The United States government will not extend the September 20 deadline for Beijing-based ByteDance to sell TikTok, President Donald Trump said on Thursday. This adds urgency to negotiations because TikTok may be banned in the United States if it can’t reach an agreement with a buyer.
"We’ll see what happens. It’ll either be closed up or they’ll sell it," Trump said before boarding Air Force One at Joint Base Andrews. Some analysts had predicted that the deadline would be extended because of the sale's complexity.
Trump issued an executive order last month claiming there is "credible evidence" that ByteDance "might take action that threatens to impair the national security of the United States." ByteDance was already in negotiations with Microsoft for a sale. Several other large American tech companies have since reportedly entered into talks with the popular video-sharing app -- but potential new roadblocks to a deal have also emerged.
Despite TikTok's larger user base and value as one of the most popular social media apps among Gen Z, there are currently several issues that may lower its attractiveness for buyers.
For example, the software code used in ByteDance’s apps, including TikTok, was developed by engineers and developers at its Beijing headquarters. This makes separating TikTok from ByteDance more complicated on a technical level. Another factor is an update China made two weeks ago to export control laws that cover artificial intelligence technologies. TikTok’s AI-based algorithms, which show new content to users depending on their interests and browsing history, are valuable and a huge part of its success. After the export control policy update was issued by China’s Ministry of Commerce, ByteDance said it will "strictly follow" the new rules, but that might prevent ByteDance from including TikTok’s personalized recommendation and AI-based technology in a sale, making it a less attractive acquisition.
In addition to Microsoft, contenders for TikTok reportedly include other American tech heavyweights like Twitter, Google and Oracle. Walmart has even put itself forward as a buyer, in a potential partnership with Microsoft.
TikTok's security is also under a magnifying glass in several other countries. For example, it was among a roster of Chinese apps banned in India over "national security and defence" concerns,” and is currently being investigated by French data security watchdog CNIL.
TikTok has fought back against those claims. Last month, it sued the Trump administration, stating in an announcement on August 24 that it "we strongly disagree with the Administration’s position that TikTok is a national security threat."
In its complaint, TikTok said it has taken "extraordinary measures to protect the privacy and security of TikTok’s user data" by storing data in the U.S. and Singapore, and creating barriers between TikTok’s U.S. user data and the data of other ByteDance products like Douyin.
Since launching in 2017, TikTok, ByteDance's international version of Douyin, has become firmly entrenched in internet culture, especially among Gen Z. In the U.S. alone, TikTok says it has more than 100 million users in the U.S. and employs about 1,500 people.
Even though several apps, including Instagram, are trying to position themselves as TikTok alternatives with similar short-form video-sharing features, no frontrunner has emerged so far. In fact, a new report by analytics firm Sensor Tower said that in August, TikTok was the most downloaded non-gaming app worldwide, with more than 63.3 million installs. TikTok users are so committed to the app that at least one VPN provider, ExpressVPN, saw a spike in traffic after the U.S. government proposed a potential ban in July.
Some cybersecurity experts say that TikTok's data collection practices are similar to other social media apps that depend on advertising revenue. But a major concern revolves around its ownership by a Chinese company that may be forced to capitulate to demands for data by the Chinese government. A Chinese cybersecurity law requires Chinese tech companies, like ByteDance, to comply with government requests for user data. ByteDance has said it would resist attempts by the Chinese government to access TikTok’s user data.
Security concerns about TikTok also increased after a Wall Street Journal analysis published in August found that TikTok went around an Android operating system feature designed to limit how much data, including unique identifiers called MAC addresses, that apps can collect from users. According to the WSJ, TikTok stopped collecting unique identifiers in November, but its investigation raised questions about TikTok's commitment to protecting user privacy. In a statement to the WSJ, TikTok said "like our peers, we constantly update our app to keep up with evolving security challenges."
It's not just Republicans who are taking a stance against TikTok. In July, Joe Biden’s presidential campaign reportedly asked its staff to remove TikTok from their work and personal devices.
The U.S government's scrutiny of TikTok began escalating last year when Senators Charles Schumer (D-NY) and Tom Cotton (R-AR) asked Joseph Maguire, then the acting director of national intelligence, to assess if TikTok can be forced to turn over American users' data to Chinese authorities.
In a statement emailed to TechCrunch, a TikTok spokesperson said, "TikTok is loved by 100 million Americans because it's a home for entertainment, self-expression, and connection. We're committed to continuing to bring joy to families and meaningful careers to those who create on our platform for many years to come."