Lawyers Explain Controversy Over Anti-TikTok Bill

The logo of the social media video-sharing app TikTok is seen during the launch of TikTok and Indonesia's leading e-commerce site Tokopedia's Buy Local Campaign in Jakarta, on Dec. 12, 2023. Yasuyoshi Chiba/AFP via Getty Images

A debate has raged over a bill that would ban the social media app TikTok unless it strips its links to China. There appears to be a broad consensus that the app is a national security risk, exposing users to risk of nefarious influence and personal data exfiltration by the communist regime in China. Many argue, however, that the bill would unduly expand the power of the federal government to control speech.

Many of the arguments and counterarguments are faulty, but there are real points of controversy regarding the bill, several lawyers told The Epoch Times.

The bill, as passed by the House of Representatives, would make it illegal—under threat of massive fines—to allow the operation in the United States of major social media apps or websites directed or substantially owned by entities based in adversarial nations, specifically China, Russia, Iran, and North Korea.

The bill singles out TikTok and its parent company, Bytedance, but also opens an avenue to expand it to other social media companies with such foreign links.

Because Bytedance is based in China, it’s subject to the dictates of the Chinese Communist Party (CCP). Moreover, a Chinese state-run company owns a stake in a key Bytedance unit. The stake allows the investor to appoint one of the unit’s board members.

Media investigations have found that U.S. TikTok users are pushed by the app’s algorithms to different, less wholesome content than users of the app’s Chinese version. Also, U.S. user data has likely been accessible by the company’s Chinese staff despite TikTok’s assurances to the contrary, The Wall Street Journal reported.

The app has been criticized for fostering addiction and overall being psychologically harmful.

The Trump administration declared TikTok a national security threat.

The House bill, H.R. 7521, gives TikTok the option to divest of the China-linked entities or face being blocked in the United States.

The bill is tailored narrowly to address the issue of social media serving as tools of influence and surveillance by specific foreign adversaries, according to Hans Mahncke, a lawyer and co-host of Epoch TV show “Truth Over News.”

He acknowledged, however, that there are vague points in the bill that could be abused.

‘Direction or Control’

Much of the controversy surrounding the bill focuses on the point of who could be considered “controlled by a foreign adversary.”

The bill says these are people or companies with home addresses in the adversary nations, principally doing business in such countries, or being organized under the laws of such countries.

It further says that if such people or companies own at least 20 percent of another company then such a company would also be “controlled by a foreign adversary.”

It goes a step further though, saying that persons “subject to the direction or control” of any of the previously described people or companies would also qualify.

The last part represents the crux of the controversy, according to Mr. Mahncke. The obvious purpose would be to prevent companies from dodging the law through straw ownership. But the bill lacks clarity on what would qualify as “direction or control,” he acknowledged.

The phrase “direction or control” is used in business and tax law to describe who has the power to give orders. An employer would have the right to give directions to and exercise control over an employee, but a contractor may retain those rights. It also sometimes refers to the power to make voting and investment decisions over stocks.

But the same phrase is also used in counterintelligence law, specifically Section 951, which prohibits acting “subject to the direction or control of a foreign government or official” without notifying the government first.

In the counterintelligence context, the Department of Justice (DOJ) has interpreted direction or control more broadly, arguing that even acting upon an informal request of a foreign official suffices.

That raises the concern that the government may adopt a similarly expansive reading of the TikTok bill, according to a career attorney who has gained popularity for legal analysis through his anonymous X, formerly Twitter, account “KingMakerFT.”

Since direction or control under Section 951 could be proved circumstantially, the government may argue that synchronicity with some objectives of, say, Russian President Vladimir Putin, creates grounds enough for investigation, he suggested.

“Nothing in this law limits the definition of control to the tax law definition. I could see some administration taking the position that a social media company is indirectly under Putin’s control insofar they are allowing Russia to interfere in an election. They may not succeed in a civil suit under that theory, but an investigation could create a lot of havoc,” he told The Epoch Times, which agreed to not divulge his real name.

Mr. Mahncke noted that the requisite direction or control would still need to pertain “to running the offending company.”

Hypothetically, if Elon Musk were to get directions from China regarding his Tesla business, that wouldn’t count. He would need to get directions regarding his social media platform X to be potentially forced to sell it.

Mr. Mahncke agreed, however, that the direction or control language “is something that could be made more clear.”

Legal Transactions

Section 951 includes an exception for “any person engaged in a legal commercial transaction.” Doing some above-board work for the Russian embassy, for example, doesn’t require one to register as a foreign agent. The TikTok bill, on the other hand, includes no such exception.

It’s not clear whether the law would apply if a social media company entered into a contract to perform some work, however innocuous, for a company from an adversarial nation. It might apply, KingMakerFT said.

“Under this statute, you don’t even need a contract for [establishing] direction.”

Reaching 20 Percent

The TikTok bill doesn’t require foreign owners to be somehow linked to the adversarial regimes—only that they have their home address in the enumerated countries. Also, the 20 percent foreign ownership threshold applies to the combined ownership by all such foreign investors, regardless of whether they are connected to each other or even hail from the same adversarial countries. That potentially opens a window to foul play, KingMakerFT acknowledged.

If an administration, for example, wants to transfer ownership of a social media platform, it could pool together all the existing Russian and Chinese investors in the social media company stock. If the total falls short of the requisite 20 percent, it could find a way to have Chinese and Russian nationals buy the stock, pushing foreign ownership over the threshold.

Hurdles

Mr. Mahncke noted that the law imposes additional hurdles before it could be applied to companies other than TikTok. First, the president would need to send a public notice and a public report to Congress proposing to designate a certain app as foreign adversary-controlled and explaining “the specific national security concern involved.”

Then, it would need to wait 30 days.

Then the adversary-controlled company would get 180 days to shed the foreign ownership or sell the app before the fines would kick in.

Yet the requirement to articulate a national security threat may not be particularly constraining. The Biden administration has subsumed a broad range of topics in its national security strategy, including fighting climate change, “addressing the crisis of disinformation and misinformation, often channeled through social and other media platforms,” and “working with governments, civil society, independent media, and the private sector to prevent credible information from being crowded out, exposing disinformation campaigns, and strengthening the integrity of the media environment.”

The bill also leaves it up to the president to decide “through an interagency process” whether the potential new owner of the app would ensure sufficient distance from foreign adversary control. That would give the administration significant control over who the buyers would be, both KingMakerFT and Mr. Mahncke agreed.

The fundamental issue with the bill, Mr. Mahncke said, is its inability to solve the underlying problem—a company with no perceptible foreign ties could engage in the same behavior TikTok has been criticized for.

“This is a band aid measure,” he said.