TikTok is a week away from its ultimatum in the US: according to an executive order by President Donald Trump, if by September 15 the company doesn't complete a sale of its US business, the short video app face being totally banned in the country.
ByteDance, the Chinese company that owns TikTok, is reportedly in talks with numerous major US corporations including Microsoft, Walmart, Oracle, Netflix, to name a few, as well as its own investors such as General Atlantic and Sequoia Capital, and is contemplating their takeover plans. TikTok and ByteDance also filed a lawsuit against the US government late last month arguing the aforementioned executive order was unconstitutional by depriving the company of due process, something that only one Chinese company has done in the past against the US government and succeeded.
As of morning September 14, Beijing time, the latest update is that Microsoft has dropped out of the bidding after being notified by ByteDance that its plan will not be picked. This leaves Oracle as the most likely winning bidder in the end, though neither Oracle and ByteDance confirmed. Notably, Trump seemed to have Oracle's back during the bidding, as Larry Ellison, Oracle's co-founder, is a major Trump donor.
Oracle's deal is likely going to be unconventional, as numerous reports suggest that it is not taking over TikTok, but rather becoming a "trusted tech partner" of TikTok, providing cloud and other tech services to the app. Financially speaking, Oracle might be no more than a stakeholder of the new TikTok after ByteDance divests.
However, any deal is still pending Chinese regulatory approval. China's Ministry of Commerce and Ministry of Science and Technology revised the export control list, restricting the export of the technology behind TikTok's content recommendation algorithm.
The ordeal of TikTok US dates back more than a year ago, when the app began experiencing enhanced scrutiny from the US government and legislative body. Below is a comprehensive timeline of the ban, aggregated from both publicly available information, reports by other media outlets, as well as some of PingWest's own exclusive reports. (Some of the timestamps are in Beijing timezones.)
2019: Dark Cloud Gathers
Early 2019, ByteDance began separating teams of Chinese and overseas products: PingWest reported exclusively in June, 2020 that ByteDance was building internal technical firewalls between teams running its Chinese and overseas products. This effort, which will be explained more in detail later in this timeline, reportedly began in 2019.
February 27: TikTok fined $5.7M for violating COPPA: The US Federal Trade Commissions found after investigations that TikTok violated The Children's Online Privacy Protection Act of 1998, alleging that TikTok illegally collected personal information from children during sign up without parental approval, and fined the company $5.7 million.
This is the largest fine to date that a COPPA violator had agreed to pay, and the first time that TikTok was penalized by a major country's government. TikTok responded by claiming that it would activate a special version of the app when underage users complete signing up, in which users cannot set up their profiles, post videos, comment on others' videos, and message other users, etc.
October 24, US politicians called for investigation: Republican Senator Tom Cotton and Senate Democratic Leader Chuck Schumer wrote a letter to the Office of the Director of National Intelligence, calling for the government to launch an investigation on the possible counterintelligence risks posed by TikTok, based on a prior report by the Guardian that the app is censoring contents relating to Chinese politic turmoil.
The senators note that while ByteDance claimed that TikTok does not operate in China and stores US user datas in the US, the company is still required to adhere to Chinese laws. TikTok responded to the letter claiming that the Chinese government had never requested the company to hand over data.
In 2nd half of 2019, CFIUS first contacted ByteDance: according to TikTok's statements and its complaint filed to the US District Court, Northern District of California, the Committee on Foreign Investment in the United States (CFIUS) first made contact with ByteDance likely in the second half of 2019, with regard to a consideration of whether to review ByteDance's 2017 acquisition of Musical.ly, a short video app for the overseas market headquartered in Shanghai that was one of the predecessors of TikTok.
The complaint mentioned that ByteDance has been trying to maintain dialog with CFIUS since that time, and handed over "voluminous" data and documentation to the US government documenting its security practices, commitments to address privacy and national security concern. However the company alleged that CFIUS largely ignored the facts and commitments, and shut down communications with ByteDance weeks ahead of making its final decision that was unfavorable to TikTok.
November 27, class action lawsuit on user privacy: Misty Hong, a student in California, filed what eventually became a class action lawsuit against TikTok. Hong claimed to have downloaded the app earlier that year, played with it for a bit without making an account, and even created a few draft videos but never uploaded them.
However, she discovered later that year that TikTok had created an account for her with her phone number as the password, a sign that the app illegally collected her private information. The case is still ongoing.
In December, US military banned TikTok: the US Army banned its soldiers and employees from using TikTok. The Navy also barred personnel from installing and using the app on government-issued mobile devices.
December 30, TikTok published record of data requests from governments: the app published its first transparency report, including a tally of data requests and takedown orders it received throughout the year from all levels of governments across the world.
