Bill to ban TikTok could have mixed results for banks

A bill seeking to force TikTok's Chinese owner to sell the platform or face a ban in the U.S. threatens to escalate the country's conflict with Beijing, which could have mixed impacts on U.S. banks, including potentially reduced access to the Chinese financial market and better data protections for consumers.

The bill's supporters say the legislation is a matter of national security, saving Americans' data from access by the Chinese government and protecting their social media diet from state-sponsored manipulation. TikTok has said there is no proof that Beijing has used the platform to do either and that it has third-party oversight of the platform to ensure this.

U.S. banks have not established a presence on TikTok to the same degree that they have on Facebook,  Instagram, or X (formerly Twitter), but there are a few exceptions. The banks and credit unions that have established TikTok presences have largely done so to court younger customers. A TikTok ban would eliminate these accounts and the audience for them.

Numerous U.S. payments processors have partnered with TikTok to, for example, help small businesses promote their products and allow creators to collect tips from fans. Partners on such features and products include American Express, Square and Stripe.

A ban on or forced sale of TikTok would eliminate these partnerships and threaten others if Beijing decided to retaliate. Retaliation could impact large U.S. firms that access the payments market in China through local companies, such as PayPal. It could also threaten the business of the eight U.S. banks with a presence in China, including JPMorgan Chase and Citibank.

A ban on TikTok could also bolster data privacy for U.S. consumers and mitigate concerns about Chinese influence on Americans' social media diets, according to the bill's supporters. Indeed, this thinking motivated the first attempt at banning TikTok in the U.S.

In 2020, then-president Donald Trump signed an executive order that sought to ban TikTok in the U.S., prompting Oracle and Microsoft to seek ownership of the company. Trump has now flipped on the idea of banning TikTok, saying it would empower platforms such as Facebook, which he views antagonistically.

After the executive order was issued, TikTok said it would rather shut down its U.S. operations than sell them, but the point became moot after a court approved a temporary injunction in the matter. President Joe Biden revoked the executive order after taking office the next year.

With the House putting the matter back on the table, some cybersecurity experts have expressed concern about TikTok, including Lisa Plaggemier, executive director of the nonprofit National Cybersecurity Alliance. Plaggemier expressed concern about TikTok's utility in misinformation campaigns and data collection by foreign actors, particularly Beijing.

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TikTok "presents significant cybersecurity concerns for the United States, primarily due to the potential exploitation of its vast user base and the Chinese company's access to user data," Plaggemier said.

Others are skeptical of the bill's approach, including Ken Westin, field chief information security officer at cybersecurity company Panther Labs. Westin questioned the value of the data that China could access through TikTok, especially in light of the alternative channels through which it can access much the same data, such as from data brokers and data breaches.

"One has to wonder what value this data has, as the platform isn't a place where documents or sensitive personally identifiable information is stored," said Westin. He also said he fears the bill is "mostly political grandstanding close to an election year, feeding off of xenophobic rhetoric against China."