Update: The TikTok Clusterfuck: Trump To Order A Block, Microsoft Wants To Buy, And Competition Is Still There

from the say-what-now dept

Update: Sooo… we already have a bunch of updates on this story. Trump has said he’s banning TikTok entirely and is “against” allowing a US company to buy TikTok. Below is the original post, with only a slight clarification regarding Ben Thompson’s thoughts on TikTok, which I didn’t present very clearly in the original. Then, beneath the post I’ll have more thoughts on Trump’s comments.

There’s been a panic over the last few weeks about TikTok, the rapidly growing social network that is owned by the Chinese internet giant ByteDance (by way of history: ByteDance purchased a startup called Musical.ly in 2017, and rebranded it TikTok in 2018, and then it started growing like crazy). A few weeks ago, the Trump administration started suggesting it would ban TikTok, and a story was built up around the idea that TikTok was some sort of national security threat, despite very little evidence to support this. A separate narrative was simply that Trump was annoyed that TikTok kids made Trump look bad in Tulsa by reserving a bunch of tickets to his rally that they never intended to use.

Either way, it was announced today that the Trump administration was likely to order ByteDance to shed TikTok and immediately with that was the news that Microsoft was a likely buyer.

The whole thing is kind of silly. The most compelling argument I’ve seen for why the US should ban TikTok came from Ben Thompson at Stratechery, who more or less says (this is a very simplified version of his argument, so read the whole thing) that since China is engaged in a war to impose its ideology on the world, and that it will make use of TikTok and other services to effectively attack Western liberalism, it is effectively dangerous to allow it to operate in the west under Chinese ownership. He supports selling TikTok off to a American company, or barring that, banning the app in the West. I tend to lean the other way: to me, banning TikTok strikes me as effectively proving China’s views on liberalism, and allowing them to claim hypocrisy on the west, and use these actions to justify its own actions.

On top of that, if the concern is about China, then the fact that most of our network and computer equipment is built in China would seem like maybe a larger concern? But beyond a weird, similar freakout about Huawei, no one seems to be taking any serious interest in that. And that doesn’t get into the fact that US intelligence has leaned heavily on US internet companies to try to get access to global data — meaning that there does seem to be a bit of US exceptionalism built into all of this: it’s okay when we do it, but an affront if any other government might do the same thing…

Separately, this whole situation with TikTok and Microsoft demonstrates the pure silliness of the antitrust hearing in the House earlier this week. Note that there were claims that the four companies there represented “monopoly power.” And yet, just days later, we’re talking about how a recent entrant in the market, which has grown up quickly, and which Facebook certainly sees as a threat, is so powerful on the internet that it needs to be sold from its Chinese owners — and the leading candidate to purchase it, Microsoft, is not even one of the “too powerful” companies who were on the panel.

If a new entrant can rise up so quickly to be a “threat” and then needs to be purchased by another giant… it certainly suggests that the internet market still remains pretty vibrant, and not at all locked down by a few monopolies.

Updated thoughts: So that’s the original above. Now that Trump is saying he really is going to ban TikTok and is against its sale, there are multiple issues raised. Trump seems to think he can do this under his emergency economic powers (effectively declaring TikTok to be a national security issue — the same “tool” he used to impose tariffs on China without Congressional approval). If he goes that route, there will be lawsuits — and there will be significant Constitutional issues raised. The Supreme Court has in the past declared software speech, in Brown v. Entertainment Merchants Association (the case about whether or not the government could regulate video games and require age warnings). And, in the 2nd Circuit, a somewhat frustrating decision regarding the publishing of some code that would break DRM, Universal v. Corley, it is at least notable that the Court made a clear statement that software is protected under the 1st Amendment:

Communication does not lose constitutional protection as “speech” simply because it is expressed in the language of computer code. Mathematical formulae and musical scores are written in “code,” i.e., symbolic notations not comprehensible to the uninitiated, and yet both are covered by the First Amendment. If someone [*446] chose to write a novel entirely in computer object code by using strings of 1’s and 0’s for each letter of each word, the resulting work would be no different for constitutional purposes than if it had been written in English. The “object code” version would be incomprehensible to readers outside the programming community (and tedious to read even for most within the community), but it would be no more incomprehensible than a work written in Sanskrit for those unversed in that language. The undisputed evidence reveals that even pure object code can be, and often is, read and understood by experienced programmers. And source code (in any of its various levels of complexity) can be read by many more. Ultimately, however, the ease with which a work is comprehended is irrelevant to the constitutional inquiry. If computer code is distinguishable from conventional speech for First Amendment purposes, it is not because it is written in an obscure language.

