Countries and Companies Cool on TikTok, As Microsoft Proposes US Solution

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In early July, the Indian government banned many Chinese mobile applications, including TikTok, claiming they pose a “threat to sovereignty and integrity.” India’s Ministry of Information Technology acted “in defense of India, security of state and public order.”  ByteDance Limited (“ByteDance”) is a Chinese multinational internet technology company headquartered in Beijing that owns the popular TikTok mobile application, but isn’t actually available for use in China. The TikTok decision by the Indian government is significant considering India is the world’s second most populous country and generated close to 660 million downloads since 2017. Geopolitical stresses underlie the ban as at least 20 Indian soldiers were killed by Chinese troops in a recent border conflict.

The United States has considered following suit as President Trump threatened to use emergency economic powers or an executive order to prohibit TikTok from operating in the United State. Among the considered actions by the Trump administration is directing ByteDance to divest its stake in TikTok’s U.S. operations. In early July, Secretary of State Mike Pompeo went as far as to say that only those who want their “private information in the hands of the Chinese Communist Party” should elect to use the mobile application.

Private entities have also expressed their distrust of TikTok. Wells Fargo identified corporate owned devices having TikTok downloaded upon it by employees. Due to concerns “about TikTok’s privacy and security controls and practices” Wells Fargo directed employees to remove TikTok from all corporate devices. Amazon had also sent a directive to remove TikTok from any device that has access to company communications because of Chinese company’s data collection policies, but later retracted it by claiming it was “sent in error.”

These privacy and security concerns stem from the access China’s government has to entity data. China already had a law that allowed the government to audit private business networks and mandates the use of government-approved security equipment. A more recent law expands that applicability to all “networks.” In response to some of these concerns, TikTok issued Community Guidelines in January. These guidelines provide that “TikTok’s regional and country teams localize and implement in accordance with local laws and norms.” It also stated that TikTok would “remove content that violates these guidelines, and suspend or ban accounts involved in severe or repeated violations.”

TikTok also released a transparency report which showed that 298 legal requests for user information and 26 government takedown requests were made during the first half of 2019. It also indicated that from January 1 to June 30 of 2019, that none of those takedown or user information requests came from China,

A new proposal has been made by ByteDance along with Microsoft to alleviate some of the China-related concerns in a bid to prevent the mobile application from being banned in the United States. The proposal would charge Microsoft with protecting all of TikTok’s U.S. user data, which is presumably more appealing than banning an application popular with millions of Americans. This would make U.S. based Microsoft responsible for data protection, and apparently another U.S.-based company would be operating TikTok within the country. If this proposal is accepted by the American government, it would be a U.S.-only solution, as it is not a pledge to transfer global data management to Microsoft.  According to their corporate blog post, Microsoft plans to “move quickly to pursue discussions” on this proposal.

China may retaliate against U.S. and Indian companies operating in China, with some voices in China, official and otherwise, calling for a similar action. If ByteDance elects to provide piecemeal regional solutions, as opposed to divestment in the mobile application, it will be worth monitoring what measures the Chinese government will take against American and Indian companies operating in China and what corporate partnerships may form as a result.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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