Banning TikTok: National Security, Civil Rights & Investments
MAY 13, 2024
Photo by Solen Feyissa
In the last week of April, Congress passed, and President Biden signed, a law banning TikTok in the United States if its parent company, ByteDance, did not sell it to an American company within 12 months.
The New York Times Senior writer David Leonhardt provides a good summary of why this bill was passed. It is a highly unusual step since TikTok is a popular social media platform. About one-third of Americans under 30 regularly get their news from it, and Congress rarely punishes a single company for a suspected or possible behavior.
Christopher Wray, the director of the F.B.I., articulated the main reason for taking this action. He told Congress, “This is a tool that is ultimately within the control of the Chinese government,” since under President Xi Jinping’s rule, private companies are treated as extensions of the state.
The argument for banning TikTok seems straightforward – protect national security.
Zephyr Teachout, a Fordham Law School professor, argues in the Atlantic that America has a long history of shielding infrastructure and communication platforms from foreign control. Beginning with the Constitutional Convention in 1787, the Framers feared that foreign powers would exploit America’s open form of government to serve their interests.
As recently as 2011, that concern was expressed in our judicial system. As a Circuit Judge, Judge Brett Kavanaughwrote in Bluman vs. FEC that the country has a compelling interest in limiting the participation of foreign citizens in such activities, “thereby preventing foreign influence over the U.S. political process.”
Those who argue that this law violates constitutional rights have opposed it, relying on past court decisions on Constitutional Rights. In 2020, President Trump tried to force a sale or ban of the TikTok app, but federal judges blocked the effort because it would have shut down a “platform for expressive activity.”
More recently, a federal judge blocked a Montana law banning TikTok from going into effect because it likely violates the First Amendment.
The A.C.L.U. sent a letter to Congress to vote against the bill, citing that decision and also arguing that the law applied a “prior restraint” preventing access to receiving speech on TikTok. To exercise a prior restraint, a court must determine that the ban is necessary to prevent serious, immediate harm to national security. None was provided for passing the law.
Leonhardt referred to a Network Contagion Research Institute report that said TikTok likely promotes and demotes specific topics based on the Chinese government’s perceived preferences. He and others have concluded that TikTok is thus a propaganda tool for China. It may be, but does that meet a level of presenting an immediate harm to national security?
The conservative-libertarian CATO Institute labeled that report a misleading study based on flawed methodology. Jeff Yass, a former board member at the Cato Institute and a major Republican campaign donor, is a prominent TikTok defender. He needs to be because, as the founder of Susquehanna, it owns roughly 15 percent of ByteDance, according to an article by an NYT reporter.
If you like this piece, become a Patreon patron or make a one-time donation to help me reach others. – thank you, Nick
Although ByteDance is a private Chinese company, American businesses have been investing in it since its formation in 2012, a year before it started TikTok. Susquehanna and investment firms General Atlantic and Sequoia Capital havecollectively poured billions into ByteDance.
Three of the company’s five board members are Americans, with the heads of GA and SC having two of those seats. Other U.S. investors include the private equity firms KKR, the Carlyle Group, and the hedge fund Coatue Management.
When you think of TikTok as a Chinese company, realize it is run by an American Board of Directors and funded by American investments. It has 600 million users outside the U.S., generating about $10 billion in global ad revenue in 2022. It doesn’t exist in China.
While ByetDance owns 100% of TikTok, it is 60% owned by global institutional investors. Its founder owns 20%, the Chinese Government owns 1%, and the remainder is owned by its 150,000 employees based in nearly 120 cities globally. Byte Dance is a global business network valued at $225 billion as of March 2024.
TikTok is a creature of global capitalism likely subservient to an authoritarian Communist government because ByteDance is domiciled there. Therefore, U.S. TikTok is subject to its regulatory rules, which serve China’s interests, not America’s.
This condition has caught the attention of politicians, academics, and reporters. Their explanations and resolutions revolve around a dialectical world of two clashing objective truths: nation-states seek to secure their existence, and they also seek the wealth generated by the internet’s social media platforms in the global marketplace.
As I’ve previously described, the internet heralded a historical increase in the security threat to nations. However, the Internet’s global market also significantly contributes to economic growth in China, America, and other countries.
The struggle to define and control TikTok’s impact on their national security and wealth is at the core of how China and America’s governments have responded in trying to manage the global internet social media octopus.
