US will not ban TikTok if it finds a new owner: Why is that easier said than done?

Efforts to ban TikTok are gaining traction in Congress, with the US believing the short-form video platform poses a threat to national security, in spite the fact that former President Donald Trump is voicing opposition to the effort.

ByteDance is owned by the Chinese company ByteDance Ltd, and China has a reputation for requiring its companies to share any national security-related data with the government.

The premise of a bipartisan bill headed for a vote in the US House of Representatives is that TikTok fans in the US can keep scrolling through their favourite social media app so long as Beijing-based ByteDance gives up on owning it.

Representative Raja Krishnamoorthi, an Illinois Democrat and bill co-sponsor, recently emphasised this point: “It doesn’t have to be this painful for ByteDance. They could make it a lot easier on themselves by simply divesting @tiktok_us. It’s their choice.”

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However, the situation is more complex than it appears.

If the technology company attempts to find a new owner for TikTok, the task will be far from easy.

Here’s a closer look.

Who would buy TikTok?

While some people have voiced an interest in buying TikTok’s US business — among them Shark Tank star Kevin O’Leary — there are a number of challenges including a six-month deadline to get it done.

“Somebody would have to actually be ready to shell out the large amount of money that this product and system is worth,” said Stanford University researcher Graham Webster, who studies Chinese technology policy and US-China relations. “But even if somebody has deep enough pockets and is ready to go into negotiating to purchase, this sort of matchmaking on acquisitions is not quick.”

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Big tech companies could afford it but would likely face intense scrutiny from antitrust regulators in both the US and China. Then again, if the bill actually becomes law and survives First Amendment court challenges, it could make TikTok cheaper to buy.

“One of the main effects of the legislation would be to decrease the sale price,” said Matt Perault, director of the University of North Carolina’s Centre on Technology Policy, which gets funding from TikTok and other tech companies. “As you approach that 180-day clock, the pressure on the company to sell or risk being banned entirely would be high, which would mean probably the acquirers could get it at a lower price.”

How would it work?

The bill calls for prohibiting TikTok in the US but makes an exception if there’s a “qualified divestiture.”

That could only happen if the US president determines “through an interagency process” that TikTok is “no longer being controlled by a foreign adversary,” according to the bill. Not only that, but the new US-based TikTok would have to completely cut ties with ByteDance. That includes no more “cooperation with respect to the operation of a content recommendation algorithm or an agreement with respect to data sharing.”

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 organisations to assist with intelligence gathering.

It’s an unusual bill in the way that it targets a single company. Typically, a government group led by the Treasury secretary called the Committee on Foreign Investment in the United States, or CFIUS, will review whether such a sale would pose any national security threats.

Hasn’t this happened before?

Yes. The Trump administration brokered a deal in 2020 that would have had US corporations Oracle and Walmart take a large stake in TikTok on national security grounds.

The deal would have also made Oracle responsible for hosting all TikTok’s US 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 congressional action, the 2020 arrangement was in response to then-President Donald Trump’s series of executive actions targeting TikTok.

But the sale never went through for a number of reasons. Trump’s executive orders got held up in court as the 2020 presidential election loomed. China also had imposed stricter export controls on its technology providers.

Incoming President Joe Biden in 2021 reversed course and dropped the legal proceedings. Now Biden says he’s in favour a bill that would ban TikTok if ByteDance won’t divest, and Trump is not.

With inputs from AP