TikTok briefly went “dark” in the US last weekend before a Trump social media post foreshadowing his executive order, after which it was turned back on, with Oracle continuing to provide its cloud service support for the app, risking the hefty penalties. Apple and Google, however, have suspended US downloads of the app from their stores rather than risk breaching the law and exposing themselves to liabilities.
As Republican senator Tom Cotton warned at the weekend, providing hosting, distribution or other services to TikTok’s US platform risks hundreds of billions of dollars of fines.
TikTok chief executive Shou Zi Chew was among those attending Trump’s inauguration.Credit: Bloomberg
Shareholders in the companies providing support for the app could take action against them for risking massive liabilities. States could sue them for failing to protect their citizens’ data in compliance with the federal law.
The TikTok executive order isn’t the only one of the host of orders Trump signed on Monday that appears to flout US law, the most obvious of which was his order to end birthright citizenship, which directly conflicts with the 14th Amendment to the US Constitution.
It does, however, provide an insight into how Trump plans to pursue his second term. Effectively, he sees himself as having a position and authority superior to Congress and the courts rather than as a co-equal branch of government.
It might, should his orders be challenged in the courts, transpire that the demonstration of authority is more performative (for his MAGA devotees) than substantive, but it could cause chaos and stasis in the meantime.
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Trump is a recent convert to TikTok’s cause. In 2020, he proposed to ban the app and tried to facilitate its purchase by a group that included Oracle and Walmart, an effort that was thwarted by the courts.
Now, Trump – who only joined the app last June – is determined to keep it alive, having been enthused by the youthful audience he attracted on it during his campaign and, perhaps, by the lobbying of a major TikTok shareholder and Republican mega-donor, Jeff Yass.
TikTok’s chief executive, Shou Chew, also sat alongside Trump’s billionaire “tech bros” at the inauguration.
When he signed the TikTok order, Trump said the US “should be entitled to get half of TikTok” if he can orchestrate a deal for the US business, without making it clear whether he was referring to the US government or private US investors.
On Tuesday, he said he was open to Elon Musk or Oracle buying the app in a joint venture with the government.
“I have the right to make a deal,” he said.
“So, what I’m thinking about saying to somebody is [to] buy it and give half to the United States of America – half – and we’ll give you the permit, and they’ll have a great partner.”
He has previously said that TikTok was worth nothing if a deal wasn’t done but could be worth a trillion dollars if one was.
China’s laws give its government the right to approve or disapprove any sale or export of algorithms and source codes – ByteDance can’t sell the US business without approval – as well as the ability to demand access to user data on Chinese-controlled platforms.
Elon Musk has been touted as a potential TikTok buyer. Credit: AP
It was that access to the vast trove of US user data TikTok holds, as well as the potential for Chinese propaganda, disinformation and manipulation of users, that underpinned Congress’s decision to legislate, citing national security interests.
Trump has said he could impose tariffs of up to 100 per cent on China’s exports to the US if it doesn’t allow a TikTok sale and raised the topic with Chinese President Xi Jinping in a phone call only days ahead of his inauguration.
Using the threat of tariffs to force China to allow, indeed encourage, a sale of TikTok to, potentially, the US government and some tech billionaires is an extraordinary and extraordinarily coercive attempt to exercise the authority of the US presidency.
It appears, however, to be working, with China being seemingly more receptive to a sale than it was previously when it condemned the legislation as “daylight robbery”.
There is a queue of prospective investors in TikTok.
Its parent, ByteDance, is already, it says, about 60 per cent owned by non-Chinese institutional investors, including a 15 per cent stake held by Yass’s Susquehanna International Group as well as US institutional investors. The US investors would no doubt be keen to continue their exposure to the US business.
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A US billionaire, Frank McCourt. and a Canadian businessman and television personality, Kevin O’Leary, have already made a formal offer to buy the business. Former Trump Treasury secretary Steve Mnuchin has previously expressed interest, while Oracle, Amazon, Facebook, and Elon Musk have also been touted as potential buyers/investors.
There have been reports that Musk, with major investments in China and a good relationship with the Chinese government, is their preferred candidate, although that would normally raise both antitrust issues and, given Musk’s role in the administration, conflict-of-interest concerns.
In Trump’s new administration, however, norms and enforcement of laws he doesn’t like don’t seem to apply.
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