Economists, business leaders raise questions, voice concerns over U.S. actions against TikTok

Photo taken on Aug. 21, 2020 shows a logo of the video-sharing social networking company TikTok's Los Angeles Office in Culver City, Los Angeles County, the United States. (Xinhua)

"There is absolutely no evidence that TikTok poses a threat to U.S. national security," said a former U.S. Treasury official and now a senior research fellow.

WASHINGTON, Aug. 26 (Xinhua) -- U.S. economists and business leaders have raised questions and voiced concerns over the Trump administration's actions against TikTok, highlighting a lack of evidence for its national security threat allegations and warning of undesirable consequences.

"There is absolutely no evidence that TikTok poses a threat to U.S. national security," Gary Hufbauer, a former U.S. Treasury official and nonresident senior fellow at the Peterson Institute for International Economics, told Xinhua.

"The claim is based on speculation that any mobile device with a Chinese app can be used to spy on Americans," Hufbauer said. "Paranoia pure and simple."

The remarks are in response to President Donald Trump's Aug. 6 executive order banning any U.S. transactions with TikTok's Chinese parent company ByteDance, starting in 45 days. A similar order was issued for WeChat, a messaging and social media app owned by Chinese tech giant Tencent.

TikTok filed on Monday a lawsuit against the Trump administration over its executive order, accusing the U.S. authorities of stripping the rights of the company without presenting any evidence to justify the extreme action, and of issuing the order without any due process as guaranteed by the Fifth Amendment to the U.S. Constitution while banning the company with no notice or opportunity to be heard.

TikTok's U.S. content moderation is led by a U.S.-based team which operates independently from China, and the popular application stores U.S. user data on servers located in the United States and Singapore, the company reiterated.

Members of local social media star "The Trending Gang" dance with fans during a TikTok filming session in Vilnius, Lithuania, Aug. 10, 2020. (Photo by Alfredas Pliadis/Xinhua)

Craig Allen, president of U.S.-China Business Council (USCBC), said that while he supports the administration's goal to protect data privacy and national security, he thinks the U.S. government should "share the evidence" that it has upon which it has based its decision.

"The evidence has been presented in very vague terms without any level of granular reality that would give one comfort that rule of law and due process has been fully given to foreign companies operating in the U.S. market," Allen told reporters at a press conference earlier this month.

"We need to treat Chinese companies in the United States that we wish American companies in China to be treated," added Allen, whose organization represents more than 200 U.S. companies doing business with China.

Trump's Aug. 6 executive order against TikTok and ByteDance draws its legal authority from the International Emergency Economic Powers Act (IEEPA), but past administrations had never used it against a global technology company, according to a report from The New York Times.

In its 39-page indictment acquired by Xinhua, TikTok argued that the executive order is a misuse of the IEEPA, authorizing the prohibition of activities that have not been found to be "an unusual and extraordinary threat" in this case.

According to the Los Angeles-based tech firm, the total number of TikTok's monthly active users in the United States soared to 91,937,040 as of June, and based on quarterly usage, 100 million Americans use the application to express themselves and connect with each other.

Also citing national security risks, Trump issued another executive order on Aug. 14 that will force ByteDance to divest the U.S. operations of TikTok within 90 days. Microsoft Corp, Twitter and Oracle have joined negotiations, according to a report by CNBC.

"The value of TikTok is clearly some combination of the masses of data the company has about users and the algorithms it uses to match content with individual users' tastes. That is why major U.S. firms like Microsoft and Oracle are interested in acquiring TikTok," Geoffrey Garrett, dean of University of Southern California (USC) Marshall School of Business, told Xinhua.

Garrett noted that the Trump administration's claim that Chinese ownership of TikTok is a national security risk seems much harder to sustain than its claim against Huawei, but he expects Trump will force ByteDance to divest, at minimum, the U.S. operations of TikTok.

A woman uses TikTok to create video for girls at the Smile Safari, an Instagram and TikTok museum, in Brussels, Belgium, Aug. 7, 2020. (Xinhua/Zheng Huansong)

"The actions against TikTok and WeChat are to weaken China's role in the global digital economy generally, mainly for geopolitical reasons," Jeffrey Sachs, an economics professor at Columbia University and a senior United Nations advisor, told Xinhua via email.

"Of course there is a link with Trump's white evangelical electoral base, which is anti-foreign in general, and is now strongly anti-Chinese, as exemplified by Pompeo," Sachs said, referring to Secretary of State Mike Pompeo, whose recent anti-China speech has drawn wide criticism.

Echoing Sachs' remarks, Hufbauer said he sees U.S. actions against TikTok as "a political move to rescue Trump's flagging prospects."

Despite the U.S. administration's groundless accusation, Hufbauer said that he is skeptical that TikTok will prevail "because the U.S. courts give wide deference to the president whenever he declares a national security threat or a national emergency."

Allen said he is concerned that the scope of the executive orders against TikTok and WeChat might be broader than intended, and encouraged the administration to "appropriately calibrate the scope" of the orders.

Noting that WeChat is not only a popular messaging app U.S. companies rely on to engage with their customers in the Chinese market, but also a very important payment platform, the USCBC president said there will be "commercial implications" if American companies are not allowed to use WeChat.

The U.S. business leader is also worried about potential consequences of such executive orders. "If we single out individual companies, we should anticipate that other governments will do the same to American companies," Allen said.