US Crackdown on TikTok Spells Trouble for Other CCP-Controlled Companies: Analyst

Beijing’s zeal to instill the ’red gene' in Chinese companies like ByteDance’s TikTok will limit their success on the global market, says a China expert.

The download page for the TikTok app is displayed on an Apple iPhone on Aug. 7, 2020. Drew Angerer/Getty Images

TikTok, the tech company at the center of a U.S.–China tug-of-war, is facing a possible total shutdown in the United States as Washington turns to legislation to address the national security risk associated with the popular app.

On April 23, the U.S. Senate passed a $95 billion foreign aid package that includes a mandate for TikTok’s Chinese parent company, ByteDance, to sell its stake in TikTok within a year or face a complete ban. President Joe Biden subsequently signed the bill into law.

Chinese Foreign Ministry spokesperson Lin Jian, speaking in Beijing on Monday, urged the United States not to implement the “China-related” portion of the legislation, warning, “If the United States clings obstinately to its course, China will take resolute and forceful steps to firmly defend its own security and development interests.”

It is a rare instance of Congress targeting a technology company with specific legislation. It’s the first time that Congress has voted for the forced sale of a social media platform.

TikTok collects an enormous amount of data from U.S. users through its platform and uses its unique recommendation algorithm to push preferred content to users, including approximately 170 million users in the United States. About a third of young people in the United States say they get their news from TikTok, according to a November 2023 Pew Research Center study.

The app’s huge popularity and its close ties with the Chinese Communist Party (CCP) have raised bipartisan concerns that China could influence a large segment of the U.S. population through the content TikTok promotes, potentially manipulating U.S. elections and public policymaking.

Asked if the CCP would use the app to influence elections, U.S. Director of National Intelligence Avril Haines told a Congressional hearing last month, “We cannot rule out that the CCP would use it.”

Sen. Maria Cantwell (D-Wash.), in remarks to the Senate last week, said, “Congress is acting to prevent foreign adversaries from conducting espionage, surveillance, maligned operations, harming vulnerable Americans, our servicemen and women, and our U.S. government personnel.”

In August 2020, former President Donald Trump issued a national security order requiring TikTok to separate its U.S. operations from its Chinese parent company and transfer them to a new U.S. company by a set deadline. However, this order was later overturned by a U.S. court ruling.

After years of ongoing disputes between the United States and China, TikTok’s claim that it posed no security risks was ultimately rejected. Nevertheless, TikTok says it will challenge the enforcement of the new law in court.

“This unconstitutional law is a TikTok ban, and we will challenge it in court,” TikTok said in a statement on Aug. 24.

ByteDance Controlled by ‘Red Gene’

Chinese regulators have ensured that despite its success in the Western market, ByteDance is controlled by the “red gene,” a catchphrase for the spirit and ideology of the CCP. With the rise of the internet economy, the CCP has tightened its control over private enterprises and internet space.

In October 2016, the CCP’s 19th National Congress emphasized that private enterprises should also establish Party branches. A year later, the CCP’s State Internet Information Office (SIIO) convened a meeting in Beijing to discuss the details of “implementing Party building” for internet companies. Private companies, including high-tech enterprises, rushed to set up party branches in order to avoid punishment from the authorities.

Over several months in 2017 and 2018, Toutiao, a media platform owned by ByteDance, was disciplined by the SIIO. In January 2018, the popular news aggregator was temporarily suspended, along with more than 1,000 accounts, for “suspected violations of laws and regulations,” a charge often used to refer to expressing political views that do not align with those of the CCP. In April, the app, which had 263 million users, was suspended from Chinese app stores for three weeks.

After the harsh crackdown early in the year, Toutiao posted a job listing for 2,000 content editors, clearly stating that the company “prefers Chinese Communist Party members.”

Chinese regulators have been tightening their grip on tech companies—whether over supposedly offensive content, such as in Toutiao’s case, or in the name of protecting data privacy, consumer rights, and antitrust laws.

The CCP now requires almost all Chinese companies conducting IPOs outside of China to undergo what it calls “cybersecurity scrutiny.”

And new regulatory measures strengthen the CCP’s management of algorithms used by social media platforms, claiming that they must “promote the core values of socialism and actively disseminate positive energy.”

The catchphrase “disseminate positive energy” means that only news that portrays the CCP in a positive light and the country as prosperous is allowed to be published.

In early 2024, it was revealed that the CCP’s state media China Central TV (CCTV) had purchased a 1 percent stake in TikTok’s Chinese counterpart Douyin. The “golden share” would give CCTV veto power over Douyin.

Speaker of the House Mike Johnson (R-LA) speaks with members of the media following passage of a series of foreign aid bills at the U.S. Capitol in Washington, on April 20, 2024. Nathan Howard/Getty Images

Losing in the Global Market

In order to survive in the United States, TikTok must be sold by its Chinese parent company. However, the sale would require the approval of the CCP, which has made it clear that it opposes a forced sale of TikTok. Beijing has revised its export control rules to allow it to block a sale for national security reasons.

“It [a TikTok ban] would be the end of ByteDance’s global expansion, as it would be a sign that the Chinese state values the algorithm’s security more than ByteDance’s financial prosperity and global expansion,” said Richard Windsor, a tech industry analyst and founder of research firm Radio Free Mobile.

“The implications are that the ideological struggle being fought in the technology industry will become more intense,” he added.

Tang Jingyuan, a U.S.-based China affairs analyst and Epoch Times contributor, said that the CCP has the power to control and manipulate ByteDance at will, as it does all other Chinese companies. That makes TikTok a security risk to the United States.

“Whether TikTok is sold or banned, ByteDance will lose the U.S. market, thus ending its globalization,“ Mr. Tang said. Ultimately, the sanctions will have a broader effect, inhibiting the international expansion of Chinese companies as long as the CCP exists. ”This applies not only to TikTok,” he added.