How the TikTok ban or forced sale could hurt Apple and other tech giants

  • TikTok has become a major player in the US-China tech war.
  • US politicians from both parties are looking for ways to ban the app or limit its influence.
  • But attacks on TikTok are a distraction from the larger task of protecting data for all Americans.

When the US spotted a Chinese surveillance balloon hovering about 66,000 feet over Billings, Montana last month, politicians and pundits alike took the opportunity to call out another China boogeyman: TikTok.

“One big Chinese balloon in the sky and millions of Chinese TikTok balloons on our phones. Let’s shut them all down,” said Republican Senator Mitt Romney of Utah tweeted.

House Foreign Affairs Committee Chairman Michael McCaul similarly compared TikTok to a spy balloon that sends sensitive data to the “mothership in Beijing” when he introduced a bill in February that would require the White House to To ban TikTok or any app that might be subject to China’s influence.

A few years after arriving in the US, TikTok has become a major player in the US-China tech war. The short video app is a common talking point for US politicians from both parties who want to take a position on China. The Biden administration and the U.S. Committee on Foreign Investments, dubbed CFIUS, are demanding that TikTok’s Chinese owners sell stakes in its app as a condition of its operation in the U.S., The Wall Street Journal reported on Wednesday.

But the TikTok-targeted attacks are also triggering policy proposals that could have serious consequences for companies caught in the ongoing US-China competition, policy experts told Insider. Bills banning TikTok — like McCaul’s DATA Act and a more recent bill by Sens. Mark Warner and John Thune — tend to be worded broadly, allowing a variety of foreign-owned tech companies, such as fast-growing e-commerce apps Shein and Temu.

The bills proposed in Congress could even affect some American companies with business functions in China, said Jenna Leventoff, a senior policy advisor at the ACLU, who co-authored a letter opposing McCaul’s bill.

“This could apply to other big companies like possibly Apple,” Leventoff told Insider. “Apple makes much of its technology in China. The president or future administration could block Americans from doing business or using apps from a number of companies in China.”

Apple is working closely with Taiwanese manufacturer Foxconn in China to make iPhones and other products in the city of Zhengzhou, although the company recently tried to move some production out of the country, The Wall Street Journal reported.

China could also retaliate against US companies in the technology or other sectors should the US go after one of its rising stars.

“The US habitually politicizes technology and trade issues, using them as tools and weapons in the name of national security,” a Chinese foreign ministry spokesman said March 6. “Such a practice violates the principles of the market economy and fair competition. China will follow relevant developments closely.”

An alternative avenue for lawmakers looking to protect Americans from foreign-owned apps would be to enact stricter privacy laws for all companies operating in the US, experts told Insider. But US tech companies that rely on data collection for ad sales or other business practices have fought to curb such regulations.

“The US is lagging far behind most other developed nations when it comes to creating comprehensive privacy regulations,” said Aram Sinnreich, communications professor at American University and co-author of the forthcoming book The Secret Life of Data.

“Much of this is due to the untold millions of dollars being spent by big tech companies like Amazon and Meta and Google lobbying the US government to allow those companies to continue their data-extracting business models,” he said.

Why TikTok has become the center of anti-China rhetoric

TikTok is a particularly effective scapegoat in Washington’s anti-China rhetoric because it elicits an emotional response from many Americans. The app is integrated into many aspects of US culture, particularly among young people, raising concerns that China could use it to influence the next generation of Americans.

“TikTok is a news-and-views site that shapes opinions and helps others shape opinions,” said Leland Miller, CEO of economic research firm China Beige Book. “Nothing is bigger than TikTok and more important to a young cohort than TikTok.”

TikTok CEO Shou Zi Chew in Washington, DC on Tuesday, February 14, 2023.

TikTok CEO Shou Zi Chew is scheduled to testify before Congress in March.

Matt McClain/Washington Post/Getty Images.

Outside of its cultural influence, officials are concerned that ByteDance, TikTok’s Beijing-based parent company, may be forced to grant the Chinese Communist Party access to US user data via its National Intelligence Law.

TikTok has hurt itself when it comes to privacy. For example, the company misrepresented how US user data was managed, and then its parent company monitored the locations of reporters who exposed its practices.

But it also comes under more scrutiny than other apps with China-based owners.

Temu and Shein, for example, have rocketed to the top spot in the Apple App Store this year and have raked in top 10 spots in Apple’s ranking for the past few weeks. Both platforms, like TikTok, collect data such as username, phone number, IP address and geolocation from US customers as part of their day-to-day operations.

Still, DC politicians have not sounded the alarm about protecting user data for either app, nor have they spoken about how a TikTok ban could affect them.

Stricter privacy laws are a way out, but could be pushed back by big tech

Lawmakers could protect American users and avoid outright bans on foreign-owned apps by enacting stricter privacy laws at home, experts and political advocates told Insider.

“It’s a national embarrassment that we don’t have a basic privacy law in the United States,” said Evan Greer, director of tech activism organization Fight For The Future, which started a petition opposing a TikTok ban. “Every day that lawmakers waste hand-wringing over TikTok is another day that we in the United States don’t have a national privacy law.”

Some officials, including Sens. Ron Wyden and Jon Ossoff, have acknowledged that the TikTok-centric legislation is a distraction from the larger issue of protecting Americans’ privacy across apps.

Still, efforts by members of Congress to pass federal privacy laws, such as the American Data Privacy and Protection Act, have met an uphill battle.

Blocking access to certain user data-tracking tools has historically been detrimental to US tech platforms’ businesses. For example, Apple’s 2021 user privacy policy changes advertising revenue at Facebook and Snapchat maker Snap.

But stopping companies from collecting users’ private information could also be a more effective way to protect Americans while preserving a way for Chinese companies to participate in the global economy.

“We must continue to pursue more secure technical standards and encryption,” said Milton Mueller, program director of the Masters of Science in Cybersecurity Policy program at the Georgia Institute of Technology and co-author of an Internet Governance Project report on TikTok and national security. “This type of security is something that I think puts the users of the internet in control without undermining the fundamental workings of the internet and the globalization of the internet.”

This story was updated to include a Wall Street Journal report that the Biden administration and CFIUS are calling for a divestment from TikTok’s Chinese owners.

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