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Breakingviews - TikTok mess is a trap for America’s next president

A 3D printed Tik Tok logo is placed on a keyboard in front of U.S. flag in this illustration taken October 6, 2020. REUTERS/Dado Ruvic/Illustration

NEW YORK (Reuters Breakingviews) - A dramatic election and White House transition might just spell a reprieve for TikTok. President Donald Trump wanted China’s ByteDance to divest parts of the video app by Thursday, but with a day to go, there are plenty of big impediments that remain. The unresolved questions could fall to incoming President Joe Biden to answer.

What Trump demanded – a sale of TikTok’s U.S. business – was never going to be simple. The deal on the table is complex, with Oracle and Walmart planning to buy a 20% stake. It also requires four parties to agree: the sellers, the buyers, the White House and the authorities in Beijing. If one resists, it’s back to the drawing board. Plus, ByteDance isn’t done fighting. On Tuesday, it filed a petition asking a U.S. appeals court to review Trump’s demand for a divestment.

TikTok may be less of a priority for Trump as he focuses on challenging the U.S. election result. But this won’t be the last situation of its kind. Chinese companies face pressure from a Biden administration too. This summer, the former vice president required his staff to delete TikTok from their phones. Biden said in September that the app was a “matter of genuine concern,” according to Reuters.

True, future divestments might be simpler without the Trumpian curveballs. At one point the president suggested that a buyer of TikTok ought to pay a fee to the U.S. government, for example. But the underlying problem would have been similar for any commander-in-chief, because forcing sales of internet companies deemed to be a threat to national security is something of a new frontier.

In TikTok’s case, that’s particularly true, because the value of the company lies partly in code that is difficult to disentangle from the parent company. Even if it could change hands cleanly, ensuring against foreign interference is harder for data and algorithms than it is a shipping port, say. And TikTok is already installed on millions of American smartphones.

Trump’s headache will soon be Biden’s. The Committee on Foreign Investment in the United States, which oversees foreign investment, has also honed in on other tech firms, like dating app Grindr and healthcare startup PatientsLikeMe, suggesting other technology targets will surely arise. Even if ByteDance’s deadline lapses, the clock is still ticking.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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