What's happening?
US President Donald Trump intends to ban Chinese short video service
As for TikTok, we will ban it in the US.
Donald Trump, President of the United States
Formerly the United States Senate Committee onNational Security and Government Affairs approved Republican Josh Hawley's law banning US government employees from using TikTok on employer-issued devices. It is expected that the document will soon be adopted by the upper house of Congress.
The American head said that TikTok will be able to continue operating in the country if it is acquired by an American company, and part of the amount from the deal will go to the US Treasury.
Trump clarified that he would be satisfied if before 15September TikTok in the US will be acquired by "Microsoft or another very American company." However, such a deal would have to include the US Treasury, which will get "a lot of money," the president explained. If the deal is not closed before the deadline, then TikTok will be banned in the country.
What is TikTok accused of?
United States officials regularlymake claims against TikTok, suspecting the social network of working for the Chinese government and intelligence. The application's activity is said to pose a threat to US national security.
So, in October last year, senators fromRepublican and Democratic parties Tim Cotton and Chuck Schumer, in a letter to Joseph Maguire, then acting director of National Intelligence, called on to assess the risks associated with TikTok.
Congressmen said the social networkcollects personal data of Americans and this information can allegedly be transferred to the state and law enforcement agencies of the PRC upon request. Senators also do not rule out that the TikTok administration is censoring materials that are "politically sensitive" for the Chinese Communist Party.
The last reason for the restrictions wasthe US authorities' confidence that TikTok and the WeChat messenger can be used by Chinese communists for disinformation and propaganda campaigns. Trump's decree says that through TikTok, the PRC authorities can collect personal data of US citizens, track the whereabouts of civil servants and use this information for espionage purposes.
Reuters points out that if TikTok is essentiallyis an entertainment application, then WeChat is actively used by Chinese businessmen, and its ban may negatively affect further negotiations with American partners. This is explained, among other things, by the fact that other popular instant messengers, like WhatsApp, are officially banned in China.
Earlier, the US authorities fined TikTok $ 5.7 millionfor illegal, from their point of view, collection of data on American children under 13 years old. The service is currently being reviewed by the United States Foreign Investment Committee (CFIUS) for potential national security risks.
A month ago, The Guardian newspaper publishedinformation about the leak of internal documents from ByteDance, the company that owns TikTok. It has become known that TikTok management has ordered its moderators to censor videos that mention “sensitive” topics for China, such as the events in Tiananmen Square, Tibetan independence and protests in Hong Kong.
Very categorical about the activities of the social networkthe State Department also applies. In early July, on Fox News, US Secretary of State Mike Pompeo, when asked about a possible ban on Chinese applications, including TikTok, said that the authorities were ready to take measures to protect information about citizens.
What do the TikTok representatives answer?
The TikTok administration has repeatedly rejectedaccusations from Washington. At the end of July, CEO Kevin Meyer said the social networking site was outside of politics. TikTok remains a secure platform for tens of millions of American families, he said.
Mayer also said that the company's planscreate 10,000 new jobs in the United States through business development. At the same time, the top manager pointed to unfair competition from Facebook.
How does the app work?
Unlike Facebook, TikTok does not analyzeonly user behavior, but also the content itself. Using computer vision and natural language processing technology, the platform recognizes objects in videos that users upload. The received data is processed using special algorithms, and the application generates personal video selections for each user.
According to the developers of ByteDance, the system learns its user in just 24 hours.
Why does Trump want Tiktokdid you buy?
US President Donald Trump has officially announcedthat the country will ban TikTok and other Chinese applications and services. TikTok will be able to continue working here if it is acquired by an American company, and part of the amount from the transaction goes to the US Treasury.
On the one hand, it looks more like extortion,and it’s not happening out of nowhere: the app’s American audience is large, with 62% of US teenagers already logging into TikTok. This is third place among all platforms.
When asked who would get the rights to the TikTok brand if two different companies owned it, Trump said it would be easier for Microsoft to buy out the entire company.
My personal opinion is that they would be better off buying everything rather than the 30%. Buying 30% is difficult.
Donald Trump, President of the United States
Purchasing the application will give the United States the opportunity to influence the company's policies, and will also not concentrate power over such a popular resource in one of the country's main competitors.
According to the Deputy Director of the Instituteof strategic research and forecasts of RUDN University by Pavel Feldman, the campaign against TikTok is part of the anti-Chinese strategy of the White House. The expert predicts that Washington will either really completely ban this service, or find a way to put its operation in the United States under the control of the authorities.
Who is the buyer?
The only contender is Microsoft.Previously, the company was considering only a partial purchase, but now they want to acquire businesses around the world: Microsoft is in negotiations to purchase all divisions of TikTok.
Buying the entire TikTok may be forMicrosoft is simpler, otherwise the seller and buyer will have to somehow share the global back office, starting with HR. In addition, by receiving the entire business, the company will be able to ensure that TikTok users in one country will be able to use the application when traveling.
For ByteDance, the wholesale sale could solve the problem with India - there the authorities decided to block TikTok even earlier than in the United States, also under the pretext of a threat to national security.
However, there are also difficulties:One of the Financial Times' sources suggests that Microsoft's interest in acquiring all of TikTok from its current owner, the Chinese company ByteDance, is due to the difficulty of dividing the social network into regions. In the case of such a separation, for example, the question arises whether users from one country will be able to continue to use the application while traveling to another country.
Let us recall that US President Donald Trump set a deadline for negotiations on the deal on August 3—September 15.
What's the situation now?
Today, August 7, US President Donald Trumpsigned two executive orders prohibiting US citizens from entering into deals with Chinese companies ByteDance and Tencent, which own the short video service TikTok and the WeChat messenger, respectively. Both documents will enter into force in 45 days, on September 20.
By his decrees, Trump has banned transactions of any peoplesubject to American jurisdiction, with these companies and their subsidiaries. At the same time, as a White House spokesman told the Los Angeles Times, the decree with regard to WeChat only applies to transactions related to the messenger, but not to other Tencent structures (the company has stakes in Tesla, Snap and Spotify).
What are the consequences?
So far, the prospects for negotiations are vague.One of the sources of the Financial Times compares the negotiations and all the circumstances of a possible deal with a game of chess, which is played in several dimensions at once.
Except for the price (the entire TikTok business was valued at $ 50billion) and terms (Trump offers TikTok to be sold until September 15, otherwise the service will be blocked in the United States), these are the prospects for the separation of technologies and algorithms of TikTok and ByteDance. This may take Microsoft years, but first it will have to be coordinated with the authorities.
While we see specific American sanctions thatmay lead to the blocking of one of the three most popular resources in the country. On the other hand, representatives of TikTok are not expressing resistance and are negotiating with Microsoft, but we have not yet seen any progress on this issue. Discussion continues.
Why is this important to us?
The TikTok story, however it ends, isa new word in international business regulation. This precedent made it clear to any companies that pretend to become global that this could happen to them too.
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