President Trump has issued an executive order requiring ByteDance to divest from its U.S. TikTok business within 90 days, CNBC reported. Part of the executive order requires ByteDance to prove that it has destroyed all data that was obtained or derived from the TikTok application in the United States.
…The transaction resulting in the acquisition by ByteDance of Musical.ly, to the extent that Musical.ly or any of its assets is used in furtherance or support of, or relating to, Musical.ly’s activities in interstate commerce in the United States … is hereby prohibited, and ownership of ByteDance of any interest in Musical.ly in the United States, whether effected directly or indirectly through ByteDance’s subsidaries, affiliates, or Chinese shareholders is also prohibited…
The wording in the executive order might be a little confusing to those who are unaware of how ByteDance, TikTok, and Musical.ly connect. ByteDance bought Musical.ly in 2019.
The FTC learned that Musical.ly (which quickly became TikTok) illegally collected personal information from children. User accounts on Musical.ly were public by default, and it appears there were some problems with adults trying to contact children on the Musical.ly app. According to the FTC, operators of the Musical.ly app were aware that a significance percentage of users were under the age of 13.
TikTok agreed to pay $5.7 million to settle the allegations made by the FTC.
The executive order requires ByteDance to sell or spin off its U.S. TikTok business within 90 days. It might be possible. Microsoft has been in discussions with ByteDance about a potential acquisition of TikTok. A previous executive order required ByteDance to reach a deal within 45 days. If that did not happen, then the order would force U.S. based app stores to stop distributing the TikTok app. The new executive order extends that timeline to 90 days.
I cannot help but wonder what happens if Microsoft acquires TikTok. Do the problems with it (and Musical.ly before it) become Microsoft’s problems to resolve? Will Microsoft be expected to provide proof that the data ByteDance gleaned from U.S. users has been destroyed? Or will ByteDance have to provide that proof itself?