Introduction to the TikTok Debate
Last Wednesday, the Trump government believed that it had a plan to save TikTok. Bytedance, TikTok’s Chinese owners, as well as some of its US investors and officials in Washington, had teamed up for a new owner structure for the popular video app. This structure would help TikTok meet the conditions of a federal law, according to which the app had to find a new owner in order to clear up national security concerns or be in the United States.
The Proposed Plan
The plan involved new investors having 50 percent of a new American TikTok company, while Chinese owners would keep less than 20 percent, the legally defined limit. Bytedance told the White House that Beijing was familiar with the general structure. On Thursday morning, a version of an executive order of President Trump, which outlined the broad lines of the deal, was viewed by the New York Times.
The Plan Hits a Wall
Then the plan hit a wall. Bytedance called the White House with the news: after Mr. Trump announced a number of tariffs for Chinese imports, the Chinese government would not let the TikTok deal go on. In response, Mr. Trump bought the app more time. On Friday, he paused the federal law enforcement and extended the deadline for a TikTok deal in mid-June.
Geopolitical Dispute
The situation illuminates how the video app is caught in a geopolitical dispute between the United States and China about trade and technology. It also highlights China’s power over TikTok’s future in the United States and raises questions about whether a deal for TikTok is ever completed. "The parties are too proud to negotiate, and that is why we are stuck between two colossal economies that turn each other upside down," said a professor of law and technology.
The Administration’s Efforts
The administration and Bytedance had worked out a structure that made it possible to capture TikTok’s largest US investors, including General Atlantic and the Susquehanna International Group, while government officials brought new funds to water the Chinese property of the app. The preliminary conditions of the deal said that new investors would have 50 percent of a new American TikTok company. Current investors would have 30 percent and Chinese owners less than 20 percent.
Uncertainty and Complications
China was always the wild card to a certain extent. The main negotiating guides did not directly discuss the topic with the Chinese government and instead relied on Bytedance’s understanding of Beijing’s position. Before the president’s announcement of tariffs, Bytedance believed that the Chinese government was familiar with the structure in Washington. But before the tariff announcement, there was no guarantee that Beijing would give its informal blessing or formal approval.
Escalating Trade War
The talks about TikTok will probably become even more complicated if a trade war escalates between the two countries. According to Mr. Trump’s announcement, China initiated retaliatory duties and asked the president to warn that he would impose additional tariffs of 50 percent into the country if it were. The use of tariffs for the negotiations is "really a remarkable effort to force a foreign company to sell."
Conclusion
TikTok has retained most of a year in which it is not for sale. On Friday, Bytedance admitted for the first time that it was involved in negotiations with the US government about the future of the app – but said that every decision was ultimately in the hands of another party. "There are important matters that have to be solved," said a spokesman for Bytedance. "Every agreement is subject to approval under Chinese law."
