TikTok seems more likely to be shut down in the US with every passing day. \u00a0How could this actually happen and what would \u201cshut down\u201d actually look like? \u00a0Given that TikTok is a massive infringer, we will lose no sleep if they find themselves in real trouble. \u00a0Still, it won\u2019t be easy, particularly since the ACLU and Electronic Frontier Foundation (and other usual suspects who received Google and Facebook largesse) will no doubt rush to their defense. \u00a0I\u2019ll do a little prognosticating with the \u201cover\/under\u201d that will necessarily entail some speculation about the future political environment.<\/p>\n
![\"Google](\"https:\/\/artistrightswatchdotcom.files.wordpress.com\/2020\/07\/google-cy-pres-large-tiktok.png?w=700\")
Here are a few ideas, but my bet is that if it happens at all, it will be a combination punch. \u00a0One thing we know for sure is that TikTok\u2019s chief lobbyist in Washington, Michael Beckerman (the Shoe Man) will be earning his millions. \u00a0 Here\u2019s a look at the old jab jab cross.<\/p>\n The Ghost Ship<\/strong>: \u00a0If TikTok were determined to be a front for a foreign government (this time the Chinese Communist Party), Americans could be prohibited from working for TikTok and advertisers could be prohibited from doing business with the company under the\u00a0International Emergency Economic Powers Act<\/a>\u00a050 U.S.C. \u00a7 1701.\u00a0There are several different angles from espionage to election meddling to compromising Hong Kong, Tibetan, Taiwan or\u00a0Uyghur human rights, or the decertification of Hong Kong.<\/p>\n If the shutdown is given effect under the International Emergency Economic Powers Act, it\u2019s likely that installed versions of the TikTok app would continue to work, but would gradually degrade in user experience as the U.S. installed base could not lawfully be supported.<\/p>\n Over\/Under: \u00a0This approach would be a great opportunity for TikTok to launch a Napster-style PR campaign. \u00a0They would probably let themselves be sued by the U.S. Government and hope to drag out the case to see if a \u00a0more sympathetic Vice President Biden is elected (particularly given the recent history<\/a>\u00a0of the Obama Foundation) and Big Tech\u2019s\u00a0jockeying for position in the Biden campaign<\/a>.<\/p>\n Et Tu CFIUS? \u00a0<\/strong>The US Government reviews significant asset sales to foreign investors (including state owned enterprises) that implicate national security. \u00a0This review is given effect in part through the Committee on Foreign Investment (CFIUS). \u00a0CFIUS is currently reviewing the acquisition of Musical.ly by TikTok parent Bytedance, a process that began on November 1, 2019. \u00a0It is possible that an acquirer like Bytedance can ask for a pre-clearance from CFIUS and\u2013are you ready? \u00a0Bytedance\u00a0did not<\/em>\u00a0seek that pre-clearance, which requires explaining why the target\u2019s business implicates national security like handing over user data to China\u2019s State Security agency. \u00a0Which is the very thing that is required by China\u2019s\u00a0National Intelligence Law<\/a>\u00a0but that TikTok denies doing. \u00a0And is also probably the subject of at least one FBI counterintelligence investigation at this very moment.<\/p>\n Over\/Under: \u00a0This CFIUS investigation is ongoing, so will likely conclude. \u00a0CFIUS can require that the Musical.ly acquisition be unwound. \u00a0That would mean that the government could force a sale of TikTok (probably its US assets) or require TikTok to cease operations in the US. \u00a0CFIUS has also\u00a0forced Chinese investors\u00a0<\/a>to divest from PatientsLikeMe and Grindr. \u00a0The CFIUS option has both precedent and is already in motion. \u00a0I like this option as an opening gambit as it would happen in the background as far as TikTok users are concerned. \u00a0Since Facebook is already trying to get licensed and also get in TikTok\u2019s business, a sale would be relatively easy to accomplish.