As the saga of banning TikTok in the US has drawn to an apparent close, we reflect on the economic and security-based interests at play. Given these layered motivations, we don’t expect similar divestments of the app are likely to emerge elsewhere in the same way vendor restrictions did in telecoms markets.
As a TikTok ban in the US has been avoided via partial divestment, the saga adds to a complicated history of how the US has approached competitiveness in communications markets. The ownership of the app reflects a familiar anxiety around foreign influence in the tech and telecoms sectors.
The partial divestiture may not address the national security concerns that motivated the law. ByteDance’s remaining ownership stake as well as the importance of US control of the algorithm over national security concerns may well inspire future legal challenges.
The US only stood to gain economically from the most plausible outcomes of the Protecting Americans from Foreign Adversary Controlled Applications Act. Just as the US has combined its economic and security interests, China could still complicate the TikTok deal by conflating licensing of its algorithm with trade negotiations.
The US has commonly enforced restrictions on foreign firms in communications markets, including in the construction of 5G networks and subsea cables. In the past, the adoption of similar restrictions by allied nations amplified their impact.
Similar mandated divestitures of TikTok are unlikely to be exported as was the case with restrictions on foreign firms in communications markets. Concerns with competition in social media markets and less trust in the US Government as an ally in tech policy make such a move less attractive to Australia, the EU, the UK and other allies.
The US’ TikTok law reflects a familiar and growing anxiety around foreign influence in the tech sector
As of 19 January 2025, it became illegal to host or support the operations of TikTok in the US, a prohibition that was originally envisioned as an effective ban on the app for US users. Following the passage of the Protecting Americans from Foreign Adversary Controlled Applications Act in April 2024, the Chinese-backed firm ByteDance was given 270 days to divest from the platform’s US subsidiary. App stores, including those operated by Google and Apple, as well as TikTok’s cloud computing provider Oracle, could have faced significant fines for continuing to support the functioning of the app. Despite this clear directive passed by Congress and a unanimous decision from the Supreme Court to uphold that directive, the app has seen a drawn-out negotiation that has resulted in what would generously be described as only partial adherence by the US Government (see Figure 1). After issuing a series of possibly unlawful delays to the implementation of the law, President Trump triumphantly announced a deal in September 2025 for limited divestiture by ByteDance that will see a majority ownership stake be shared by US investors and allies of the President, including Larry Ellison (Executive Chairman, Oracle), Michael Dell (CEO, Dell Technologies) and Rupert Murdoch (Founder, News Corp).
From early discussions of banning the app during the first Trump Administration to now, the push to deny TikTok and ByteDance unrestricted access to the US market reflects a consistent and predictable fear of foreign influence and dependency. Though the future of the app in the country devolved into a domestic and highly politicised debate, the original sentiment behind the effort – a concern for the degree of influence a Chinese firm has over a major US communications channel – is familiar in the history of US tech and telecoms regulation. This saga offers another tangible example of how competitiveness functions in these critical sectors, even as a byproduct of national security debates. In addition to restricting competition from a foreign firm, the agreed partial divestment, based on a remarkably low valuation of TikTok at $14bn (£10.4bn), enforces a firesale of a high value asset to US investors. Specific to the tech and telecoms sectors, this positioning also reasserts the unique priority the US Government has consistently placed on domestic control of communications channels of all shapes and sizes, even as it works to export its own tech and telecoms technologies as a tool in leveraging influence abroad.
The stated motivations for banning TikTok did not always match the impacts of possible outcomes under the law
Despite the often repeated refrain of TikTok posing a national security threat to the US, the debate over the possible outcomes of the Protecting Americans from Foreign Adversary Controlled Applications Act as well as the final agreement on partial divestiture have revealed a disconnect between stated motivations and the possible impacts of the law (see Table 1). Among the four plausible resolutions to the Government’s ultimatum to ByteDance, some of the identified risks, including the President’s authority to conclude the deal proposed, remain unsettled.
Though the motivation for the ban and the legal rationale underlying the court decision upholding it have been based on national security justifications, not all plausible paths forward would’ve alleviated those concerns. The potential for undue interference from China through the app appeared two-fold: US user data collected by TikTok could be accessed by the Chinese Government; and the algorithm held by ByteDance that powers TikTok could promote content that serves the interests of the Chinese Government. Notably, the evidence supporting these threats has remained classified in the US, though TikTok has previously admitted to improperly accessing user data from reporters it believed were receiving leaked information from its employees. In both of these threat scenarios, access to and control of the algorithm that powers the app is crucial. Nonetheless, it’s unclear under the terms of the deal announced by the US Government as to whether control of the algorithm will be fully severed from ByteDance.
A US-based joint venture, led by Oracle, is expected to take over operational control of a licensed version of the technology that it will retrain exclusively on US user data which is already housed domestically by Oracle. However, ownership of the source code will remain with ByteDance, along with the power to update the software. Oracle will be responsible for auditing that code, a task it previously stated would take a minimum of three years to complete, and making amendments within the licensed version. Any significant changes made to the recommendation system run the risk of altering the app’s infamously responsive “infinite scroll” user experience and undermining the investment made by Oracle and others. The US joint venture will both be required to work within the confines of the algorithm licensing agreement and will be disincentivised from making sweeping changes to the source code to avoid devaluing the US version of the app. Additionally and while a distant possibility, the deal to license the algorithm has also not been formally approved by the Chinese Government, which previously ruled the algorithm to be a controlled export subject to regulatory approval. As trade negotiations remain ongoing between the US and China, that regulatory approval will be a closely watched process capable of unwinding the deal entirely.