And, later:

Computer programs are not exempted from the category of First Amendment speech simply because their instructions require use of a computer. A recipe is no less “speech” because it calls for the use of an oven, and a musical score is no less “speech” because it specifies performance on an electric guitar. Arguably distinguishing computer programs from conventional language instructions is the fact that programs are executable on a computer. But the fact that a program has the capacity to direct the functioning of a computer does not mean that it lacks the additional capacity to convey information, and it is the conveying of information that renders instructions “speech” for purposes of the First Amendment.

There were other issues with that case, but it remains law in the 2nd Circuit. TikTok suing over being banned would present an interesting 1st Amendment issue at the very least.

As to whether or not Trump could block the sale to a US company — ordinarily the answer to that should also be no, with a few caveats. However, as was recently revealed in Congress, the Bill Barr-lead DOJ appears to have no problem at all weaponizing its powers against companies the President is annoyed with — meaning that the DOJ could trump up some ridiculous excuse for why TikTok cannot be sold to an American company, and it’s possible a court would buy it.

On a related noted, it’s also entirely possible that the President would try to lean on both Apple and Google to remove TikTok from their app stores. And while I’d like to believe both companies would push back — the fact that there are realistically just those two bottlenecks to blocking TikTok entirely from the country, it could also get… interesting.

I get the feeling we’ll be writing about all of this for quite some time.

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Companies: microsoft, tiktok

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Comments on “Update: The TikTok Clusterfuck: Trump To Order A Block, Microsoft Wants To Buy, And Competition Is Still There”

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56 Comments
That One Guy (profile) says:

Re: 'Nice company you got there...'

Because apparently they were stupid enough to have US offices, which I imagine is being used as the justification as to why Trump’s latest temper-tantrum is acceptable and legal.

From the Bloomberg article:

TikTok, which has offices in Los Angeles, has been looking for ways to distance itself from its Chinese ownership, seeking to reassure the public that no data is stored on servers in China and that the app operates independently. Bytedance even appointed a CEO formerly of Walt Disney Co, Kevin Mayer, to run its operations in America and the rest of the world.

Scary Devil Monastery (profile) says:

Re: Re: Re: 'Nice company you got there...'

"Having US offices doesn’t change the fact that Trump has no power to force anyone to sell anything."

Neither does the mob when Vinnie the Knife strolls into your store and tells you you can either sell it to his boss at half of what it cost you and get out of dodge or you can spend the rest of the year having a gang of thugs running your customers off and beating up your employees.

Trump doesn’t have the power to legally shut anyone down. But he doesn’t need to. All he needs to do is whisper "Will no one rid me of these troublesome people?" for his cadre of sycophants to arrange matters.

rangda (profile) says:

Re: Re: 'Nice company you got there...'

Speaking as an American, it seems that it would make far more sense for TikTok to divest itself of it’s American operations than to sell.

Unless of course they can sucker Microsoft into drastically over-paying. MS will of course not get TikTok and will screw it up horribly (see Skype), so at some level this is a chance to pocket a pile of American dollars and then start working on TikTok’s replacement.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: His power isn't absolute, but he thinks it is

The Omnibus Trade and Competitiveness Act of 1988, which granted such authority to the President upon review by the Committee on Foreign Investment in the United States. It’s been used previously: Bush Sr. ordering CATIC to sell Mamco, by Bush Jr ordering Smartmatic to sell Sequoia Voting Systems, by Obama to force Ralls to sell several wind farms, and by Trump last year to force Beijing Kunlun Tech Co to sell Grindr.

It’s more commonly used to prohibit acquisitions, or attach additional requirements to acquisitions (eg NTT’s aquisition of Verio).

Scary Devil Monastery (profile) says:

Re: Re: Re: His power isn't absolute, but he thinks it is

"…does this allow donny to force the Iceland purchase?"

Not, it won’t let him force the Greenland purchase.

Iceland is a sovereign nation, Greenland is – on paper at least – part of the danish commonwealth. One which in times of global warming has acquired some fairly brand new strategic worth.

The reason Trump is really after greenland is, of course, because greenland’s ice cap melting off this fast not only opens a potential new sea route off their coast but also exposes about half a continent’s worth of pristine resources to tap.

Anonymous Coward says:

Because Microsoft would never misuse a monopoly power, right?