<\/p>\n No TikTok IPO For Bytedance: \u00a0<\/strong>Like the CFIUS review, there is already a process in play in the Congress that will make a U.S. TikTok IPO much less attractive to Bytedance. \u00a0The Holding Foreign Companies Accountable Act (S. 945)<\/a>\u00a0that unanimously passed the Senate on May 20 and was introduce in the House by Brad Sherman (D-CA) as\u00a0H.R. 7000<\/a>\u00a0where it is also expected to pass. \u00a0It will be very interesting to see who votes against it.<\/p>\n It shouldn\u2019t be surprising that China\u2019s President-for-Life Xi Jinping doesn\u2019t like his public companies being audited by U.S. public accounting firms and held to the same standards as all the other public companies. \u00a0You know, Sarbanes Oxley and all that jazz.<\/p>\n For reasons that are difficult to fathom, China somehow managed to finagle a pass on SarBox compliance in 2013\u2013ahem\u2013that has been decried far and wide (recently by Arthur Levitt, President Clinton\u2019s SEC chairman). \u00a0According to Reuters<\/a>, \u201cThe audit-quality issue has been festering since 2011, when scores of Chinese firms trading on U.S. exchanges were accused of accounting irregularities.\u201d<\/p>\n According to\u00a0Bloomberg<\/a>\u00a0the Holding Foreign Companies Accountable Act says:<\/p>\n If a company can\u2019t show that it is not under [control of a foreign government] such control or the Public Company Accounting Oversight Board, or PCAOB, isn\u2019t able to audit the company for three consecutive years to determine that it is not under the control of a foreign government, the company\u2019s securities would be banned from the exchanges.<\/p><\/blockquote>\n Bloomberg also tells us:<\/p>\n Stricter U.S. oversight could potentially affect the future listing plans of major private Chinese corporations from Jack Ma\u2019s Ant Financial to SoftBank-backed ByteDance Ltd. But since discussions on increased disclosure requirements began last year, many other Chinese companies have either listed in Hong Kong already or plan to do so, said James Hull, a Beijing-based analyst and portfolio manager with Hullx.<\/p>\n \u201cAll Chinese U.S.-listed entities are potentially impacted over the coming years,\u201d he said. \u201cIncreased disclosure may hurt some smaller companies, but there\u2019s been risk disclosures around PCAOB for a while now, so it shouldn\u2019t be a shock to anyone.\u201d<\/p><\/blockquote>\n Why would they list on Hong Kong when they are already listed on NY? \u00a0Because they anticipate getting dumped from NY and they will still trade on the Hong Kong exchange for all the suckers.<\/p>\n Over\/Under: \u00a0TikTok could become the poster child for holding foreign companies accountable. \u00a0HR 7000\u2019s sponsor is Representative Brad Sherman who is a crack CPA and knows his way around this issue. \u00a0Representative Sherman is also Chair of the powerful\u00a0House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets so it\u2019s likely that the legislation will pass out of the House, although Mr. Beckerman and the\u00a0vast network of CCP lobbyists<\/a>\u00a0and consultants will have their work cut out for them. \u00a0Trump would sign this bill faster than you can say \u201cRosatom\u201d. \u00a0By denying Bytedance (and Softbank) access to the U.S. capital markets, it would weaken the incentive for TikTok to fight a ban in court as the legislation is unrelated to a ban. \u00a0Legislative action could not be easily reversed in a Biden Administration (who was in the White House when China got the exemption that the bill would now fix).