Banning or requiring divestiture from TikTok is inextricably linked to US economic interests
Given the classified nature of the national security concerns discussed in relation to the TikTok law, we do not see our place in attempting to evaluate the legitimacy of these claims. In fact, other recent but less prominent prohibitions on the use of foreign-owned technologies due to security concerns, such as Russian-owned Kaspersky cybersecurity software, has built a precedent for the US Government acting swiftly on cybersecurity threats aimed at consumers. Instead, noting the possibility that some degree of security threat will remain under the terms of the partial divestiture, we find value in discussing the other impacts or even secondary motivations of restricting foreign access to communications markets. In the case of TikTok, it is not possible to ignore the economic gains for the US of almost any outcome of passing the Protecting Americans from Foreign Adversary Controlled Applications Act.
Even without a full ban resulting in US social media firms taking over TikTok’s market share or a complete divestiture of Chinese interests from the app, the Trump Administration will still deliver on a different form of a national security objective linked to a more ill-defined measure of economic strength. Given the increasing emphasis globally on economic competitiveness as a matter of security, the ability to capture a fraction of the value of TikTok’s growth for US investors can easily be understood as a success for US security, in part because of the detriment it will pay to ByteDance as a Chinese competitor. As the Chinese Government has repeatedly expressed, the US is leveraging the policy tools of national security, characterised by a wide latitude for executive decisionmaking, for economic gain in the fierce, zero-sum race for technological leadership currently underway. This impulse – to overlay economic policy with the image of national security – is well-supported by the emerging links between negotiations over the fate of TikTok and negotiations over tariff and trade policy with the Chinese Government. As ByteDance continues to await approval for its part in the deal, the Chinese Government could very well reverse the course of this pressure and determine that any deal to license TikTok’s algorithm undermines Chinese security. The confluence between security and economy is also well-documented in prior contexts when the US restricted access to communications markets by foreign firms.
Restrictions in the telecoms sector provided previously similar dual benefits in national security and economic gain
Throughout US history, restrictions on foreign ownership of and involvement in communications infrastructure have been common (see Table 2). Only in the case of broadcast media has the Government instituted a horizontal prohibition of significant foreign investment from any other country. Given the nature of spectrum as a scarce resource, the US justifies these restrictions as prioritising domestic firms’ access.
Much more commonly and with greater intensity in recent years, restrictions have been targeted to limit the influence of countries deemed adversaries, as in the Clean Network initiative introduced in 2020. Like the effort to force divestiture from TikTok, these restrictions also served both security and economic interests of the US Government. As in the case of limiting the use of HMN Tech components in US-backed subsea cable projects, a US-based firm as well as firms from allied nations – SubCom along with ASN of France and NEC of Japan – stood to benefit in capturing additional market share that was forcibly forfeited by the Chinese cable supply firm. When the US has moved to encourage restrictions on foreign firms in like-minded nations, as it did aggressively with restrictions on the use of Huawei and ZTE network components in 5G networks, that benefit to favoured suppliers, such as Ericsson and Nokia, has been multiplied. These vendor restrictions have been linked to lost domestic economic value due to slowed network development and related uptake of advanced technologies. However, that lost value can be measured against not only the benefit to the favoured firms who capture lost market share but also the intangible gain of stronger alliance with (if not dependence of) other allied nations who adopt similar restrictions.
The US will face a less receptive audience if it attempts to export TikTok divestment
Despite the US’ recent success in encouraging other countries to adopt vendor restrictions in communications infrastructure, the likelihood of extending similar divestitures of TikTok to allied nations is slimmer. Given President Trump’s own reversal of opinion on whether to ban the app, possibly in part due to his own campaign and administration’s use of the app, it is first unclear whether the US Government would commit resources to attempting to export its thinking to other countries. In other jurisdictions, the idea that TikTok poses a significant security threat is also immediately challenged by the existence of more stringent data protection rules that limit that information the app can collect from users, unlike in the US. Particularly among the US’ traditional allies, anxiety has also risen around the concentration of market power by US tech firms, and the forcible exit of TikTok from their markets is only likely to exacerbate that concern.
The restrictions introduced in Canada in November 2024 present a middle path between the US’ drastic action and allowing the service to function uninterrupted. Following a national security review of ByteDance under the Investment Canada Act, the Government issued an order to TikTok to cease corporate operations within the country, though the app will remain accessible to consumers. While the Government stated that it found sufficient evidence of activities harmful to Canadian national security to justify its order, it also maintained that consumers should be able to make an informed choice on continuing to use the app based on the risks identified in the review. While more moderate in protecting the rights of consumers to choose digital services as they see fit, Canada’s actions nonetheless fail to address the primary objectives of the US’ restrictions by comparison. By expelling TikTok’s corporate staff, the Government does not immediately appear to better protect the data of users in Canada nor limit the potential for the app’s algorithm to promote content that serves the interests of the Chinese Government.
Outside of North America, other governments are likely to be (rightfully) troubled by the tenuous connection between the security claims that motivated the US to consider banning the app and the economically motivated negotiations that led to partial divestiture. The link between maintaining access to TikTok for American users and negotiating trade terms beneficial to the US economy strains the case that banning TikTok would similarly serve British, European, Australian or other allied interests. According to our benchmark with our Cybersecurity Tracker, at least 18 other governments have already banned access to the app on state-owned devices for government employees, the bar to clear in order to force the app’s exit from the market or attempt to negotiate a divestiture of the app’s local operations appears much higher. As the good faith of the US Government is increasingly questioned in debates around global tech regulation, the willingness of other governments to trust the US’ assessment of and course of action on achieving greater security in the digital age will be significantly tested.
