To avoid US ban, TikTok may sever ties with Chinese company ByteDance

TikTok could separate itself from Chinese company ByteDance to operate as an independent American firm to avoid being banned by the US government.

TikTok has 40 million users in the US and after recently being banned in another large market, India, after border clashes between troops of Delhi and Beijing, the short-video sharing social media company has a hard choice to make.

White House economic advisor Larry Kudlow said severing the umbilical cord with its parent company would be the better option for TikTok than a ban on the app threatened by Secretary of State Mike Pompeo, Reuters reported.

“We haven’t made final decisions but...I think TikTok is going to pull out of the holding company which is China-run and operate as an independent American company,” Kudlow was quoted as saying by Reuters.

It is unclear how this change would be made, how the ownership would change and whether US companies had proposed to buy out the US operations of the app.

Security concerns are the reason ascribed to the ban by India and the proposed ban in the US, as Chinese companies have been accused of sharing user data with the Chinese Communist Party which runs the government in Beijing. By Chinese law, any digital company that has its server in China are to allow scrutiny of its contents by authorities there. This makes the data of users in other countries accessible to China, which constitutes a national security risk, the US argues.

The US has been relentlessly pressing its allies to beware of Chinese telecommunications and technology companies and recently got Britain to ban Huawei from all its networks. The US had already restricted Huawei from major American telecom networks and is even set to impose sanctions on Huawei staff.

In this context, and with the United States pointing towards human rights abuses by the Chinese government allegedly using technology and social media companies to spy on dissidents, TikTok had pulled out of Hong Kong recently after China introduced its national security law on the island to tighten its hold on the former British colony. The move was made to distance TikTok from the Chinese administration.

Similarly, a breaking of ties with ByteDance would be a strategic move to continue TikTok’s business in the US. However, TikTok has not confirmed any such move yet. When asked about Kudlow’s remarks, a TikTok spokesman was quoted as saying by Reuters that the company would not “engage with speculation in the market,” and referred to a statement last week noting that ByteDance was “evaluating changes to the corporate structure of its TikTok business” and was fully committed to protecting users’ privacy and security.