<\/p>\n Criminal RICO: \u00a0<\/strong>TikTok may well be determined to be a racketeering organization and a criminal conspiracy for massive copyright infringement as a RICO predicate, not to mention potentially violation of the Export Administration Regulations for exporting data to a foreign country with a military purpose as evidenced by China\u2019s National Intelligence Law. \u00a0It would at least be worth convening a grand jury to investigate.<\/p>\n Over\/Under: \u00a0There is no doubt that TikTok has plenty of RICO predicates and a high likelihood of conspiracy to commit any one of a number of things including copyright infringement.<\/p>\n Under RICO (18 U.S.C. \u00a7 1961\u20131968) the racketeering predicate is defined thusly\u2013so what do you think?:As used in this chapter\u2014(1)\u201cracketeering activity\u201d means (A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code: Section\u00a0201<\/a>\u00a0(relating to bribery), section\u00a0224<\/a>\u00a0(relating to sports bribery), sections\u00a0471<\/a>,\u00a0472<\/a>, and\u00a0473<\/a>\u00a0(relating to counterfeiting), section\u00a0659<\/a>\u00a0(relating to theft from interstate shipment) if the act indictable under section\u00a0659<\/a>\u00a0is felonious, section\u00a0664<\/a>\u00a0(relating to embezzlement from pension and welfare funds), sections\u00a0 891\u2013894 (relating to extortionate credit transactions), section\u00a01028<\/a>\u00a0(relating to fraud and related activity in connection with identification documents), section\u00a01029<\/a>\u00a0(relating to fraud and related activity in connection with access devices), section\u00a01084<\/a>\u00a0(relating to the transmission of gambling information), section\u00a01341<\/a>\u00a0(relating to mail fraud), section\u00a01343<\/a>\u00a0(relating to wire fraud), section\u00a01344<\/a>\u00a0(relating to financial institution fraud)<\/strong>,<\/em>\u00a0section\u00a01425<\/a>\u00a0(relating to the procurement of citizenship or nationalization unlawfully), section\u00a01426<\/a>\u00a0(relating to the reproduction of naturalization or citizenship papers), section\u00a01427<\/a>\u00a0(relating to the sale of naturalization or citizenship papers),\u00a0sections\u00a0 1461\u20131465 (relating to obscene matter<\/em>),\u00a0section\u00a01503<\/a>\u00a0(relating to obstruction of justice), section\u00a01510<\/a>\u00a0(relating to obstruction of criminal investigations), section\u00a01511<\/a>\u00a0(relating to the obstruction of State or local law enforcement), section\u00a01512<\/a>\u00a0(relating to tampering with a witness, victim, or an informant), section\u00a01513<\/a>\u00a0(relating to retaliating against a witness, victim, or an informant),\u00a0<\/em><\/strong>section\u00a01542<\/a>\u00a0(relating to false statement in application and use of passport), section\u00a01543<\/a>\u00a0(relating to forgery or false use of passport), section\u00a01544<\/a>\u00a0(relating to misuse of passport), section\u00a01546<\/a>\u00a0(relating to fraud and misuse of visas, permits, and other documents),\u00a0sections\u00a0 1581\u20131592 (relating to peonage, slavery, and trafficking in persons)<\/strong>,\u00a0<\/em>section\u00a01951<\/a>\u00a0(relating to interference with commerce, robbery, or extortion), section\u00a01952<\/a>\u00a0(relating to racketeering), section\u00a01953<\/a>\u00a0(relating to interstate transportation of wagering paraphernalia), section\u00a01954<\/a>\u00a0(relating to unlawful welfare fund payments),\u00a0section\u00a01955<\/a><\/em>(relating to the prohibition of illegal gambling businesses),<\/em>section\u00a01956<\/a>\u00a0(relating to the laundering of monetary instruments), section\u00a01957<\/a>\u00a0(relating to engaging in monetary transactions in property derived from specified unlawful activity<\/em>),<\/strong>\u00a0section\u00a01958<\/a>\u00a0(relating to use of interstate commerce facilities in the commission of murder-for-hire),\u00a0section\u00a01960<\/a>\u00a0(relating to illegal money transmitters), sections\u00a02251<\/a>,\u00a02251A<\/a>,\u00a02252<\/a>, and\u00a02260<\/a>\u00a0(relating