When President Donald Trump declared TikTok a threat to national security, there were more than a few Americans who thought, "What's that?" Others were confused about how a Chinese-owned service mainly known as a way for teenagers to share short videos showing off their pets or dance moves could become the center of a global controversy. In a move that could mark a deepening of what's been described as a digital Cold War, Trump issued a pair of executive orders banning U.S. residents from doing business with TikTok and WeChat, another popular Chinese-owned app.
1. What is TikTok?
It's an app for posting video clips of up to 60 seconds that has been downloaded more than 2 billion times since its launch in 2016. The app, called Douyin in China and previously known as Musical.ly in the U.S., is a popular platform for lip-syncing videos. Users can film and edit clips inside of the app and share them immediately. TikTok's central feature is the ForYou page, where algorithms generate an infinite scroll of videos based on a user's behavior. Fans consider TikTok special because of the sense that anything can show up on your page.
2. How big is it?
Huge and growing fast, at least up till now. More than 2 billion users have downloaded the app, according to SensorTower estimates. In the first quarter, it generated the most downloads for any app ever in a three-month period, accumulating more than 315 million installs across the Apple Inc. App Store and Google's Play store. Globally, the U.S. ranks third, with 8.2% of total downloads. Before India banned TikTok in June, the country led with almost a third of global downloads. China had 9.7%.
3. Why did India ban it?
TikTok was one of 59 Chinese-owned apps that were banned in June after India's Ministry of Information said the services posed a threat to national security and India's sovereignty. The move came days after a border dispute between India and China that left 20 Indian soldiers dead.
4. What's Trump unhappy about?
Before issuing his order, Trump had cited national security in threatening to ban TikTok from the U.S. Some administration officials are concerned that the app is collecting huge amounts of data about American citizens and that China's government could force ByteDance Ltd., as a Chinese company, to turn over the information. Earlier this year, the Pentagon ordered service members to delete the app from their phones, a move that was followed by some corporations including Wells Fargo. U.S. officials haven't provided any proof that TikTok is sharing information with Beijing. The company has repeatedly denied this.
5. Is that true?
Security experts say that almost every major social media app vacuums up a vast amount of data about users and their contacts. They say there's not strong evidence that TikTok gathers more, or does more with it, than competitors. However, Chinese companies are required to share data with the government when asked.
6. Are there other factors involved?
Teenage TikTok users have not endeared themselves to Trump. In June, they organized on the app to disrupt a campaign rally by the president. They registered for hundreds of thousands of seats at the event in Tulsa, Oklahoma. This inflated the campaign's expected attendance numbers, and Trump arranged to address overflow crowds at a stage outside the arena. Only a few thousand people showed up, leaving the president speaking to a mostly empty arena.
7. What about WeChat?
WeChat, owned by Tencent Holdings Ltd., is a messaging platform that offers payment services and other features. WeChat doesn't have a huge presence in the US, but it's used by more than 1 billion people and has become of a staple of daily life in China. Trump's executive orders pertain to any transaction over which the US has jurisdiction and prevents transactions involving TikTok's parent company ByteDance; they block all transactions involving WeChat but doesn't amount to a broader ban on dealings with Tencent.
8. How does this fit into the broader conflict?
The White House has already added Huawei Technologies Co., the Chinese telecoms-equipment giant, to a list of restricted entities, citing similar data and national security concerns. Huawei has also denied that it shares sensitive information with the Chinese government. The day before Trump issued his order on TikTok, Secretary of State Michael Pompeo urged American companies to bar Chinese applications from their app stores, signaling that U.S. efforts to banish Chinese technology from U.S. computers and smartphones will extend broadly, with the goal of creating a "clean network."
9. What's happening with TikTok?
Microsoft is trying buy TikTok's operations in the U.S., Canada, Australia and New Zealand. The acquisition would help the software giant expand into social media and give it a foothold with younger consumers. ByteDance, TikTok's parent company, was valued at more than $100 billion in private markets earlier this year. Analysts and bankers have pegged the value of TikTok's U.S. business anywhere from $20 billion to $50 billion.
10. Is Trump going to permit that?
At first, he suggested he would block the deal, but then appeared to give his permission as talks continued between ByteDance, Microsoft and the White House. Trump wants U.S. companies and investors to own 100% of TikTok's U.S. business. He also said that the U.S. Treasury should receive a portion of the sale, but it is unclear what authority he has to require that. The maximum amount CFIUS can charge for reviewing a transaction is $300,000.
11. Has Trump forced a sale of an app before?
Yes. A similar situation unfolded recently with Grindr, a dating app popular in the LGBT community. Beijing Kunlun Tech Co. acquired the service in January 2018, but the Committee on Foreign Investment in the U.S. required the company to sell the business. Again, the concern was that sensitive information could be sent to entities in China. In March this year, Kunlun said it agreed to sell Grindr to San Vincente Acquisition for about $608.5 million.
12. What's been China's reaction?
An editorial published in Chinese-state media labeled the proposed acquisition a "smash and grab." A spokesperson for the Chinese Ministry of Foreign Affairs said that the precedent of acquiring a company under the pretense of protecting national security could lead to foreign countries targeting American companies, calling it the opening of a "Pandora's Box." The editor-in-chief of a Chinese tabloid called Trump's proposal for the government to share in the sale's proceeds "open robbery."