Perhaps one of the biggest news stories in the technology industry in the past year was the uncertain fate of TikTok, a music-video app that was developed by the Chinese company, ByteDance Ltd. By July 2020, TikTok had roughly 800 million users globally. At the time, U.S. users alone were responsible for more than 165 million installs. In today’s geopolitical atmosphere, where the U.S. is increasingly wary of China’s growing technological prowess and influence, TikTok’s Chinese origin and its popularity made it an easy target for the former U.S. President, Donald Trump.
On August 6, 2020, Trump issued an executive order, prohibiting the use of TikTok in the U.S. after September 20, 2020. The order stated that TikTok collects sensitive personal data from Americans that could be used by the Chinese government and thus poses significant security threats to the U.S. On August 14, Trump issued another executive order, demanding that ByteDance “divest all interests and rights” in TikTok’s American operations. Trump’s executive orders spurred a slew of American technology companies to purchase TikTok’s operations in the U.S.
The fight over TikTok’s ownership raises at least two legal concerns for Canada to consider. First, the issue of the state’s regulatory power and interventions by the government due to national security concerns is noteworthy. As two MIT researchers point out, internet-connected products that collect personal data across borders are ubiquitous. Invoking national security concerns as the main reason for banning trans-border products could quickly escalate into a cyber trade war, which would not be in any country’s (or company’s) interest.
Due process is also a concern in this case. On August 24, 2020—soon after Trump’s executive order for divestiture—TikTok filed a lawsuit against the Trump administration, claiming that its executive orders are unconstitutional. Notwithstanding its legal merits, the lawsuit alerts us to the necessity of scrutinizing a government’s regulatory discretion. On February 10, 2021, the Biden administration reversed its predecessor’s decision on TikTok. Although the Biden administration did not completely call off political pressures on TikTok when it removed the immediate divestiture order imposed by the Trump administration, it gave the company some breathing room.
TikTok’s lawsuit against the Trump administration brings forth an important question about the regulatory relationship between the government and technology companies. Should a government be allowed to unilaterally evict a company out of its market without due process? Should Canada follow the model set by the former U.S. administration or embrace a different regulatory scheme?
The second important issue in this story is the rights of TikTok users. For many, TikTok has become more than a lighthearted means of entertainment. The platform has provided income for many users. India, a geopolitical rival of China, where TikTok also happened to be wildly popular, banned the app on June 29, 2020. On March 11, 2021, Pakistan banned TikTok for the second time on the grounds that it is "detrimental to the youth" of Pakistan. These bans bring forth concerns about freedom of speech infringements. India’s ban has also cost many Indian citizens, whose self-made videos attracted tens of thousands of views, significant income. The question is, should governments be held liable for losses of income resulting from their banning of a popular app such as TikTok?
Canada may have to confront similar questions, especially regarding technological products made by Chinese companies. It is not too early to start identifying the best legal tools to regulate Canada’s technology market, which is already inextricably linked with foreign technology companies.
Written by Jingcai Ying, IPilogue Contributing Writer and J.D. student at Osgoode Hall Law School (Class of 2023).