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Report: Trump to Order ByteDance to Divest TikTok

By Eric Volkman – Jul 31, 2020 at 6:36PM

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The speculation comes amid ongoing concerns about security with the video-sharing app.

Could TikTok become a purely American company?

According to a report from Bloomberg citing "people familiar with the matter," President Trump will order ByteDance -- parent of the popular micro-video sharing app -- to divest the company.

On Friday, Trump admitted that his administration is considering some kind of action regarding the app. He told reporters gathered at the White House on Friday: "We are looking at TikTok. We may be banning TikTok. We are looking at a lot of alternatives with respect to TikTok." He had previously spoken of the possibility of a ban in remarks made earlier in July.

A woman recording herself with a smartphone.

Image source: Getty Images.

ByteDance is based in China; TikTok has been criticized for being an insecure app with many security flaws. Some believe these leave its users' data vulnerable to hacking, particularly from bad actors connected with China's government. If it were to be sold to a company based in this country, authorities would likely consider mandating tighter security controls to protect its users.

TikTok has seen a sharp increase in popularity since its late 2016 debut, especially among young users. Earlier this year it passed 800 million monthly active users (MAUs).

It has powerful competitors, however, and more are on the way. Snap's (SNAP -7.28%) Snapchat, for example, has a busy short-video service within its app. Ever on the hunt for more users and deeper engagement, tech sector titan Facebook (META -4.33%) is rolling out its own short-video service, Reels, on Instagram. The new Facebook/Instagram offering is scheduled to launch in August.

While either Snap and Facebook would theoretically benefit from acquiring a top competitor, neither has indicated any interest in obtaining TikTok. That might change if the app were forced onto the market.

 

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Eric Volkman owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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