New TikTok ban is poised to advance in Congress

Key Points
  • A bill to revise legal protections that have shielded TikTok from U.S. sanctions is expected to pass a key House committee on Tuesday, paving the way for a broader ban on the popular short video app.
  • Sponsored by House Foreign Affairs Committee Chairman Mike McCaul, the bill would strip longstanding protections from companies that transfer the "sensitive personal data" of Americans to entites or individuals based in, or controlled by, China.
  • The bill would likely pass the Republican-controlled House easily. Its fate in the Democratic majority Senate is unclear.
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WASHINGTON — The U.S. House Foreign Affairs Committee plans to take up legislation Tuesday that would give President Joe Biden the authority to ban TikTok, the Chinese social media app used by more than 100 million Americans.

The panel is scheduled to vote on a series of China-related bills Tuesday afternoon, including one that would revise the longstanding protections that have shielded distributors of foreign creative content like TikTok from U.S. sanctions for decades. Introduced last Friday, H.R. 1153 is expected to pass the committee on Tuesday.

The bill that could ultimately ensnare TikTok, owned by China's ByteDance, only has one sponsor, the committee's newly seated Republican chairman, Texas Rep. Mike McCaul.

Typically, a bill this new, with only one sponsor, would not move to committee votes just days after it was introduced. But the choice of which bills will advance through a committee is made by each committee's chairman, so McCaul's sponsorship is effectively all the bill needs.

If the measure is approved by a majority of the committee members and referred to the full House for a vote, as expected, H.R. 1153 will effectively leap frog several other proposals to ban TikTok that were previously introduced in the House and Senate, but haven't yet advanced through the committee process.

After that, McCaul's bill would likely pass the Republican-controlled House easily. But its fate in the Democratic majority Senate is unclear.

Despite the bitter divisions between the two parties on nearly every major issue, there is one thing both Democrats and Republicans overwhelmingly support: proactive measures to stem China's growing global influence. And H.R. 1153 could do that.

In practical terms, the bill would revise a group of rules known as the Berman amendments that were first enacted near the end of the Cold War, intended to shield "informational materials" like books and magazines from sanctions-related import and export bans.

Over time, however, the Berman amendments were expanded into a broad rule that courts interpreted as prohibiting the government from using sanctions powers to block trade in any informational materials, including digital content, to or from a foreign country.

In 2020, TikTok argued successfully in court that it was covered by the Berman amendments exemption when it beat back attempts by the Trump administration to ban its distribution by Apple and Google app stores.

McCaul told CNBC his bill would change this. "Currently the courts have questioned the administration's authority to sanction TikTok. My bill empowers the administration to ban TikTok or any software applications that threaten U.S. national security," McCaul said in a statement Monday.

Under McCaul's bill, the Berman amendments exemptions that have protected TikTok in the past would no longer apply to companies that engage in the transfer of the "sensitive personal data" of Americans to entities or individuals based in, or controlled by, China.

On first reading, McCaul's legislation appears to be broader than some of the other TikTok bills that have been introduced so far.

Critics and TikTok lobbyists have argued that those prior bills amounted to punishing the company for a crime outside the legal system. They also argue that any ban is tantamount to censorship of content protected by the First Amendment.

"It would be unfortunate if the House Foreign Affairs Committee were to censor millions of Americans," TikTok spokeswoman Brooke Oberwetter told CNBC in an email Monday.

TikTok is no stranger to rough political waters, having been in the crosshairs of U.S. lawmakers since former President Donald Trump declared his intention to ban the app by executive action in 2020.

At the time, ByteDance was looking to potentially spin off TikTok to keep the app from being shut down.

In September 2020, Trump said he would approve an arrangement for TikTok to work with Oracle on a cloud deal and Walmart on a commercial partnership to keep it alive.

Those deals never materialized, however, and two months later Trump was defeated by Biden in the 2020 presidential election.

The Biden administration kept up the pressure. While Biden quickly revoked the executive orders banning TikTok, he replaced them with his own, setting out more of a road map for how the government should evaluate the risks of an app connected to foreign adversaries.

TikTok has continued to engage with the Committee on Foreign Investment in the U.S., which is under the Treasury Department. CFIUS, which evaluates risks associated with foreign investment deals, is scrutinizing ByteDance's purchase of Musical.ly, which was announced in 2017.

The CFIUS review has reportedly stalled, but TikTok spokeswoman Oberwetter said the company still favors the deal.

"The swiftest and most thorough way to address national security concerns is for CFIUS to adopt the proposed agreement that we worked with them on for nearly two years," she told CNBC on Monday.

In the meantime, government officials from the FBI and the Department of Justice have publicly warned about the dangers of using the app, and many states have imposed bans of their own.

On Monday, the Biden administration released new implementation rules for a TikTok ban that applies only to federal government-owned devices, which was passed by Congress in December.

Earlier this month, Sens. Richard Blumenthal, D-Conn., chair of the Senate Judiciary subcommittee on privacy, and Jerry Moran, R-Kan., a member of the Senate Select Committee on Intelligence, said in a letter that CFIUS should "swiftly conclude its investigation and impose strict structural restrictions between TikTok's American operations and its Chinese parent company, ByteDance, including potentially separating the companies."

But while the executive branch scrutinizes TikTok through CFIUS, McCaul and the GOP-controlled House are not waiting around for them to act.

"TikTok is a security threat. It allows the CCP [Chinese Communist Party] to manipulate and monitor its users while it gobbles up Americans' data to be used for their malign activities," McCaul told CNBC.

If TikTok-related legislation looks like it's moving swiftly through Congress, that could spook investors, and work to the benefit of some of the company's biggest competitors.

TikTok has been taking market share from Facebook, Instagram and Google's YouTube, which have all seen advertising slow dramatically over the past year.

According to Insider Intelligence, TikTok controls 2.3% of the worldwide digital ad market, putting it behind only Google (including YouTube), Facebook (including Instagram), Amazon and Alibaba.

— CNBC's Ari Levy contributed to this story from San Francisco.