TikTok has 100 million US users
When it comes to China, US President Joe Biden and his predecessor Donald Trump are much closer than on any other topic.
In the name of national security, the Democrat and the Republican defend the same thesis in relation to TikTok: to maintain its operations in the United States, the social network of short videos must disassociate itself from its parent company, ByteDance.
Until recently, the White House negotiated with TikTok’s command a series of measures to guarantee the protection of data of the application’s users in American territory. In recent days, however, Biden has hardened his position, adopting the same thesis defended by his political opponent during his tenure as president of the United States.
In order to guarantee its presence in the country, TikTok leaders do not rule out the separation of ByteDance, but only as a last resort. Last year, the company agreed to implement a series of changes to satisfy US authorities’ security demands.
Baptized Project Texas and budgeted at around US$ 1.5 billion, the plan involves hiring a partner in the United States, Oracle, to store the information of American users and protect them against any influence from Beijing.
In addition to reviewing its software, the Chinese pledged to submit to Washington’s scrutiny the employees and board members of what would become the American subsidiary of TikTok.
“Under Project Texas, TikTok data for our US users would be held to a significantly higher standard of security than any US company,” Brooke Oberwetter, a spokesperson for the social network, said in a statement.
A similar plan, named Project Clover, has been proposed in Europe. In an interview with the newspaper The Wall Street JournalShou Zi Chew, CEO of TikTok, says the Texas and Clover projects will cost the company $1 billion a year.
Although TikTok is a private company, a 2017 law allows the Chinese government to demand data from Chinese companies if that information is classified as important to China’s sovereignty. To date, there have been no signs that the social network has been used for spying.
The TikTok leadership was taken aback by the news of ByteDance’s demand for separation. Divestment would result in either a sale or an IPO and would require Beijing’s approval.
Founded in 2012, TikTok’s parent company is valued at $220 billion. Its founder Zhang Yiming would own 20% of the company, global investors would hold 60% and employees the other 20%. Launched in 2016, the app has 1 billion monthly active users and its market value is around US$66 billion.
If Project Texas does not receive approval from the US Department of Justice committee (which some analysts take for granted), then yes, TikTok would be willing to disassociate itself from ByteDance. With 100 million users in the country, the American arm of the social network is valued at between US$ 40 billion, according to Bloomberg Intelligence accounts.
The union of political opponents around the risk that Chinese companies can offer the United States remains firm in Congress.
The bill that would give President Biden the power to limit the participation of a foreign company in the United States, for example, was introduced in the Senate by Democrat Mark Warner and Republican John Thune. The White House not only supported the proposal but asked for speed in its voting.
Among Biden’s political allies, however, there are those who oppose the banning of TikTok, as they consider the measure unpopular, with a risk of negative repercussions for the US government.
For Gina Raimondo, Secretary of Commerce, banning the app would result in the “forever loss of all voters under 35”. The average daily use of the social network is 56 minutes, more than Instagram and Facebook, according to analysis by the consultancy Insider Intelligence.
