TikTok developer and owner ByteDance has agreed to completely pull out of owning any percentage of TikTok in the United States and will sell the division to Microsoft.
Reuters reports that the move is being made in response to President Donald Trump’s promise on Friday to issue an executive order banning the popular short-form social video app.
There has been long-standing concern over national security and privacy issues posed by the TikTok app, due to ByteDance's ties to the Chinese Communist Party and Chinese laws that require the company's data to be fully accessible by the Chinese government.
TikTok has been compared to spyware by a Reddit hacker named bangorlol who reverse engineered the program, who described it as a "data collection service that is thinly-veiled as a social network."
In short, here's what it collects:
- Phone hardware information, including CPU type, screen dimensions, memory usage, and hardware IDs
- Other installed apps
- Network information (IP address, MAC address, WiFi access point name, and router MAC address)
- Jailbreak information, if applicable
- GPS pinging (if you’ve ever location-tagged a post)
- Local proxy server set-up with no authentication
Reddit CEO Steve Huffman described the app as "fundamentally parasitic," comments that are only now resonating with the general public.
The US government has since issued a ban on the app from being installed on government devices, including active service members of the military.
Gaming legend and Twitch streamer Tyler "Ninja" Blevins also advised his audience to delete the app following concerns over the Chinese government's involvement in data collection through the app.
I have deleted the TIK TOK app off all my devices. Hopefully a less intrusive company (data farming) that isn’t owned by China can recreate the concept legally, such funny and amazing content on the app from influencers.
— Ninja (@Ninja) July 9, 2020
Under the terms of the current deal, the US app will wind up in the hands of Microsoft. Other current ByteDance investors would be allowed to invest in the app, depending on their specific circumstances.
ByteDance was valued at as much as $140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal. The startup’s investors also include Japan’s SoftBank Group Corp.
The White House has not made any official pronouncements as of yet on this proposed deal.
Microsoft, under these new proposed terms, would be solely responsible for processing and storing sensitive data generated by the app, thus divesting ByteDance and its operations in China from any further involvement. The brokers of the deal are also willing to substitute another qualified US entity for Microsoft if necessary.
This is not the first time the US government has ordered a company with a foreign-owned app to divest for reasons of national security. Grindr, an app popular in gay communities all over the world, was also ordered to do so last year admit similar concerns regarding personal data and privacy.
Also, the purchase of the money transfer company MoneyGram International by a Chinese financial consortium was blocked in 2018 due to the same concerns.
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