And it is a growing giant. As of January 2024, 66.2 percent of the global population were internet users, of which 94% were social media users. China ranks first for the highest number of those users, followed in the following order by India, the U.S., Indonesia, Brazil, and Russia. It’s apparent that social media, even if state-controlled, has tremendous participation regardless of the government’s tight management of the internet.
Access to a nation’s population is a lucrative revenue source for whoever has the resources to build a massive website infrastructure. Investors have pumped billions into social media companies, with the market values of Alphabet, Amazon, and Meta each over $1 trillion. Digital commerce is growing in Communist and Capitalist countries alike. China’s Tencent, which owns WeChat and QQ, is the fourth-largest internet company in the world, with a market capitalization of $351.2 billion, and ByteDance is not far behind.
China’s approach to TikTok is typical of how it and other governments, like Russia and Iran, deal with social media’s benefits and dangers. All three have banned major foreign-owned internet social media platforms, such as Facebook, Google, Twitter, YouTube, and most other sites on the mainstream Western internet. However, they do allow apps that are controlled domestically or submit to censorship.
For instance, TikTok is not offered in China, but ByteDance does provide its sister app, Douyin, which has no presence outside China. Acquiescing to the government’s censorship has not hurt its sales. The research firm eMarketer estimated that Douyin took in $21 billion in advertising revenue in 2023, or about two-thirds of Alphabet’s ad revenue from YouTube.
That attraction of large profits from China’s huge population has led some major U.S. internet companies to make serious compromises. Apple receives a fifth of its total sales from within China. However, a New York Times investigation found that Apple has risked its Chinese customers’ data and aided the Chinese government’s censorship. As a result, since 2017, roughly 55,000 active apps have disappeared from Apple’s App Store in China, while most of them have remained available in other countries.
China also demands that “golden shares” be acquired to allow government officials to be directly involved in private business decisions, including having a say in the content they provide. Chinese officials acknowledge their existence but have not described how they are used.
In addition, every website on China’s internet goes through one of three companies, all owned by the state. Hence, all web searches can be subject to substantial restrictions, and the results can be censored.
If you like this piece, become a Patreon patron or make a one-time donation to help me reach others. – thank you, Nick
The U.S., in comparison to China and similar states, provides a wide-open internet for social media apps to exist.
Overall, Freedom House ranks the U.S. as the 9th most open to internet freedom, ranked just below the democracies of Canada, the U.K., Japan, and Germany. As I previously noted our courts have used the Constitution’s First Amendment to curtail state interference with accessing information on social media apps.
According to the Congressional Research Service report Free Speech and the Regulation of Social Media Content, which reviewed court decisions, social media has been treated “like news editors, who generally receive the full protections of the First Amendment when making editorial decisions.”
This interpretation means that social media apps, like newspapers, have the right to express their opinions but are not obligated to print or post others’ views. Hence, social media can bar statements endangering public health, like hate speech that incites violence toward citizens or disinformation that exposes the public to a killer pandemic.
Constitutional rights also protect private property. Republican Senator Paul, writing in Reason, accuses the government of violating the Fifth Amendment right to due process by taking the property of the current American owners of TikTok through its ban or the forced sale of TikTok to an American company. For the courts to uphold these government actions, TikTok would have to be accused and convicted of a crime.
However, there is no obvious protection for companies that lose money by freely choosing the businesses they invest in. Hirsch’s NYT article notes how TikTok investors could lose billions if the courts decide the government can ban TikTok as a security risk.
Selling it to an American company may not be an option since China stopped a prior such sale, and its foreign minister condemned the current proposal as unacceptable. China passed a new law denying the export of technology similar to the algorithm that TikTok uses.
The TikTok kerfuffle arises because China and the U.S. have overtaken the internet’s social media platforms. However, future conflicts will occur between nations over controlling the internet’s social media. The emergent digital age has exposed existential conflicts between securing a nation’s sovereignty, protecting citizens’ rights, and maximizing the global marketplace’s profits.
Authoritarian and democratic governments are testing the two paths to effectively resolving these conflicts. At the heart of their approach is how they manage domestic decision-making.
Internet access is denied or censored in countries without independent judiciaries and where the legislative branch is subservient to the executive branch of government. In democratic republics with these three branches not controlled by one party or executive branch, access is open and subject to varied, limited regulations.
The difference between these two approaches is that one allows for public debates on managing access to the Internet. In this manner, social media apps that challenge the status quo of institutions and the marketplace will enable a society to respond rationally and not have a response decided by a select few.
