🖤 Donations of all sizes power our public service journalism Give Now

Worry about foreign ownership of telecom companies has a long history in the U.S.

Henry Epp Apr 24, 2024
Heard on:
HTML EMBED:
COPY
The founders were concerned countries would try to meddle in the U.S., so they passed measures like the Emoluments Clause which prohibits office holders from taking gifts from foreign officials. Justin Sullivan/Getty Images

Worry about foreign ownership of telecom companies has a long history in the U.S.

Henry Epp Apr 24, 2024
Heard on:
The founders were concerned countries would try to meddle in the U.S., so they passed measures like the Emoluments Clause which prohibits office holders from taking gifts from foreign officials. Justin Sullivan/Getty Images
HTML EMBED:
COPY

The foreign aid bill that President Joe Biden signed today includes a provision that could force the owner of TikTok to sell the video app – or see it banned in the U.S.

TikTok’s Chinese parent company ByteDance now has several months to complete a sale.

In a statement, TikTok has called the measure unconstitutional and said the company will challenge the matter in court.

It’s not every day that Congress takes aim at a specific foreign-owned company over national security worries. But limiting foreign ownership of firms in the U.S., especially in telecommunications, is a practice with a long history.

By long history, we mean like all the way back to the founding of the United States, says Zephyr Teachout, a professor at Fordham Law School.

“The focus and anxiety about foreign corruption and foreign powers was really central at the Constitutional Convention,” said Teachout.

The founders, she says, were really concerned that foreign countries would try to meddle in the U.S., so they passed measures including the Emoluments Clause which prohibits office holders from taking gifts from foreign officials.

Over the decades, the government restricted foreign businesses from taking part in energy, shipping and telecommunications.

“In 1912, the Radio Act was passed, which prohibited foreign ownership of radio stations, and that really became a model for other communications infrastructure,” said Teachout.

The idea, Teachout says, was to prevent foreign actors from using mass communication to do two things:

“Spying on the one hand and propaganda on the other,” explained Teachout.

Those are the same concerns lawmakers now have about ByteDance, the Beijing-based owner of TikTok, says Ganesh Sitaraman at Vanderbilt Law School.

“It really matters who owns the basic communications infrastructures of our country, and tech platforms are one of the central ones in the modern era,” said Sitaraman.

But what’s unusual in this case is its Congress spelling out who can own a specific company. Usually, that’s left to a government body called the Committee on Foreign Investment in the United States, or CFIUS, says James Lewis at the Center for Strategic and International Studies.

“CFIUS can block a sale. But they can also say, ‘OK, we’ll let you operate this American company, but you need to do the following things,'” said Lewis.

CFIUS had been looking into TikTok, but Congress’ action overrides that work. 

Now, with the U.S. giving the company a matter of months to sell off the algorithm at the heart of the app, the Chinese government is pushing back.

“We’ve set ourselves up for a head on collision. It’s a bit like a game of chicken. And the real test here is the algorithm. Who gets the algorithm?” said Lewis.

And that fight, Lewis says, does not have a historical precedent.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.