The record shows that India ranked first with 107 data requests, or about 36% of all the requests the company received in 2019. US was in second place with 79 data requests and 6 takedown orders. China was not in the report. The company claimed that all requests and orders received are included in the report.
End of 2019, TikTok contemplates a new global headquarters: TikTok was reported to be considering a global headquarters outside China. Cities that made into the short list included London, Dublin, Singapore, etc. The effort continued into this year and may end up becoming choosing a global headquarters for the entire ByteDance company, with London being the most likely city to host it.
1st Half of 2020: Corporate Restructure and Opening Up
January 23, TikTok looks for a new CEO: Bloomberg reported that ByteDance was looking for a US-based CEO for TikTok for the past couple of months. The candidate was expected to be in charge of TikTok's non-technical functions, including advertising and operations, while Muscial.ly co-founder and former TikTok head Alex Zhu, based out of Shanghai, would hold onto product and engineering.
What ByteDance found eventually was a major professional manager in charge of its global expansion and operation.
In March, CFIUS decided on its intention to investigate TikTok: the company's court complaint indicated that CFIUS told ByteDance in March that it intended to launch an investigation on the company's acquisition of Muscal.ly.
March 12, ByteDance announced major restructure: ByteDance announced its most significant corporate restructure to date in March, with veteran business head Zhang Lidong and Douyin chief Kelly Zhang appointed as ByteDance China's chairman and CEO, respectively.
Founder and ex-CEO Zhang Yiming went on to become ByteDance's Global CEO, a new post the company established to better answer challenges it encounters during its massive worldwide expansion.
May 19, Kevin Mayer Joins ByteDance as TikTok chief: Kevin Mayer, Disney veteran and head of the global entertainment giant's streaming endeavors, announced that he is joining ByteDance as TikTok's Global CEO and ByteDance's Chief Operating Officer.
Later that same month, PingWest reported exclusively that Liu Zhen, a ByteDance SVP originally in charge of the worldwide expansion and made a figurehead with Mayer's hire, left the company.
On May 29, Reuters reported that ByteDance was increasingly moving the decision making and R&D of its overseas products out of China, a change in the original mindset that core product development efforts of products like TikTok, Resso, etc. can be maintained by the parent company in a collective manner.
On June 9, ByteDance's internal technical firewalls made public: PingWest published an exclusive report detailing ByteDance's effort to erect internal data, engineering, and administrative firewalls between its China teams and overseas products.
Those employees currently in China, working on apps and services for the home market, are now largely stripped of access to sensitive data of ByteDance's slew of overseas products that include TikTok. It is extremely rare for multi-national internet companies to region-lock internal code bases and data against their own engineers from one specific country, let alone their home market, with the most notable example being Google, with its Chinese engineers, back in 2009 and 2010.
ByteDance's new policy was a significant move in the direction the company has been on since early 2019, setting up firewalls between its China and overseas operations, so that not only management can be streamlined, but the public's privacy and geopolitical concerns could also be better addressed, and regulatory risks minimized. It is part of the effort ByteDance had been making to make CFIUS and the US government happy.
June 14, PingWest reports on TikTok's content algorithm: ByteDance made public in a 2019 white paper the general theme of how it conducts content moderation across its matrix of Chinese content apps including Toutiao, the news aggregator, and Douyin. The now-deleted white paper didn't make much of a splash until Isabelle Niu, co-founder of Chinese Storytellers and a former senior video journalist at Quartz analyzed it with a Twitter thread on July 9.
It turns out that ByteDance's overseas apps, including TikTok, work in very similar manner, too. A month before Niu's tweets, Guixingren, a division of PingWest's Chinese edition, went in depth into how TikTok's content recommendation and moderation work, including its incremental recommendation system monitored by both automation and human supervisors, the separation of the content moderation teams within the parent company, as well as the localization of overseas moderation, etc.
The Past 2 Months, a Nosedive Into Chaos
On June 15, CFIUS launches official investigation: TikTok's legal complaint against the US government suggested that the CFIUS investigation into ByteDance's acquisition of Musical.ly began on June 15, or three years after the acquisition concluded.
Zhang Yunan, Hong Kong-based reporter for The Information, wrote that a major miscalculation on ByteDance's end, which contributed significantly to its downfall three years later, was that it did not go through the CFIUS procedure about the acquisition based on the notion that it was a Chinese company acquiring another Chinese company.
June 21, Trump rally sabotaged by TikTok teens: A prank to register for Trump rally in Tulsa, Oklahoma in order to inflate the campaign's expectations for the June 21 event went viral on TikTok, with users across the country scooping up tickets with the intention to not show up, resulting in a mediocre attendance.
