Saturday, 2024 July 13

How might the TikTok ban bill affect Lemon8, CapCut, and other Chinese applications?

On March 13, 2024, the US House of Representatives passed HR7521, a bill that could ban TikTok in the US if its parent company ByteDance does not divest it. The bill secured a landslide victory, with 352 votes in favor outnumbering a measly 65 in opposition.

While the bill still has to pass through the Senate, US President Joe Biden has said that he would sign it into law if it is passed, a worrying development for TikTok’s 148 million US users.

Nicknamed the TikTok ban bill, other applications like Lemon8 and CapCut might also be susceptible to the bill’s restrictions, facing a similar circumstance.

What is the TikTok ban bill?

HR7521, which refers to the Protecting Americans from Foreign Adversary Controlled Applications Act, forbids app stores from “distributing, maintaining, or providing internet hosting services” for social media applications controlled by foreign adversaries deemed to pose a threat to national security, as determined by the president. The bill defines foreign adversaries as countries specified in section 4872(d)(2) of title 10 of the United States Code. This includes North Korea, Russia, Iran, and China.

Authored by US representative Mike Gallagher, HR7521 was introduced to push a nationwide ban on TikTok to prevent China from allegedly collecting user data and promoting propaganda. “We can’t take the chance of having a dominant news platform in America controlled or owned by a company that is beholden to the Chinese Communist Party,” said Gallagher during a press conference held in response to TikTok’s “intimidation campaign” against US users.

This legislation would force ByteDance to sell TikTok to another company that is not subject to the bill, if TikTok wants to continue operating in the US market. “As long as ByteDance no longer owns the company, TikTok can continue to survive,” said Gallagher.

However, divestment is unlikely as China has already expressed that it would assume authority and oppose the sale.

“The sale or divestiture of TikTok involves technology export, and administrative licensing procedures must be performed in accordance with the laws and regulations of China,” said Shu Jueting, spokesperson of the Chinese Ministry of Commerce, during a press conference on March 23, 2023. China’s trade controls restrict the export of recommender systems, including the algorithms used by TikTok.

Photo courtesy of Solen Feyissa

Broad definitions

What constitutes control by a foreign adversary? According to the bill, an entity controlled by a foreign adversary is defined as follows:

  1. A foreign person domiciled in, headquartered in, having its principal place of business in, or organized under the laws of a foreign adversary country.
  2. An entity in which a foreign person or combination of foreign persons described in [1] directly or indirectly owns at least a 20% stake.
  3. A person subject to the direction or control of a foreign person or entity described in [1] or [2].

While the bill specifically targets social media companies, its broad definitions can extend to a multitude of applications. For instance, any company that operates a website, desktop application, or mobile app where users can create a profile and view or generate digital content are susceptible to the bill. However, this excludes platforms hosting review content, such as product reviews, business reviews, and travel information, among others. Applications of Chinese companies like Shein and Temu, which focus mainly on e-commerce, may therefore be exempt from the bill’s provisions.

Will CapCut and Lemon8 be banned?

Given that ByteDance operates other app-based businesses like Lemon8 and CapCut, concerns have also emerged regarding their future prospects and whether they too will face a ban in the US. The short answer is likely yes, as the bill outrightly states that entities owned by ByteDance are considered “foreign adversary controlled applications.”

During the bill’s hearing, representative Cathy McMorris Rodgers said in the opening statement that applications like Lemon8 and CapCut are “spying-by-design” as “required by law in China.” This stems from the argument that, in conjunction with China’s national intelligence law which obliges organizations to assist public security and state security officials with intelligence work.

“While TikTok may be the most well-known application subject to the Chinese Communist Party (CCP), it is certainly not the only one—others, like Lemon8 and CapCut, are also subject to the CCP’s influence through ByteDance,” said Rodgers.

While Lemon8 and CapCut do not share the same level of popularity as TikTok, both rank consistently among the top free iOS applications in the US, with CapCut notably starting 2024 atop the list.

Users of these apps may, surprisingly, even comprise the White House’s media team—on March 24, 2023, the White House released an Instagram video that seemingly utilized a CapCut template.

Instagram video released by the White House campaigning the Affordable Care Act
One of many free video templates offered by CapCut, the video editing app by ByteDance
36Kr Global Writers
36Kr Global Writers
The tech ecosystem is roaring. Unicorns valued at billions of dollars have emerged worldwide, while venture capital and strategic investors are constantly on the lookout for the next big thing. 36Kr Global is committed to establishing ties between global stakeholders and providing the most vital information about China’s tech scene and capital markets.

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