Is the clock ticking for TikTok? What’s the big deal anyway?

By: Bonnie Kersch, Senior Trade Advisor, Braumiller Consulting Group

A quick scroll through the social media app TikTok will lead you to “thirst trap” videos, Sheena Melwani playing a beautiful song on her keyboard while her “dad” provides hilarious quips, dogs like Tina the Chi doing crazy chihuahua things, and couples like Thirsty on Main providing relationship advice and looks into their daily lives.  It seems full of mostly wholesome relatable content.  So why is the U.S. government threatening to shut it down on the grounds of national security concerns?  Let’s chat about deemed exports and what’s really going on.

The main problem TikTok has, is that it is owned by a company called Byte Dance, which is a Beijing-headquartered company led by CEO Yiming Zhang, who was named one of the world’s 100 most influential people by Time Magazine in 2019.  The U.S. has complained a number of years that Chinese intellectual property theft has harmed the U.S. economy and threatened national security.  This is why understanding the concept of deemed exports is so important and is something that Braumiller Consulting Group can help your company with.  If your company makes a product or develops a technology that would require an export license to a particular country, any information related to that product or technology that is released to a foreign person also requires an export license.  For example, let’s say your company makes rocket engines.  When shipped to China, these rocket engines would require an export license.  If a Chinese person is working at your facility in the U.S. on the technology related to the rocket engines, your company needs to acquire an export license to allow that foreign person to work on the rocket engine project.  One of President Trump’s concerns with TikTok is that user information is being acquired by Byte Dance in China and that the Chinese government will use this information to gain an unfair economic advantage against the United States, something that he has been trying to curb with the additional duties that he has levied against Chinese-origin products.  All of the information gathered by TikTok is being stored in China with no export licenses issued.  It is skipping right around the concept of deemed exports.

What information is TikTok gathering anyway?  According to TikTok’s privacy policy, it collects a user’s IP address, geolocation-related data, unique device identifiers, browsing and search history, and cookies.  It also collects device identifiers like the model of a user’s device, a user’s mobile carrier, operation system, app and file names and types, keystroke pattern and rhythms, etc.  Not only does TikTok collect all of the above information and much more, it also shares a user’s information with basically anyone the company wants to.  When the CFIUS, the Committee on Foreign Investment in the United States, launched its review of Byte Dance, TikTok’s owner, in November 2019, several U.S. senators praised this move, stating that, “TikTok is a potential counterintelligence threat we cannot ignore.”  However, the review by CFIUS is not actually related to the app TikTok, but instead is looking into Byte Dance’s 2017 acquisition of the popular app Musical.ly.

So what’s the latest on TikTok?  At the time of this article, President Trump has given Microsoft Corporation 45 days to make a deal with Byte Dance to purchase TikTok for the U.S. market and to move all information collected from U.S. users onto U.S. soil.  Most predict that this deal will go through and that TikTok will not go anywhere.  So get back to posting those short videos of your dog or the newest TikTok challenge, but don’t forget to review your company’s deemed exports policy in the meantime to make sure that you don’t become the next TikTok fighting for your company to stay afloat.  Don’t have a robust deemed exports policy?  E-mail us at Braumiller Consulting.  We’re happy to help.