Trump administration significantly increased its anti-TikTok activity, with close advisors like Larry Kudlow and Peter Navarro, and Secretary Mike Pompeo beginning to more actively attack the short video app publicly.
June 29, India banned TikTok: India's Ministry of Electronics and Information Technology made an unexpected announcement banning 59 mobile apps developed by Chinese companies or companies with Chinese background, including TikTok, on the grounds of protecting the country's cyber sovereignty and national security. This marked the first time that TikTok has been banned indefinitely by a major country.
TikTok told PingWest that it remove its products from local mobile app stores after the MEIT decision and before the ban went into effect. Mayer, the new CEO, said in a post that he was working actively with the Indian government to resolve the issue.
India banned hundreds of additional Chinese apps in separate waves in the following weeks. TikTok is still unavailable in the country to this day.
July 2, TikTok found "snooping" iOS clipboard: with the launch of Apple's beta version of iOS 14, a number of popular mobile apps, including TikTok, Instagram, etc. were found by developers to be copying strings from user's clipboard. Specifically for TikTok, notifications that the app is snooping clipboard content were constantly popping up whenever users are typing within the app.
TikTok responded by saying that the suspicious behavior was actually a part of its anti-spam features that is being deprecated. Experienced iOS developers told PingWest that the behavior was likely due to bad code or integration of third-party SDKs, rather than malicious intent to collect user data.
July 7, Trump mentioned banning TikTok for the first time: during an interview with Gray Television, commenting on an earlier remark by Pompeo that the US is considering banning TikTok, Trump said that banning TikTok "[is] something we're looking at, yes."
"It's a big business. Look, what happened with China with this virus, what they've done to this country and to the entire world is disgraceful," said Trump, adding that banning the app could be "one of many" ways he may consider to punish China.
That same month, the anti-TikTok sentiment in Washington, DC reached an important peak, with the US Congress passing a bill 336 to 71 on July 22, banning federal employees from using TikTok on government-issued devices.
July 22, FT reports a potential sale of TikTok: Financial Times reported that existing ByteDance investors, including General Atlantic and Sequoia Capital, have submitted a motion to the board to purchase TikTok.
The reported price tag was about 50 billion dollars, or about 50 times the app's 2020 revenue estimation. Reports around the time suggested that the plan included having ByteDance as a minority shareholder in TikTok after the deal.
Sometime in July, Microsoft was already in the discussion to buy TikTok: Microsoft made a surprise announcement saying it is resuming talks to acquire TikTok's operations in US, Canada, Australia, and New Zealand, which will be finished by September 15, indicating that it has already been in talks with ByteDance for some time, likely since July.
On the same day of Microsoft's statement, ByteDance's Zhang Yiming sent out an internal email confirming to employees that the company is in talks with "a certain US tech company" to ensure the continued operation of TikTok in US.
CNBC reported that Microsoft's offer was around $30 billion, the authenticity of which number was denied by ByteDance. In August, multiple US companies, including Oracle, Twitter, and Walmart, to name a few, were reported and/or confirmed to have joined the talks.
August 4, Trump asked for a cut from the TikTok deal: Trump told White House reporters that unless Microsoft or other companies acquire TikTok, the app would have to be shut down by September 15.
Trump also said something that sounded like a mafia-like extortion, claiming that "the United States should get a very large percentage of that price, because we're making it possible," adding that "it would come from the sale, which nobody else would be thinking about but me, but that's the way I think, and I think it's very fair."
On the same day, ByteDance's Zhang spoke of US government's true intent: PingWest reported that Zhang sent another internal email on the same day of Trump's bold extortion, this time specifically to the company's Chinese employees, claiming that "what US really wanted was a ban, not a sale":
"Many people got it wrong. The focus was never CFIUS investigating into the national security concern of our acquisition of Musical.ly, hence forcing us to sell TikTok's US operations to an American company", wrote Zhang, adding that while the CFIUS investigation (editor: the decision of which was a forced sale, according to ByteDance's legal complaint) is within the legal framework, "a sale was never the true intent of the US, It is not even what they wanted. Their actual goal is a full ban, maybe even more..."
On August 6, Trump signs ban order: Trump signed two almost identical Executive Orders that day, banning TikTok and Tencent's WeChat in 45 days based on national security concerns.
The exact language used in the orders were focused on banning transactions with the two apps and their corresponding parent companies in 45 days. Another 2019 order cited in the two orders, as well as legal experts' opinions, suggest that the word "transaction" is a broad term that could include users simply using the apps.
August 14, Trump signs another order requiring ByteDance to divest TikTok: Trump signed another presidential document, confirming the decision of the CFIUS investigation against the Musical.ly acquisition, ordering ByteDance to divest TikTok in 90 days.
