Yahoo Finance TikTok: How did the wildly popular app end up in danger of a US ban
TikTok is on the verge of being banned in the U.S., meaning there’s a chance your days of endlessly swiping through videos are numbered.
On Thursday, CEO Shou Zi Chew will appear before the House Energy and Commerce Committee, where he's expected to face sharp questions and calls by representatives to kill the app. There’s, of course, a larger debate about what this means for Americans’ First Amendment rights, data privacy, and competitors like Meta (META) and Snap (SNAP).
But let’s talk about how we got here first.
TikTok wasn’t always TikTok, at least not exactly. In 2014, Chinese entrepreneurs Alex Zhu and Luyu Yang launched an app called Musical.ly that became especially popular in the U.S. among tweens and teens who would use it to share videos of themselves lip syncing to songs. Sound familiar?
China-based ByteDance, meanwhile, started up its own similar app Douyin, which it later launched outside of China as TikTok. Seeing how popular Musical.ly was, ByteDance vacuumed up the company for $1 billion in 2017. It merged the two apps in 2018, bringing all Musical.ly users over to TikTok and kickstarting what would become one of the world’s most popular social media platforms. Douyin remained a separate app with similar underpinnings.
That same year, ByteDance secured a $3 billion funding round that valued the company at a whopping $75 billion.
But ByteDance’s connection to China, which can demand data from the company without notice, coupled with TikTok’s popularity with younger users, set regulators and lawmakers in the U.S. and abroad on high alert.
The app hasn’t been without its controversies, either. In 2019, TikTok agreed to a $5.7 million settlement with the FTC over allegations that the company violated the federal Children’s Online Privacy Protection Act. The app also faced harsh criticism for not doing enough to crackdown on adults preying on young users.
But the government’s main beef with TikTok is over whether it’s shipping U.S. users’ data to China, which could then use it to spy on Americans or spread pro-Beijing propaganda and disinformation.
In 2019, The Guardian reported that ByteDance required TikTok to censor content critical of the Chinese government and its policies. The company says it has since changed those practices.
In 2020, then-President Trump signed an executive order banning the app in the U.S. But the move was shot down by the courts. TikTok ultimately agreed, however, to work with Oracle to ensure that U.S. user data runs through Oracle’s servers, rather than its own.
The Biden Administration, meanwhile, has been negotiating with owner ByteDance for months, but the sides appear to be at an impasse, and now Biden is throwing down an ultimatum: sell the app or see it banned in the U.S. Several bills in Congress are also seeking to kill the app.
A number of states and federal agencies, not to mention the military, have banned the use of the app on official devices and networks, as well. The U.S. isn’t the only country taking action against the app. India banned it outright in 2019, and the U.K. and Canada have banned its use by government officials. The E.U. has done the same.
The Department of Justice is also investigating TikTok’s surveillance of U.S. citizens and journalists, after workers at the parent company ByteDance accessed the user data of journalists and people connected to them to find internal sources leaking to the press.
ByteDance says it fired the employees responsible for the move.
On March 21, Chew announced that TikTok had hit 150 million monthly active users in the U.S. To put that in perspective, Meta's Facebook reported having 266 million monthly active users in the U.S. and Canada in Q4 2022.
Where do we go from here? It’s hard to tell. Trump’s already failed to ban the app, so it’s unclear if Biden will succeed at the same task. And whichever party drops TikTok is sure to face backlash from younger voters.
By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley
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