American legislators are issuing warnings of a potential ban on TikTok, but are also offering its Chinese parent company the opportunity to maintain its operation.

The underlying idea of a congressional proposal supported by both political parties, which will soon be voted on in the U.S. House of Representatives, is that American users of TikTok will still have access to the popular social media platform as long as its ownership is relinquished by the Chinese company, ByteDance.

“The situation does not have to be so difficult for ByteDance,” stated U.S. Representative Raja Krishnamoorthi, who co-sponsored the bill, in a recent post on X. “They have the option to make things easier for themselves by divesting @tiktok_us. The decision is theirs to make.”

According to experts, the way lawmakers are presenting it may not be as straightforward as it seems.

Although there is interest from certain individuals, such as “Shark Tank” personality Kevin O’Leary, to purchase TikTok’s U.S. operations, there are several obstacles to overcome, including a 6-month time limit for completion.

According to Graham Webster, a researcher at Stanford University studying Chinese technology policy and U.S.-China relations, it would take a significant financial investment for someone to acquire this product and system. However, even if someone is financially able and willing to negotiate a purchase, this type of matchmaking process for acquisitions is not a fast one.

Large technology corporations may have the financial means, but may also encounter heavy scrutiny from antitrust authorities in the United States and China. However, in the event that the legislation is passed and withstands legal tests regarding freedom of speech, it could potentially lower the acquisition cost of TikTok.

According to Matt Perault, who heads the University of North Carolina’s Center on Technology Policy funded by tech giants like TikTok, the legislation would primarily lead to a decrease in the selling price. As the 180-day deadline draws near, there will be immense pressure on the company to sell or possibly face a complete ban, making it likely that the buyers will be able to acquire it at a discounted price.

The proposed legislation aims to ban TikTok in the United States, with the condition that a “qualified divestiture” is made.

The only scenario in which this could occur is if the president of the United States decides, as part of a collaborative effort, that TikTok is no longer being influenced by a foreign enemy, as stated in the legislation. Furthermore, the new American version of TikTok must completely sever all connections with ByteDance, including terminating any cooperation regarding the content recommendation algorithm or agreements concerning the sharing of data.

It reflects longstanding concerns that Chinese authorities could force ByteDance to hand over data on the 170 million Americans who use TikTok. The worry stems from a set of Chinese national security laws that compel organizations to assist with intelligence gathering.

This is a unique piece of legislation as it specifically focuses on one company. Normally, a governmental organization led by the Treasury Secretary known as the Committee on Foreign Investment in the United States (CFIUS) will assess whether a sale of this nature could potentially jeopardize national security.

In 2020, the Trump administration facilitated an agreement that would have involved U.S. companies Oracle and Walmart obtaining a significant ownership share in TikTok for security reasons.

The deal would have also made Oracle responsible for hosting all TikTok’s U.S. user data and securing computer systems to ensure national security requirements are satisfied. Microsoft also made a failed bid for TikTok that its CEO Satya Nadella later described as the “strangest thing I’ve ever worked on.”

Instead of relying on Congress, the 2020 arrangement was created as a reaction to former President Donald Trump’s string of executive orders aimed at TikTok.

Unfortunately, the sale did not proceed due to several factors. Prior to the 2020 presidential election, the execution of Trump’s orders was delayed by court proceedings. Furthermore, China had implemented more stringent restrictions on its technology suppliers.

In 2021, newly elected President Joe Biden changed his stance and abandoned the legal actions. Currently, Biden is supporting a bill that would prohibit the use of TikTok if ByteDance does not comply with divestment, while Trump is not in favor.

Source: wral.com