China to oppose US lawmakers’ new move forcing ByteDance to divest TikTok amid mainland tech restrictions, analysts say

China to oppose US lawmakers’ new move forcing ByteDance to divest TikTok amid mainland tech restrictions, analysts say

06 Mar China to oppose US lawmakers’ new move forcing ByteDance to divest TikTok amid mainland tech restrictions, analysts say

Posted at 13:30h in Asia by

A bipartisan bill was introduced in the US House of Representatives on Tuesday that would give ByteDance 165 days to divest TikTok, or else the app would no longer be available on US app stores or be accessible on web-hosting services in the country.

The Chinese government “would block the sale” even if ByteDance and other mainland investors were forced to divest their shares, according to Alex Capri, a senior lecturer at the National University of Singapore and a research fellow at Asia-based philanthropic organisation Hinrich Foundation.

He indicated that ByteDance could face legal consequences on the mainland if it transfers ownership or technology to the US without Beijing’s approval.

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US lawmakers grill TikTok CEO on app’s alleged ties to Chinese Communist Party

US lawmakers grill TikTok CEO on app’s alleged ties to Chinese Communist Party

“It’s unlikely that TikTok will ever be effectively banned in America”, Capri said. “Any attempt to ban it outright is likely to be struck down in US courts on the grounds that this violates a user’s First Amendment right to free speech.”

Beijing-based ByteDance, which was founded in 2012 by entrepreneur Zhang Yiming, did not immediately respond to a request for comment on Wednesday.

A TikTok spokesman on Tuesday described the new bill as “an outright ban” of the app, adding that it would “trample the First Amendment rights of 170 million Americans and deprive 5 million small businesses of a platform they rely on to grow and create jobs”.

TikTok told to break with China’s Communist Party or lose access to US users

An initial vote on the bill is expected this Thursday. It was sponsored by more than a dozen lawmakers led by Republican congressman Mike Gallagher, the chair of the House of Representatives’ select China committee, and top Democratic congressman Raja Krishnamoorthi.

An opinion piece on Guancha.cn, a nationalist Chinese website, played down the threat posed by the new bill, asserting that US politicians are showing “their political manoeuvring against TikTok” during an election year.

Similar attempts to ban TikTok in the US or force ByteDance to divest the app’s operations in the country date back to 2020 during the administration of former US President Donald Trump. Various prior executive orders and bills have been either stalled or blocked by US courts.
Beijing had partly thwarted Washington’s moves against TikTok in 2020 by revising its rules on technology exports. Any export of software, such as the algorithm that serves as TikTok’s recommendation engine, were included in the restricted list. That means TikTok’s US operations can be sold, but not the key technology that powers the app.

“We have been down this road before,” Paul Triolo, an associate partner for China and technology policy lead at consultancy Albright Stonebridge Group, wrote in a post on X on Wednesday. “Project Texas remains the best ‘solution’.”

US executive order to keep Americans’ personal data from ‘countries of concern’

Last year, TikTok said it has already spent US$1.5 billion on the project and estimated that it will cost between US$700 million and US$1 billion annually once it is fully operational.

China’s Ministry of Commerce said in March last year that Beijing would “firmly oppose” any move by the US government to force the sale of TikTok.

China would intervene because “the sale or divestment of TikTok involves technology export and must be subject to administrative licensing procedures in accordance with Chinese laws and regulations”.

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