to sexual exploitation of children)<\/strong>,\u00a0<\/em>sections\u00a02312<\/a>\u00a0and\u00a02313<\/a>\u00a0(relating to interstate transportation of stolen motor vehicles),\u00a0sections\u00a02314<\/a>\u00a0and\u00a02315<\/a>\u00a0(relating to interstate transportation of stolen property), section\u00a02318<\/a>\u00a0(relating to trafficking in counterfeit labels for phonorecords, computer programs or computer program documentation or packaging and copies of motion pictures or other audiovisual works), section\u00a02319<\/a>\u00a0(relating to criminal infringement of a copyright), section\u00a02319A<\/a>\u00a0(relating to unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances), section\u00a02320<\/a>\u00a0(relating to trafficking in goods or services bearing counterfeit marks)<\/strong>,\u00a0<\/em>section\u00a02321<\/a>\u00a0(relating to trafficking in certain motor vehicles or motor vehicle parts),\u00a0s<\/em>ections\u00a0 2341\u20132346 (relating to trafficking in contraband cigarettes),\u00a0sections\u00a0 2421\u201324 (relating to white slave traffic),sections\u00a0 175\u2013178 (relating to biological weapons), sections\u00a0 229\u2013229F (relating to chemical weapons), section\u00a0831<\/a>\u00a0(relating to nuclear materials),<\/em>\u00a0<\/strong>(C) any act which is indictable under title 29, United States Code, section\u00a0 186 (dealing with restrictions on payments and loans to labor organizations) or section\u00a0501<\/a>(c)<\/a>\u00a0(relating to embezzlement from union funds), (D) any offense involving fraud connected with a case under title 11 (except a case under section\u00a0157<\/a>\u00a0of this title), fraud in the sale of securities, or the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), punishable under any law of the United States, (E) any act which is indictable under the Currency and Foreign Transactions Reporting Act, (F) any act which is indictable under the Immigration and Nationality Act, section\u00a0 274 (relating to bringing in and harboring certain aliens), section\u00a0 277 (relating to aiding or assisting certain aliens to enter the United States),\u00a0or\u00a0section\u00a0 278 (relating to importation of alien for immoral purpose)<\/strong><\/em>\u00a0if the act indictable under such section of such Act was committed for the purpose of financial gain, or (G) any act that is indictable under any provision listed in section\u00a02332b<\/a>(g)(5)(B)<\/a>\u2026. (emphasis mine)<\/p>\n","protected":false},"excerpt":{"rendered":" With the Trump administration threatening to shut down TikTok in the US, speculation is raging as to what such a move would look like and what laws support or prevent it. Op-ed by Attorney\u00a0Chris Castle\u00a0of\u00a0Music Technology Policy TikTok seems more likely to be shut down in the US with every passing day. \u00a0How could this<\/p>\n","protected":false},"author":29,"featured_media":76231,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_stc_notifier_status":"sent","_stc_notifier_sent_time":"2020-07-21 12:45:32","_stc_notifier_request":false,"_stc_notifier_prevent":false,"_stc_subscriber_keywords":"","_stc_subscriber_search_areas":"","footnotes":""},"categories":[75,22,108,77],"tags":[8708,6162],"class_list":["post-95593","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-news","category-industry_news","category-opinion-news","category-techn-news","tag-chriscastle","tag-tiktok"],"acf":[],"yoast_head":"\n![\"Michael](\"https:\/\/artistrightswatchdotcom.files.wordpress.com\/2018\/07\/michael-beckerman.png?w=700\")
![\"obama_dinner_who\"](\"https:\/\/artistrightswatchdotcom.files.wordpress.com\/2020\/07\/obama_dinner_who.jpg?w=700\")
<\/figure>\n<\/div>\n![\"Bloomberg](\"https:\/\/musictechpolicy.files.wordpress.com\/2020\/05\/bloomberg-china.png?w=423&h=273\")
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