Broader context: this is a standard MBA-training technique: strike scintillating sparks of genius off your solid-granite cranium, then watch as your shocked-and-awed minions scurry about to immanentize your "vision". Take credit if it doesn’t fail too blatantly; assess blame to minions if it doesn’t succeed beyond your wildest dreams of avarice. Take time off to dream wilder dreams.

Anonymous Coward says:

Re: What if ByteDance refuses? How could USA block TikTok?

Couldn’t they use economic sanctions? Some companies won’t export free software to Iran, for example. If TikTok couldn’t export software from its US offices to its Chinese offices, or couldn’t use the American banking system (e.g. to accept advertising money from American companies), they’d have some trouble.

Anonymous Coward says:

Re: What if ByteDance refuses? How could USA block TikTok?

Well legally it’s a mess, but technically it can be done easily. Just revoke the app’s signature. That will take care of most devices. The only exceptions being jailbroken iDevices and Android devices that allow side-loading or that have unlocked bootloaders.

As for legal theories, they could just claim National Security the entire way as per the article. They could also revoke ByteDance’s corporate charter and seize their assets, forcing the app into abandonment. Or The Orange One could just send in his thugs to arrest ByteDance’s employees and anyone else who dare help them. (They already do it in Portland and get away with it.)

This comment has been flagged by the community. Click here to show it.

Anonymous Coward says:

The nsa is getting tons of data from isps and telecom company’s. And alot of network equipment
is made in China. Tik toks problem is its a massive success especially with young people so some politicians don’t like the idea that’s its owned by a Chinese company.
It s the biggest app since Instagram and YouTube.
China has stakes in gaming company’s like epic
that have millions of American users.
There seems to.be.a cold war going on between USA and China.
Following China in banning apps is just going down
to their level

Anonymous Coward says:

Microsoft needs a popular social media app, they spent millions on mixer, which was a flop.
If they buy it there.ll be an Xbox console tik Tok app.
I hope they don, t mess it up like they did with Skype.
Which is now to hard to use with a strange Uí layout.
I wonder would Google or amazon be allowed to buy it?

This comment has been deemed insightful by the community.
That One Guy (profile) says:

Re: The Tulsa corona swap-meet you mean?

As pranks go that one was glorious.

Before the rally be was bragging about how the event was so sold out the seats were going to be packed and it was going to be such a huge corona sharing event that people would be waiting outside for a second rally speech and then the event rolls around and… huge, blatantly obvious sections of empty seats, so large that they would have been impossible to miss any time he looked out.

For a childish narcissist like him who uses political rallies to cheer himself up that must have been really galling, so it makes sense that he would lash out against the platform that people used to accomplish it.

Stephen T. Stone (profile) says:

Re: Re:

Oh, he absolutely hated that the expectations were so high and the turnout was so low. If you want proof, look at the photo of Trump after returning to the White House following the Tulsa rally. I’ve never seen him look that defeated before.

Once word got out about how TikTok fucked him over, anyone with any sense knew he would eventually retaliate against TikTok. His narcissism drives his vengeance.

Stephen T. Stone (profile) says:

Re: Re: Re:2

Oh, people not showing up had nothing to do with TikTok. (Blame that on COVID.) Generating hype for more people showing up than actually showed up — and thus making Trump and his team look like chumps when they went through all the work of building that outdoor stage — was what TikTok did. I hope Trump stayed up all that night angry about it, too.

Anonymous Coward (profile) says:

Why hasn't Trump tried to ban VK? ????

Other than popularity, I don’t know what sort of relevant distinctions can be made between VK and TikTok. I’m assuming VK engages in the same sort of data harvesting as everyone else, just like TikTok. And I’m sure VK’s apps have had security vulnerabilities in the past, just like TikTok (and every other piece of software ever made). And if we’re gonna go the CHINA BAD route, then, well, I’d say Russia is arguably worse given their meddling in USA elections.

Anyone more familiar with VK who might have some better insight as to why it has managed to fly under the radar?

This comment has been deemed insightful by the community.
ANANONANA says:

More seriously, this is deeply bullshit and worrying on all sorts of levels. That kind of attack and discrimination driven by anger in the executive branch, and the fact that there seems little to check it in the immediate sense (since the only remedy is likely extended and costly litigation which might only be resolved well after the damage is done) is the kind of unchecked power that encourages censorship of these platforms, and heavy self censorship by companies and executives.

This is the case for both US and foreign companies. While TikTok being a foreign company makes it a much easier target the administration has shown little compunction against moving against US companies on the behest of Trump. It’s a further example of the breakdown of a rules based system in the US and further reinforcement that there is very little immediate recourse against the executive branch running amok.

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