US President Donald Trump on August 14 signed yet another executive order essentially directing TikTok’s Chinese parent company ByteDance to divest from its American assets and it rights to any user data that TikTok gathered in the country, within 90 days. The new executive order directs Bytedance to destroy any TikTok data from US users, and report to the Committee on Foreign Investment in the United States once all the data has been destroyed. Bytedance must also destroy any data collected by Musical.ly, which the company bought in 2017, as per the new order.
“There is credible evidence that leads me to believe that ByteDance”, which merged Musical.ly and TikTok’s apps and userbase in 2018, “might take action that threatens to impair the national security of the United States,” Trump said in the new order. Before this, Trump had barred all US transactions with TikTok and WeChat by means of an executive order signed earlier in August (more on that below).
What the new executive order mandates: ByteDance will have to divest “any tangible or intangible assets or property, wherever located, used to enable or support ByteDance’s operation of the TikTok application in the United States,” the order said. The CFUIS will determine these assets and properties. Immediately upon divestment, ByteDance will also have to certify in writing to CFIUS that it has destroyed all data that it was required to divest, and submit copies of such data wherever located, the executive order said. It is worth noting that by TikTok’s own admission, it stores American users’ data in the US, with backup redundancy in Singapore.
The executive order also prohibits ByteDance from selling TikTok to a third party, until it notifies CFIUS in writing of the intended recipient or buyer. Microsoft has emerged as the frontrunner to buy TikTok’s operations in the US, Canada, Australia, and New Zealand, even as several Microsoft employees have called the deal “unethical”. In fact, Microsoft is interested in buying TikTok’s operations globally, as per the Financial Times. Twitter has also emerged as a potential suitor for TikTok according to multiple reports. Apple was also rumoured to be interested, until the company denied the speculation.
At the moment, it is unclear how this new executive order will impact the imminent sale of TikTok’s US operations. However, after the CFUIS raised national security concerns over gay dating app Grindr, which was owned by a Chinese company, in 2019, it was sold to US-based San Vicente Acquisition for about $608.5 million in 2020.
The previous executive order: This is a second executive order signed by Trump against ByteDance and TikTok, with the last order having banned US transactions with the company, along with WeChat. The previous order, signed on August 6, banned US transactions with ByteDance, and was to come into effect on September 15. The order did not mention that ByteDance had to divest its American business and American users’ data gathered via Musical.ly and TikTok.
The first executive order had also mentioned the Indian government banning TikTok, WeChat and 57 other ‘Chinese’ apps over national security concerns. Telecom major Reliance Jio is reportedly interested in acquiring TikTok’s India business according to multiple reports.
