Executive Summary: This policy paper explores the potential sale of TikTok’s U.S. operations to Elon Musk amidst growing concerns regarding national security, geopolitical trade, and regulatory scrutiny. The report addresses the challenges TikTok faces in the U.S., the possibility of a deal with Musk, and the broader implications of such a move. It also proposes policy recommendations to mitigate risks while balancing economic and security interests in the digital age. As TikTok’s U.S. operations face increasing scrutiny over their ties to China and the Chinese government’s influence, this paper delves into the policy and geopolitical ramifications, with a focus on strategic solutions to safeguard national interests without stifling technological innovation and global economic interdependence.

Introduction: TikTok, the popular short-video app owned by Chinese tech giant ByteDance, has become a global phenomenon, particularly in the United States. However, in recent years, the app has attracted intense scrutiny from U.S. lawmakers and security agencies over concerns that its data collection practices could be used for espionage by the Chinese government. As national security concerns mount, the possibility of banning or forcing a sale of TikTok’s U.S. operations has become a point of contention. The recent development of China’s consideration of selling TikTok’s U.S. operations to Elon Musk raises significant policy, economic, and geopolitical questions.

Background: TikTok’s rapid rise in popularity has spurred debates on its safety and security. In 2020, former U.S. President Donald Trump issued an executive order attempting to ban TikTok in the U.S. citing national security concerns. While legal challenges stalled the ban, the tension surrounding TikTok remains unresolved. The Biden administration has continued to scrutinize TikTok, and U.S. lawmakers have urged the app’s divestiture from ByteDance.

A crucial factor in the debate is China’s so-called “golden share” in ByteDance. This stake is believed to grant China a certain level of influence over ByteDance’s operations, even though the company has maintained that the Chinese government does not have direct control over TikTok’s international operations. Despite this, the U.S. government continues to express concerns about the potential for Chinese espionage via the app’s data collection practices.

Elon Musk and TikTok: A Potential Deal According to reports, Chinese officials are reportedly considering selling TikTok’s U.S. operations to Elon Musk in the event the app faces a ban in the United States. This development raises a variety of issues:

1. Ownership Implications: Elon Musk’s ownership of both TikTok and X (formerly Twitter) could present new dynamics in the social media landscape. Musk has previously voiced concerns over free speech, which could influence TikTok’s operations in the U.S. However, questions remain about whether Musk’s acquisition could address national security concerns or simply shift the platform’s control to a billionaire with his own set of global interests.
2. China’s Strategic Interests: China’s involvement in the TikTok-U.S. saga is a delicate balancing act. While Beijing would prefer that ByteDance retain control over the app, a forced sale to an American businessman like Musk could be seen as a concession to U.S. demands. The “golden share” complicates the matter, as it indicates Beijing’s potential influence over the app’s operations. A sale to Musk could ease U.S. tensions but may invite retaliation from China, further escalating the already volatile geopolitical situation.

Policy Implications: The potential sale of TikTok’s U.S. operations to Elon Musk would have far-reaching policy and geopolitical implications:

1. National Security and Data Sovereignty: The U.S. government’s primary concern with TikTok centers on its data privacy practices and potential for Chinese state surveillance. Selling TikTok to Musk may alleviate some of these concerns, especially if U.S. regulatory oversight is heightened. However, issues of data sovereignty and transparency would remain key concerns.
2. Economic and Trade Relations with China: TikTok has become a symbol of broader tensions between the U.S. and China in the tech sector. A sale to Musk may temporarily calm the waters, but it could also signal further fragmentation of the global tech ecosystem. The economic implications of such a deal could affect U.S.-China trade negotiations and could be interpreted as a strategic move by China to appease the U.S. without ceding full control over TikTok’s operations.
3. Influence on Global Social Media Landscape: A deal between Musk and TikTok could create a shift in the global social media landscape. Musk’s acquisition of another major social media platform would strengthen his influence over global discourse, raising questions about the monopolistic control of information. Additionally, such a deal could set a precedent for other countries seeking to protect their interests in the digital space.

Implications for Geopolitical Trade: The geopolitical implications of a deal between Musk and TikTok are multifaceted. TikTok is more than just a social media platform; it represents China’s growing digital influence and soft power. A sale to Musk could mark a significant concession by China, potentially leading to further U.S. demands for control over Chinese tech companies operating in the U.S. This could trigger retaliatory measures from China, such as limiting U.S. tech firms’ access to the Chinese market.

Furthermore, such a deal could deepen existing tensions in the global tech race, particularly with regard to the race for dominance in artificial intelligence (AI), data privacy, and 5G technologies. TikTok’s algorithm, which is a key component of its success, could be subject to new regulations or oversight, depending on which country has ultimate control.

Policy Recommendations:

1. Strengthen Data Privacy Regulations: The U.S. should implement stronger, clearer data privacy laws that address not only TikTok but all foreign apps operating on U.S. soil. This would include mandatory transparency reports, independent audits, and clear frameworks on the handling of user data.
2. Promote Multilateral Approaches: The U.S. should work with international allies to develop a global framework for regulating tech platforms owned by foreign entities. This would reduce the risk of protectionist measures and help ensure that data privacy and security are upheld globally.
3. Create a Balanced Solution for Foreign Investment in U.S. Tech: A possible compromise could involve selling TikTok’s U.S. operations to a neutral entity, or structuring a deal where U.S. investors and regulators have more oversight of the company’s operations without undermining the integrity of the platform’s international structure.
4. Clarify China’s Role in Global Tech Oversight: The U.S. should work with China and other global powers to create clearer guidelines on government involvement in the operations of global tech firms, particularly those with significant user data. This would address the underlying concerns without resorting to abrupt, protectionist measures.

Conclusion: The potential sale of TikTok’s U.S. operations to Elon Musk is a complex issue with significant national security, economic, and geopolitical ramifications. While such a sale may alleviate some immediate concerns, it does not resolve the broader issues surrounding data privacy, the geopolitical tech race, and China’s influence over global tech platforms. A multilateral, regulatory approach that strengthens transparency, data sovereignty, and international cooperation will be key to navigating the future of global digital trade and ensuring that national security concerns are adequately addressed.

Also read: Navigating the TikTok Ban Debate: Balancing Economic Growth, National Security, and Digital Transformation

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References:

1. “China mulls potential sale of TikTok US to Musk, Bloomberg News reports,” Reuters, January 13, 2025.
2. “National Security Threats Posed by TikTok,” U.S. Senate Intelligence Committee, 2023.
3. “China’s Role in Global Tech Regulations: Implications for U.S. Businesses,” Foreign Policy Institute, 2022.
4. “The Digital Privacy Debate: Balancing Security and Innovation,” Journal of International Affairs, 2024.
5. “TikTok and National Security: The Dilemma of Foreign-Owned Apps,” Technology and Policy Review, 2023.