TikTok’s Chinese parent ByteDance may soon face a stark choice in the United States — divest the wildly popular app or see it disappear from its biggest market. A bill that could force ByteDance’s hand swiftly passed the House last week, with bipartisan support, and will now be considered by the Senate. President Biden has already said he will sign the bill into law if it reaches his desk.
This week, The Wire traces TikTok’s path to mass popularity in the United States and identifies some of the key senators who will decide the app’s fate in the coming weeks.
AN ONLINE CRAZE
ByteDance’s road to success started in late 2017 when it paid $1 billion for video app Musical.ly, gaining all of its user data and transferring it to TikTok. In China, TikTok operates as a separate app named Douyin, in compliance with Chinese law.
Key to TikTok’s success has been its highly versatile recommendation algorithm, which has effectively personalized search results to show users videos they want to watch. That has helped fuel TikTok’s staggering rise: after it first went global, downloads of the app almost tripled in two years, from over 110 million in the first quarter of 2018 to 315 million in the first quarter of 2020, according to data analytics firm SensorTower. The app currently reports more than 170 million active American users every month.
As the chart below shows, its usage among American adults has already eclipsed Instagram and could soon surpass Facebook.
Of course, TikTok’s main appeal is to the teenagers glued to its videos showing everything from dancing, Taylor Swift imitation videos, as well as comedy routines. 58 percent of American teenagers say they use TikTok daily, while 17 percent say they use it almost constantly, according to Pew Research Center.
In response to the impending legislation, TikTok is emphasizing its role as an ecommerce platform. The company has cited Oxford Economics research that said businesses using TikTok as an advertising and marketing platform contributed $5.3 billion in taxes to the U.S. government in 2023 and supported 224,000 American jobs. TikTok is now gaining ground on e-commerce giant Amazon as young Americans’ platform of choice for online shopping.
TikTok’s ubiquity has stoked U.S. lawmakers’ concerns about its ownership and links to China, whose strict data security laws could in theory require private companies like ByteDance to hand over their user data to the Chinese authorities.
During five hours of testimony last March, TikTok’s Singaporean chief executive Shou Zi Chew tried to persuade members of Congress that its parent ByteDance is neither owned nor controlled by the Chinese government.
“60 percent of the company [ByteDance] is owned by global institutional investors. 20 percent is owned by the founder and 20 percent owned by employees around the world,” Chew said during the 2023 hearing. “ByteDance has five board members, three of them are American.”
ByteDance’s co-founders are Zhang Yiming and Liang Rubo, who is the company’s current CEO. Its global investors include BlackRock, General Atlantic, and Sequoia Capital. Check out the graphic below for more information about TikTok’s investors, including ByteDance. The exact ownership stakes are not publicly disclosed:
In the Senate, the TikTok bill requires a simple majority of the chamber’s 100 senators to pass, or a super-majority of 60 to avoid a filibuster. Some senators have said they want to discuss amendments before scheduling a vote. Rand Paul (R-KY) has come out strongly against the bill because of the power it gives the U.S. government to regulate platforms for free speech.
Previous legislative attempts to address concerns around TikTok, such as the RESTRICT Act introduced last year, proposed giving the U.S. government power to restrict communications technology products coming from a foreign adversary, but did not name any specific company. The most recent bill names TikTok directly.
The graphic below highlights some of the key senators who will decide the fate of TikTok:
Aaron Mc Nicholas is a staff writer at The Wire based in Washington DC. He was previously based in Hong Kong, where he worked at Bloomberg and at Storyful, a news agency dedicated to verifying newsworthy social media content. He earned a Master of Arts in Asian Studies at Georgetown University and a Bachelor of Arts in Journalism from Dublin City University in Ireland.