Explained: TikTok Ownership Controversy And Calls For Its Ban In US

Popular video sharing platform TikTok is facing a potential ban in the United States after the House of Representatives passed a bill last week. The move, initiated by US politicians, wants TikTok parent ByteDance to sell its US operations to American owners. But it has sparked a heated debate about data privacy, political misinformation and the power dynamics between the US and China. The legislative move is being led by Steve Mnuchin, who was the Treasure Secretary under the Trump administration, and a group of his influential political associates.

Here's everything to know about the TikTok ownership controversy:

Why US politicians want TikTok banned?

The popularity of TikTok makes it a prime target over data privacy concerns and spread of political misinformation in the election year, especially due to its Beijing-based owner ByteDance.

Some US politicians are concerned that China could access American users' data so they want the ownership to lie within the country.

President Joe Biden has said he would sign the legislation into law if it passes Congress.

ByteDance has repeatedly said that it has never shared data of US users with the Chinese authorities, but American lawmakers are not convinced. They have, however, not presented any evidence of TikTok's alleged national security risks.

Is TikTok really Chinese?

A CNN report said that TikTok has never operated in mainland China. Its Singaporean CEO, Shou Chew, has repeatedly told this to American officials during questioning.

Citing US court documents, the outlet said that TikTok was first incorporated in California in April 2015. The app never existed in China, and was pulled out of Hong Kong in July 2020 when Beijing imposed a national security law.

In China, a different version of short video app called Douyin exists, which was launched in 2016 - a year before the company launched the international version of that app called TikTok.

But ByteDance's ownership through a complex multi-layered corporate structure raises many questions about TikTok. Though Mr Chew maintained that TikTok never operated in China during his questioning in March 2023, he didn't answer the ownership question directly.

The app is owned by TikTok LLC incorporated in Delaware and based in Culver City, California. It is controlled by TikTok Limited, which is registered in the Cayman Islands and based in Shanghai. That firm is ultimately owned by ByteDance Ltd, also incorporated in the Cayman Islands and based in Beijing.

What is ByteDance?

The company was founded in Beijing in 2012. According to Washington Post, its founder, Zhang Yiming, was a software engineer turned entrepreneur whose vision was to use big data and machine learning to analyse and curate content according to user preferences.

ByteDance is sometimes called the "app factory" due to the number of digital products it has created in recent years. One of the popular ones is AI-powered news aggregator Jinri Toutiao, largely used in China.

ByteDance has been based in Beijing since its formation. It has more than 110,000 employees globally and is valued at $268 billion. A release issued last May by TikTok stated that about 60 per cent of ByteDance "is beneficially owned by global institutional investors such as Carlyle Group, General Atlantic, and Susquehanna International Group," with about 20 per cent owned by "ByteDance employees around the world" and the rest owned by its founder.