spokesman, want Canberra to follow suit. TikTok, owned by Beijing-based tech giant ByteDance, has faced this situation before. It countered a similar order from the Trump administration banning video creation and sharing apps in the US several years ago. To ease US security concerns about user data potentially being handed over to the Chinese Communist Party, TikTok promised to transfer US user data to the US-based Oracle Cloud.
However, TikTok has reportedly struggled to deliver on this promise. TikTok’s resistance to US pressures is growing The platform’s survival in Western markets depends on its ability to navigate these geopolitical complexities. This situation will test TikTok’s adaptability and strategic approach as well as the strength of its user base. Over the past four years, TikTok has seen tremendous growth in both its user base and advertising revenue, although this has begun to slow somewhat in the US. Last year, ByteDance was valued at US$220 billion, down from US$500 billion in 2021, but still ranked as the world’s most valuable non-public startup.
This valuation not only highlights its worldwide appeal, but also makes it uniquely equipped to deal with US regulatory hurdles. Indeed, TikTok’s response to the latest US ban attempt has demonstrated the power of its resistance. On March 7, the platform directly engaged its users with a pop-up message urging them to contact Congress to complain. In doing so, it gave a new twist to the narrative from a direct confrontation between itself and Washington to a broader conflict between the US government and American citizens over freedom of expression. The bill that would force ByteDance to sell the app or face a nationwide ban has yet to pass the Senate. President Joe Biden has said that if this bill is passed, he will sign it.
Although the bill has broad support from both sides of the political spectrum, senators from both parties will need to consider the potential reaction of young people in a crucial election year. Already, former President Donald Trump – the Republican nominee in the 2024 presidential election – has hit back at a potential TikTok ban, underscoring ByteDance’s growing political influence. Should the bill become law, civil liberties groups could also challenge it in U.S. federal court as a violation of TikTok users’ First Amendment rights to free speech. Some groups are already mobilizing for action. Federal judges have in the past rejected attempts at sanctions in the US on various grounds. A new challenge based on free speech, which has not yet been tested in court, could eventually lead to an appeal to the US Supreme Court.
China can take this action
China could retaliate in other ways Although US national security officials were briefing US senators this week about the threats posed by TikTok, it is not the only reason the social media app has run into problems in Washington. TikTok has also been targeted due to the growing technological rivalry between the US and China, with many fearing far-reaching technological disruption or even an all-out technological cold war between the countries. Facing potential pressure to sell at a lower price, ByteDance may decide to exit the US market altogether, given the challenges faced by other Chinese tech companies like Huawei in the West. Such a decision could prompt retaliatory trade sanctions or other actions by the Chinese government due to nationalist pressures. This could boost ByteDance’s stature in China – as happened with Huawei after it was banned in the US.
China already blocks many US media outlets, social media platforms and other websites like Facebook, Twitter and Google. But it could retaliate with sanctions, as it has done in the past against US data firms, officials and researchers. The Chinese government has also said that any sale of TikTok would have to comply with its law on technology exports, which requires a license to export certain technologies. It’s not entirely clear how the law will apply to TikTok, but some experts believe it could include the algorithms that govern the app. This means that theoretically China can prevent ByteDance from selling this technology to any foreign company. TikTok’s plight in the US could also set an example for other Chinese tech companies like e-commerce platforms Teemu and Shein. Both companies are also under increasing congressional scrutiny, making them apprehensive about potential mandates for future divestitures or other regulatory hurdles.
Could Australia be next?
In Australia, TikTok is already banned on government-issued devices. Now, there is renewed momentum for a nationwide ban, too. As a close ally of the US and a major trading partner of China, Australia is in a particularly vulnerable position. It may be forced to choose between a US strategy of decoupling its tech industry from China or prioritizing improving its relations with Beijing. As the debate in the US progresses, the points of difference between the two major parties in Australia are likely to become more defined. Prime Minister Anthony Albanese said his government has no plans to follow the US lead on the TikTok ban – at this stage – but that could change as the next federal election approaches. Politicians on both sides will need to take into account the impact of a potential ban among TikTok supporters as well as the Chinese-Australian community. Many Chinese-Australians will see the ban as another slap in the face to their country of origin and evidence of an anti-China foreign policy.