Chinese apps have surged in popularity in the U.S. A TikTok ban bodes ill for them
Lemon8, a photo-sharing app from Bytedance, and RedNote, a Shanghai-based content-sharing platform, have seen a surge in popularity in the US as “TikTok refugees” migrate to alternative platforms ahead of a potential ban.
Now, a law that could shut down TikTok in the U.S. threatens to trap these Chinese social media apps, and others are gaining traction as TikTok alternatives, legal experts say.
From Wednesday RedNote – known as Xiaohongshu in China — was the top free app in the US iOS store, with Lemon8 taking second place.
The United States Supreme Court must rule on the constitutionality of the Constitution Protecting Americans from Foreign Counterintelligence Controlled Applications Actor PAFACA, which would lead to the TikTok app being banned in the US if its Beijing-based owner, ByteDance, does not divest it by January 19.
While the legislation explicitly names TikTok and ByteDance, experts say its scope is broad and could open the door for Washington to target additional Chinese apps.
“Chinese social media apps, including Lemon8 and RedNote, could also end up being banned under this law,” Tobin Marcus, head of US politics and policy at New York-based research firm Wolfe Research, told CNBC.
If the TikTok ban is upheld, the law is unlikely to allow potential replacements to come from China without some form of divestment, experts told CNBC.
PAFACA automatically applies to Lemon8 since it is a subsidiary of ByteDance, while RedNote could fall under the law if its monthly average user base in the United States continues to grow, Marcus said.
The legislation prohibits the distribution, maintenance or provision of internet hosting services for any “foreign opposition controlled application”.
These applications include those associated with ByteDance or TikTok or a social media company controlled by a “foreign adversary” that has been determined to pose a significant threat to national security.
The wording of the legislation is “quite expansive” and will give President-elect Donald Trump room to decide which entities pose a significant threat to national security, said Carl Tobias, the Williams Chair in Law at the University of Richmond.
Xiaomeng Lu, director of geo-technology at political risk consultancy Eurasia Group, told CNBC that the law is likely to prevail, even if its implementation and enforcement will be delayed. Regardless, she expects that Chinese apps in the US will continue to be subject to increased regulatory action going forward.
“The TikTok case has set a new precedent for Chinese apps to be targeted and potentially shut down,” Lu said.
She added that other Chinese apps that could be affected by increased scrutiny this year include the popular Chinese e-commerce platform Temu and Shein. US officials have accused the apps of pose data risksclaims similar to those charged against TikTok.
TikTok’s fate rests with the Supreme Court after the platform and its parent company filed suit against the US government, saying that invoking PAFACA violated constitutional protections for free speech.
TikTok’s argument is that the law is unconstitutional as applied specifically to them, not that it is unconstitutional per se, said Cornell Law Professor Gautam Hans. “So whether TikTok wins or loses, the law can still potentially be applied to other companies,” he said.
The law’s defined scope is broad enough to apply to a range of Chinese apps deemed a national security threat, in addition to traditional social media apps like TikTok, Hans said.
Meanwhile, Trump has urged the US Supreme Court to wait to implement PAFACA so he can pursue a “policy decision” after he takes office. Democratic lawmakers have also urged Congress and President Joe Biden to do so extend the deadline 19 January.