The News
A new bill that would let the Biden administration ban foreign-owned tech products like TikTok in the U.S. is already gaining major momentum in Congress.
But even if it passes, the bill might not change much for the wildly popular, Chinese-owned video app, which was already facing serious pressure from U.S. regulators. Instead, it could give the administration a bigger stick to use in talks that are already under way to address concerns about the app’s handling of U.S. user data.
Morgan’s view
TikTok has been the subject of a longstanding review by the Treasury Department’s Committee on Foreign Investment In the U.S., which can block or unwind deals involving overseas buyers of U.S. companies that it believes might threaten U.S. national security. Its investigation began in 2019, a couple years after ByteDance bought Musical.ly, a U.S. based app it merged into TikTok.
TikTok says that it proposed a settlement months ago that would keep American user data secure, in part by storing it on U.S. servers controlled by Oracle. But the sides haven’t reached a final deal. Lawmakers have urged the administration to impose a strict wall between ByteDance and TikTok’s American operations, and potentially force them to separate entirely.
The Senate’s new bill, known as the RESTRICT Act, would give the government even more power to crack down on TikTok. The legislation allows the Department of Commerce to bar tech companies owned by “foreign adversaries,” including China, from doing business in the U.S. if the government believes they pose a security risk.
The legislation would be hugely consequential for U.S. tech policy, since it would allow the government to investigate foreign companies over national security concerns even if they aren’t involved in a merger, and shut their products out of the U.S. entirely, which it currently can’t do.
But the RESTRICT Act would also let the government take steps short of an outright ban to address risks posed by foreign companies, such as forcing them to spin off their assets. So far, the bill’s sponsors have been careful not to promise a full-on TikTok ban. Utah Sen. Mitt Romney, one of the RESTRICT Act’s cosponsors, told Semafor that he couldn’t predict what the measure would mean for the app’s future.
It might not mean much of anything at all. Should it become law, the bill is designed to let the Treasury’s current review process continue on, and would even prevent the administration from taking further action against the company if it has already reached a deal with CFIUS on national security issues. That’s irked some lawmakers, who’d prefer to simply ban TikTok without any extra song and dance.
