Has the clock run out on TikTok? How a Chinese company blundered its way toward legislation that could ban it

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On April 24th, President Joe Biden signed H.R. 815, a bill the White House said “provides supplemental emergency appropriations…to the situations in Israel, Ukraine and for assistance to the Indo-Pacific region.” Included in the $95-billion foreign aid package is “Division H” or the “Protecting Americans from Foreign Adversary Controlled Applications Act,” otherwise known as the “TikTok Bill.” Congress has a long track record of adding unrelated bills onto must-pass legislation (a questionable practice, but that’s for another article). Essentially, the bill gives ByteDance Ltd., TikTok’s Chinese-owned parent company, nine months – plus another 90 days, at the President’s discretion – to sell its United States operations.

Here’s how it could play out.

Let the Courts Decide

Way back in 2020, President Donald Trump’s administration explored the possibility of banning TikTok. Various states have banned it from state-owned devices, and Montana passed a state-wide ban on it (before being overturned by the courts). Congress has also discussed banning TikTok before. In March 2024, the House overwhelmingly passed a bill requiring ByteDance, TikTok’s Chinese owner, to sell the US operations to someone who isn’t based in a “foreign adversary” country; if not, the app would effectively be banned in the US, requiring Google and Apple to remove TikTok from their app stores. That bill stalled in the Senate but with some adjustments to timelines was included in H.R. 815. However, on May 7th, TikTok filed its much-expected lawsuit against the Law because it violates TikTok users’ First Amendment rights to free speech. The 67-page petition sets in motion a – as The New York Times put it – “battle over national security and free speech that is likely to end up in the Supreme Court.”   

TikTok has some precedent from the Montana case to claim free speech violations. Legal scholars may suggest that there is a substantial First Amendment challenge, and the courts generally take a comprehensive view of Free Speech; the government can (and has) infringed upon First Amendment rights in favor of national security. There are also legitimate questions about the feasibility of selling “just” the U.S. operations, with even more complication brought by the fact that China has unequivocally stated that it will not part with the algorithm (which is where TikTok’s value is).

TikTok’s Case Study in How to Lose in Washington

When did TikTok lose its battle with the U.S. Government? We’d humbly suggest it was March 23, 2023, the first time CEO Shou Chew testified before a Congressional committee. His testimony came across as half-truths, dodges, sanctimonious, and entirely absent of recognition of the national security threat Congress believes TikTok to be. Those fears are objectively warranted given China’s 2017 national intelligence law requires individuals, organizations, and institutions to assist China’s Public Security and State Security offices in their intelligence work, essentially requiring all Chinese companies to provide the government with any information requested. That law is on top of a 1993 law that requires Chinese companies to establish a Chinese Community Party presence in its organization. Chew’s testimony, nor anything else TikTok has done, has assuaged any of the concerns. In fact, much of what TikTok did in response to the bill bolstered the fears of China being able to weaponize TikTok.

Being anti-China is about the only thing Americans agree on right now. A recent Pew Research Center survey suggests that about four-fifths (81%) of Americans hold an unfavorable view of China (about a 15% jump since 2020). A recent Reuters/Ipsos poll earlier found that nearly three out of five (58%) Americans agree with the statement “Chinese government uses TikTok, which is owned by China’s ByteDance, to “influence American public opinion.” That same poll finds half of American supporting the ban and nearly as many (46%) agree with the statement that China is “using the app to spy on everyday Americans.”  

Anti-China sentiment, plus the national security fear combined with public support, led the initial “TikTok Ban Bill” to be passed out of committee unanimously, which is almost unheard of; it passed on the House floor with about 300 votes to spare. 

According to a recent article in Politico, “TikTok’s complacency, tone deafness, and hubris caused its lobbyists to lose its most important fight in Washington.” The article goes on to say that many see TikTok as a company that is blinded by its commercial success and vast number of users. This was made worse by a leadership that failed to recognize that its links to China made it more vulnerable than rival tech platforms like Meta, which had faced Washington scrutiny and came through with “barely a scratch.”

Missed Opportunities

The missteps run deep. TikTok had years of warning, starting with President Trump’s 2020 effort to ban it, which was overturned in court. In 2022, its lobbyists failed to convince Capitol Hill of the wisdom of “Project Texas,” the company’s plan to protect American user data from Beijing by storing it on U.S.-based servers run by Oracle. This completely missed the point. Lawmakers were more concerned about the company’s ties to China than data protection. In 2023, TikTok brought a “small army” of creators to Washington to dissuade Congress, which again missed the point of Washington’s concern. And as Rep. Kat Cammack of Florida told The Wall Street Journal, “[TikTok] made the point for us. They hurt themselves pretty tremendously by doing what they did (sending push alerts to its 170 million users to call Congress) in targeting members of Congress and using content creators and users of the app as foot soldiers [of the Chinese government.” Rep. Raja Krishnamoorthi of Illinois, the ranking member of the House Select Committee on the Chinese Communist Party, said that a lot of members were “lean yes” before the 50-0 committee vote, who then became a ‘hell yes’ after this (the call to TikTok users to lobby Congress) happened.”

What does this all mean for me?

We’ve been counseling clients to stay away from TikTok for the last two-plus years. We could see that it was likely going to come to where we are today, and besides, it was just a bad look to be on a Chinese-owned app (to say nothing of being on a Musk-owned app…). Our prescience aside, there are some important lessons for enterprises and organizations to take away from this ongoing TikTok fiasco:

  • Know your stakeholders and know what they think about you. This means communicating with them regularly – not just when you need something or when something goes wrong – and paying attention to survey data.
  • Know what is going on regulatorily and legislatively. You should never be surprised by a bill or regulation, as The Journal reported TikTok was. Develop, maintain, and cultivate strong relationships with local, state, and national officials. If you can’t do it yourself, find a suitable partner to help.
  • Understand your weaknesses. Recognize how they are perceived objectively, not just subjectively. What you consider a strength (TikTok…large, active user base) could be seen as a threat to someone else, like the U.S. government.
  • Seek out differing opinions. Do the research. You’ll never win when the feedback loop is so circular that it resembles a dot.
  • If you’re in the data-collecting business, be it via social media or otherwise, strongly consider backing legislation that could adversely impact your business. It’s the right thing to do, and it’ll put you on the right side of history.
  • If you’re a Chinese-owned, or an enterprise with extremely close alignment with the Chinese government, recognize you will be under more scrutiny than a competitor without China ties.
  • Don’t do the thing you’re being accused of doing to try and “right the ship.” If your enterprise – especially in the age of the Internet of Things and AI – is being accused of “spying” or collecting data or any other nefarious issue, don’t rely on something that could reasonably be viewed as the output of that accusation to curry favor. Similarly to knowing your stakeholders, understand your audience and who impacts/influences them. Recognize what public sentiment is (or will likely be soon) and react as quickly as possible.

As Lincoln told us: “Public sentiment is everything. With public sentiment, nothing can fail. Without it, nothing can succeed.”

Purposeful Advisors delivers premium communications advisory, crisis communications, and public affairs services to founders and senior management teams, empowering companies to move minds, bodies, dollars, media, and governments to reach their business objectives.

Purposeful Advisors’ roots are in the boardrooms of the biggest brands in the world and the war rooms of some of the most complicated political and business campaigns in recent memory. With its senior advisors, the team brings over a century of hard-earned experience to start-ups, scale-ups, and midsize enterprises. Purposeful also leverages its expertise to help clients through crises, litigation, and other critical situations.

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