Specifically, Trump ordered ByteDance to fully divest all TikTok assets, tangible and intangible, located anywhere around the world, essentially eliminating the possibility that ByteDance could still remain any stakes in TikTok after any deal.
It was after this new order that ByteDance finally had enough and announced that it is suing the US government — not for this order, but the August 6 ban order.
In August, back and forth in the negotiation room: quite a lot of news surrounding a potential deal came out in August, none of which was confirmed by ByteDance. The New York Times reported that after weeks of discussion, the 2 most competitive offers were from 1) Microsoft + Walmart; 2) Oracle + other existing investors.
On August 24, ByteDance officially sued the US: TikTok and ByteDance filed its official complaint to the US District Court in Northern California, claiming that the August 6 ban order lacks due process hence violated the Fifth Amendment of the US Constitution.
"By banning TikTok with no notice or opportunity to be heard (whether before or after the fact), the executive order violates the due process protections of the Fifth Amendment," read the complaint.
"To be clear, we far prefer constructive dialogue over litigation. But with the Executive Order threatening to bring a ban on our US operations – eliminating the creation of 10,000 American jobs and irreparably harming the millions of Americans who turn to this app for entertainment, connection, and legitimate livelihoods that are vital especially during the pandemic – we simply have no choice." read TikTok's statement on the lawsuit.
Only one Chinese-backed company sued the US government for being unconstitutional with regard to CFIUS investigations and received a favorable ruling in the past. Ralls, a US affiliate of Chinese heavy equipment giant Sany, sued the Obama administration with the same claims TikTok used, got a favorable ruling in 2014, and reached a settlement with the US government in 2015, with the latter retracting the CFIUS decision that Ralls' acquisitions of wind power projects in the US constituted national security concerns.
August 27: Three days after TikTok sued the US, Kevin Mayer resigned. Mayer, who was immediately put into fire extinguishing mode and barely actually run the company for his exact 100-day tenure, resigned as ByteDance COO and TikTok Global CEO.
Vanessa Pappas, head of TikTok's US operations who reported to Mayer, was appointed TikTok's interim CEO.
PingWest was able to exclusively publish two internal letters on the resignation, from both Mayer and Zhang. In his letter, Mayer admitted that "In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for," signaling that whatever the outcome, a sale or not, is not up to his expectation.
Zhang wrote in his letter that he understood Mayer's tough decision, thanks him for the contribution, and told employees that while he "cannot get into details at this point, but I can assure you that we are developing solutions that will be in the interest of users, creators, partners, and employees," indicating a final decision on the sale is imminent.
The prospect of that decision is swiftly squashed by a revision in China's export control catalogue on August 28.
China's Ministry of Commerce and Ministry of Science and Technology jointly announced a revision of the country's list of technologies that are subject to export bans and restrictions, with "data analytics-based personalized information push service technology", which TikTok relies on heavily, added to the list of export restrictions.
This revision may imply that a future sale of TikTok may depend on Chinese government's approval. A report by China's state-owned mouthpiece Xinhua News literally called on ByteDance to "seriously study" the revision as it directly affects the company, especially the potential TikTok sale.
TikTok replied on the next day that it is handling business related to technology exports in strict compliance with relevant regulations and catalogues. Bloomberg reported citing sources that Zhang Yiming is "reconsidering his options and weighing the implications of Beijing's involvement.
On September 2, Trump mentioned his "cut" again: Trump spoke to reporters, reiterating that any TikTok deal would have to be achieved by September 15, adding that the US government would still need to be compensated.
September 12, Reuters reported that the Chinese government would rather see TikTok US close than a forced sale: Reuters reported citing two sources with direct knowledge of the matter that China may have purposefully issued a revision of its technology export control list to delay ByteDance from selling TikTok.
An additional source also told Reuters that Beijing opposed the forced sale, and would rather see TikTok's US operations gets banned, which gives China more material to work with when attacking the US.
ByteDance, as usual, denied the report by issuing a statement saying China had never suggested to it that it should shut down TikTok in the United States.
September 13, Microsoft dropped out of TikTok bidding: Microsoft released a short statement confirming that ByteDance will not be selling TikTok's US operations to Microsoft.
Some jealousy can be read from the statement, as Microsoft claimed that its plan would have been good for users as well as the US' national security concerns as the company proposed significant changes to ensure security, privacy, online safety, and combatting disinformation. "We look forward to seeing how the service evolves in these important areas," said Microsoft.
Shortly after, The Wall Street Journal reported that Oracle is the winning bidder, though neither it or ByteDance confirmed. Notably, Trump seemed to have Oracle's back during the bidding, as Larry Ellison, Oracle's co-founder, is a major Trump donor.