1. What is TikTok?
It’s an app for posting video clips of up to 60 seconds that has been downloaded more than 2 billion times since its launch in 2016. The app, called Douyin in China and previously known as Musical.ly in the U.S., is a popular platform for lip-syncing videos. Users can film and edit clips inside of the app and share them immediately. TikTok’s central feature is the ForYou page, where algorithms generate an infinite scroll of videos based on a user’s behavior. Fans consider TikTok special because of the sense that anything can show up on your page.
2. How big is it?
Huge and growing fast, at least up till now. More than 2 billion users have downloaded the app, according to SensorTower estimates. In the first quarter, it generated the most downloads for any app ever in a three-month period, accumulating more than 315 million installs across the Apple Inc. App Store and Google’s Play store. Globally, the U.S. ranks third, with 8.2% of total downloads. Before India banned TikTok in June, the country led with almost a third of global downloads. China had 9.7%.
3. Why did India ban it?
TikTok was one of 59 Chinese-owned apps that were banned in June after India’s Ministry of Information said the services posed a threat to national security and India’s sovereignty. The move came days after a border dispute between India and China that left 20 Indian soldiers dead.
4. What has Trump done about TikTok?
Trump said this month he would ban TikTok in the U.S., citing national security. Some U.S. officials are concerned that the app is collecting huge amounts of data about American citizens and that China’s government could force ByteDance Ltd., as a Chinese company, to turn over the information. Earlier this year, the Pentagon ordered service members to delete the app from their phones, a move that was followed by some corporations including Wells Fargo. U.S. officials haven’t provided any proof that TikTok is sharing information with Beijing. The company has repeatedly denied this.
5. Is that true?
Security experts say that almost every major social media app vacuums up a vast amount of data about users and their contacts. They say there’s not strong evidence that TikTok gathers more, or does more with it, than competitors. However, Chinese companies are required to share data with the government when asked.
6. Are there other factors involved?
Teenage TikTok users have not endeared themselves to Trump. In June, they organized on the app to disrupt a campaign rally by the president. They registered for hundreds of thousands of seats at the event in Tulsa, Oklahoma. This inflated the campaign’s expected attendance numbers, and Trump arranged to address overflow crowds at a stage outside the arena. Only a few thousand people showed up, leaving the president speaking to a mostly empty arena.
7. What power does Trump have on this?
The main way Trump could ban the app would be to force Apple and Google to remove TikTok from their app stores. The administration can put companies on an “entity list,” which limits how they work with U.S. companies. The White House has already added Huawei Technologies Co., the Chinese telecom-equipment giant, to this list, citing similar data and national security concerns. Huawei has also denied that it shares sensitive information with the Chinese government.
8. Has Trump forced a sale of an app before?
Yes. A similar situation unfolded recently with Grindr, a dating app popular in the LGBT community. Beijing Kunlun Tech Co. acquired the service in January 2018, but the Committee on Foreign Investment in the U.S. required the company to sell the business. Again, the concern was that sensitive information could be sent to entities in China. In March this year, Kunlun said it agreed to sell Grindr to San Vincente Acquisition LLC for about $608.5 million.
9. What’s happening with TikTok?
Microsoft Corp. is trying buy TikTok’s operations in the U.S., Canada, Australia and New Zealand. The acquisition would help the software giant expand into social media and give it a foothold with younger consumers. ByteDance, TikTok’s parent company, was valued at more than $100 billion in private markets earlier this year. Analysts and bankers have pegged the value of TikTok’s U.S. business anywhere from $20 billion to $50 billion.
10. Is Trump going to permit that?
At first, he suggested he would block the deal, but then appeared to give his permission as talks continued between ByteDance, Microsoft and the White House. Trump wants U.S. companies and investors to own 100% of TikTok’s U.S. business. He also said that the U.S. Treasury should receive a portion of the sale, but it is unclear what authority he has to require that. The maximum amount CFIUS can charge for reviewing a transaction is $300,000.
10. What’s been China’s reaction?
An editorial published in Chinese-state media labeled the proposed acquisition a “smash and grab.” A spokesperson for the Chinese Ministry of Foreign Affairs said that the precedent of acquiring a company under the pretense of protecting national security could lead to foreign countries targeting American companies, calling it the opening of a “Pandora’s Box.” The editor-in-chief of a Chinese tabloid called Trump’s proposal for the government to share in the sale’s proceeds “open robbery.”
For more articles like this, please visit us at bloomberg.com
©2020 Bloomberg L.P.