TikTok’s Fight to Remain in the U.S.

2020 has been a tumultuous year for popular short-form video platform TikTok. While they’ve surpassed 100 million monthly annual users as of August (up from 40 million MAUs in October 2019 and 11 million in January 2018), they’ve also faced a series of legal troubles. The issue in the forefront is the executive order in response to their perceived threat by U.S. officials to national security, although there was also a massive patent-infringement lawsuit filed in July 2020 by Triller who claimed TikTok infringed on their patent for creating music videos synchronized with an audio track. 

President Trump issued the executive order banning the app from the U.S. set to take place September 28th, which would have made it unavailable on Apple and Google’s app stores if it wasn’t halted by federal judge Carl Nichols at the last minute, who felt that the president was exceeding his authority. The order was issued on the grounds that ByteDance might be feeding the data it was collecting from U.S. users through the app’s facial recognition technology to the Chinese government.

While the ban was delayed for the time being, the executive order still mandates that TikTok’s company ByteDance must negotiate a sale of TikTok’s U.S. business to Oracle and Walmart by November 12th, the completion of which would form TikTok Global. The idea is that it would create over 25,000 jobs in the U.S. and the data of the app’s U.S. users would be stored in Oracle’s cloud servers instead of ByteDance’s servers. Oracle and Walmart are on board and the president has given his “blessing,” but Chinese regulators have not yet approved the deal and there are complications due to Chinese restrictions that bar the export of TikTok’s signature AI technologies. It’s unclear whether these issues will be resolved and the deal approved by the November 12th deadline. 

TikTok has taken several steps to make it harder for the U.S. to justify banning the app from the country, one of which is an ongoing hiring spree. This past summer, TikTok ramped up its hiring of U.S. employees to accommodate its exponential growth, but also to make it more difficult for the U.S. to ban the app as it would put thousands of Americans out of work. In a display of confidence, despite the immediate threat of being banned, TikTok plans to hire 10,000 U.S. employees in addition to the current 1,500 or so over the next three years. 

An abundance of workers are being hired in the trust-and-safety team to help defend the company’s reputation against accusations of reporting data collected on its users to the Chinese government. The website tiktokus.info was launched to rebut claims about its privacy record.

The Creator Fund was created in conjunction with TikTok’s recent hiring spree, which is allocating $200 million to ambitious U.S. creators “who are seeking opportunities to foster a livelihood through their innovative content,” according to TikTok’s website, further entrenching themselves in the U.S. economy. However, there is an application process and only a small percentage of creators qualify as beneficiaries thus far. While it’s a step in the right direction to establish a new stream of financial viability to content creators, it only pays about $0.02-$0.04 per 1,000 streams, which is significantly lower than the average royalty rates paid to artists on the major digital music streaming platforms. TikTok predicts the fund will increase to $1 billion for U.S. users in the next three years, which may be more widely distributed to a larger pool of its users, but it’s hard to tell right now with the rapid growth of the company and its uncertain future in the U.S.

Immediately following the halting of the executive order to ban the app from the U.S., TikTok launched a U.S. elections guide on its platform in collaboration with BallotReady to help inform and provide resources to young voters, especially those who are disabled, overseas, students, or have a criminal record. In light of the other measures being taken to ensure the app remains and thrives in the U.S., it’s likely this is another move to stay in the public’s good graces, albeit a seemingly well-intentioned act. 

While it’s unclear whether TikTok will be able to remain in the U.S. in the long term given the myriad of issues that must be resolved both regarding the TikTok Global deal and other legal troubles, the company is doing everything in its power to bolster its chances of calling the U.S. its second home.