What will happen to TikTok? Another Chinese-owned app targeted by US could offer clues

The House of Representatives, on March 13, passed a bill that would force ByteDance, the Chinese owner of TikTok, to sell the app’s U.S. operations or face a nationwide ban.

The bill, which will now be sent to the Senate, puts the future of the ultra-popular app up in the air — but this situation is not without precedent.

In 2019, the U.S. government ordered the Chinese owners of Grindr, an LGBTQ+ dating app, to give up control of the company.

The forced sale draws some parallels to Congress’ current case against TikTok and could provide a glimpse into TikTok’s future, Sarah Bauerle Danzman, a senior fellow at the Atlantic Council and professor at Indiana University, told McClatchy News.

“The TikTok transaction is Grindr on steroids,” said Bauerle Danzman, who studies international investment.

National security concerns

The government took action against Grindr and TikTok for largely the same reason: national security concerns related to Chinese data collection.

But the specific concerns surrounding the two apps — while similar — are not identical, Bauerle Danzman said.

Grindr collects substantial personal data from users, including their real-time location and sensitive information like HIV status and vaccination status, according to the company.

As a result, U.S. officials were concerned that the data — maintained by the app’s Chinese owner, Beijing Kunlun Tech — could potentially be used to blackmail individuals for the purpose of intelligence gathering, Bauerle Danzman said.

TikTok collects similar types of user data, including in-app messages, financial information and uploaded content, according to the company.

Lawmakers have argued that Bytedance could provide this information to the Chinese government at any point — an assertion that TikTok has denied, according to the Associated Press.

But an added concern is that TikTok, by nature of being a social media platform, curates a content feed for users, Bauerle Danzman said.

“Therefore, unlike Grindr, Chinese control of TikTok creates concerns about manipulation of the algorithm for propaganda purposes,” Bauerle Danzman said.

Further, TikTok has a much larger footprint in the U.S., boasting more than 100 million users compared to Grindr’s 13 million monthly users worldwide, making the scale of the perceived problem much bigger.

Government action

The government crackdown on both apps began with the same organization: the Committee on Foreign Investment in the United States (CFIUS), an interagency group that monitors business transactions involving international companies for potential national security risks.

The organization reports to the president and can recommend he demand a company to divest from foreign entities, though companies can also voluntarily enter agreements with CFIUS, Bauerle Danzman said.

In recent years, in response to strained U.S.-China relations, the organization has become more dubious of foreign acquisitions and otherwise foreign-owned companies, according to a Brookings report.

In 2019, following an investigation, CFIUS ordered Grindr’s Chinese owners to relinquish control of the company, though its specific reasoning was not disclosed, according to the report.

This was “perhaps the first major reported CFIUS review that was undertaken due to concerns about sensitive personal data,” Bauerle Danzman said.

A year later, the Chinese owners voluntarily complied and sold the company to San Vicente Acquisition, incorporated in Delaware, for around $608 million, according to Forbes.

The sale led the owners to make “a substantial profit on their initial investment,” Bauerle Danzman said.

Similarly, CFIUS began investigating Bytedance in 2017, when it purchased Musical.ly, a startup with U.S. operations that eventually rebranded into TikTok. (Former President Donald Trump also tried to ban the app through executive order in 2020, though the effort was stopped in court after TikTok sued).

CFIUS’s investigation, unlike the Grindr probe, has been ongoing for years and has yet to reach a conclusion, according to Axios.

So, now, Congress has elected to take action, with the House passing a bill that would essentially have the same effect as a CFIUS divestment order, per the outlet.

Notably, the bill only addresses ownership and would not require TikTok to change its algorithm, Bauerle Danzman said.

If ByteDance chooses to divest, TikTok could carry on operating in the U.S., like Grindr, without significant changes, Pennsylvania Rep. Madeleine Dean wrote in a post on X, formerly Twitter.

“Grindr divested — and it’s alive and well today,” Dean wrote.

But whether the bill will garner enough votes to pass in the Senate is an open question.

If it is passed and signed into law by the president, it’s not clear whether ByteDance will opt to divest from TikTok — a possibility that some have cast doubt on.

“Any kind of divestiture and then merger with another company or acquisition would have to be approved by the Chinese government, which would probably reject that and is probably advising ByteDance that it would reject that” Paul Triolo, a partner at consulting firm Albright Stonebridge, told CNBC.

A spokesperson for the Chinese Ministry of Foreign Affairs was critical of the bill on March 14, calling it “at odds with the principles of fair competition and international trade rules,” according to the outlet.

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