Source : THE AGE NEWS
In the absence of unexpected help from the US Supreme Court, the wildly popular social media platform, TikTok, will “go dark” in the US on Sunday. But, can Elon Musk save it?
A Bloomberg report earlier this week said Chinese officials were considering a sale of the US operation to Musk should the Supreme Court decide to uphold the bipartisan law passed by the US Congress last year that requires TikTok’s parent company, ByteDance, to sell the US platform by January 19. If it isn’t sold to a US buyer the law requires it to effectively be shut down.
China is thinking of selling TikTok US to Elon Musk.Credit: Getty Images
Reports elsewhere have suggested that the officials are looking at whether they could use Musk, whose $US250 million-plus ($400 million-plus) contribution to Donald Trump’s election campaign has bought him a position as a close adviser to the incoming president, as a broker with the administration to avoid or defer a sale.
TikTok and ByteDance executives have described the reports as fiction, although Bloomberg and others have made it clear that the discussions they have reported were occurring at Chinese government level and don’t necessarily involve the companies.
Trump, who wanted TikTok’s US business sold or shut down in 2020, pivoted to opposing the law in his campaign, perhaps because he wanted to attract the support of platform’s predominantly Gen Z user base or because of the reach he discovered it gave him.
He has said he had a “very good experience” on TikTok during the campaign, crediting it with helping him to win the youth vote.
Another factor in his about-face might have been his at times tense relationship with Mark Zuckerberg’s Meta Platforms and Facebook, which he once described as “an enemy of the people.” They appear to now be on better terms, with Zuckerberg dining with Trump at Mar-a-Largo and announcing that Facebook would ditch its content moderation functions.
Facebook, which banned Trump from its platform in 2021, after the January 6 assault on the Capitol, would be the most likely beneficiary if TikTok was shut down in the US, via its TikTok-like Reels short-form video feature.
Trump has asked the court, which appears to favour Congress’ national security arguments over TikTok’s freedom of speech position, to delay the ban – which would take effect the day before his inauguration – so that he could, his lawyers said, “resolve the issues at hand through political means once he takes office”.
The genesis of the law that could see TikTok banned in the US was legislators’ concerns about the vast troves of user data it collects and Chinese laws that give its officials the ability to direct Chinese companies to provide access to their data.
The US is concerned about the potential of a Chinese entity to exploit its user base to try to influence US government policy. About 170 million of TikTok’s billion-plus monthly users are Americans.Credit: AP
There was also a fear, heightened by a disproportionate (relative to other social media) airing of pro-Palestinian sentiment after October 7, that China could use the platform to spread disinformation and manipulate public opinion via the app.
It didn’t help TikTok’s cause that it sought to leverage its user base to oppose the ban. Users flooded congressional phone lines after being urged to by messages on the platform, which used their postcodes to connect them to the phone numbers for their congressional representatives. The lawmakers weren’t amused by TikTok’s attempt to use its database and audience to influence their decisions.
Concerns about the national security implications of TikTok’s vast store of user data aren’t confined to the US.
Government officials and the military in many countries, including Australia, have also been banned from downloading or accessing the app. India has a blanket ban on all Chinese controlled apps.
ByteDance, which has a majority of foreign institutional investors, including US institutions, as shareholders, hosts its US data on Oracle servers in Texas. It has rejected claims of Chinese government access to the data, although the US has said in its court filings that TikTok has acceded to Chinese demands to censor content outside China. ByteDance has admitted that its data has been used by some of its (now former) staff to try to track down journalists’ sources.
In the absence of a last-minute reprieve from the Supreme Court, TikTok won’t actually be shut down in the US for existing users, with the law focused on outlawing future downloads and upgrades.
It would, however, be illegal for app stores like Apple or Google to distribute upgrades and it is likely to disappear from those stores on Sunday. It would also be illegal to access the platform via internet browsers.
President-elect Donald Trump, who wanted TikTok’s US business sold or shut down in 2020, pivoted to opposing the law in his campaign.Credit: AP
Without access to upgrades, the platform would almost inevitably degrade over time, which might explain why TikTok appears to have been suggesting that it will simply block US users should the ban come into effect. TikTok’s lawyers suggested it might “go dark” in the US in their Supreme Court hearing.
ByteDance could, of course, avoid the ban by agreeing to sell the US business.
There is a queue of obvious interested parties, some of whom, like Apple, Google, Meta and Microsoft might face anti-trust obstacles, but others, like Musk, former US Treasury Secretary in the Trump administration, Steve Mnuchin, other billionaires who have expressed interest and private equity are interested in acquiring the platform in a forced and therefore discounted sale.
While it is loss making, with an estimated $US20 billion of revenue in the US, TikTok is thought to be worth somewhere between $US25 billion and $US50 billion in a forced sale. Twitter cost Musk $US44 billion.
Musk’s ownership of X (formerly Twitter) and alignment with Trump would have been an obstacle during the Biden administration, but his relationship with both Trump and China, where his Shanghai factory accounts for about 40 per cent of Tesla production, explains why China might see him as either an acceptable buyer or a useful broker of a deal.
If X were brought next to TikTok it would vastly expand Musk’s audience and advertising revenues, while TikTok’s user data would be valuable in training the models for his xAI artificial intelligence start-up.
Concerns about the national security implications of TikTok’s vast store of user data aren’t confined to the US.
If China does involve Musk in the TikTok process it would generate conflicts of interest and suspicion about his allegiances among the dominant China hawk faction within Trump’s new cabinet, given the semi-official but powerful and influential role Trump has given him within the incoming administration.
China’s ability to help or destroy Tesla’s prospects in its major market could raise a question mark over where those allegiances might lie under pressure from China. Musk is, for instance, seeking approval for Tesla’s Full Self-Driving software in China. Approval for similar autonomous vehicles has been given to a number of his Chinese competitors.
There are already concerns that he could use his position to advance the interests of the host of businesses he owns or controls.
TikTok’s competitive advantage lies in its algorithm, which analyses its users’ behaviours to decide what they would most want to see. ByteDance has said it would be near impossible to replicate the algorithm for a stand-alone US entity.
China’s laws, however, give its government the ability to approve, or disapprove, the export of algorithms and source codes.
It could effectively block any sale of, or access to, the platform’s key asset; hence it has a decisive influence over the future of TikTok in America. As might, with China’s help, Musk.
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