Zohaib Zahir
Associate Editor
Loyola University Chicago School of Law, JD 2027
The world of social media has rapidly evolved from a way to connect with friends to an integral component of global communication, commerce, and culture. Since 2010, social media platforms have consistently shaped daily life with individuals spending countless hours on their favorite platforms. Social media platforms such as Facebook, Instagram, and TikTok have amassed billions of users. With such influence comes heightened regulatory scrutiny over data privacy, national security, and corporate accountability. TikTok has drawn intense regulatory oversight due to its ownership by the Chinese company ByteDance, which has prompted fears of foreign influence and national security risks among U.S. regulators. The culmination of these concerns resulted in the passing of the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA). Under the PAFACA, ByteDance is required to sell off TikTok’s U.S. operations. This compelled sale has sparked a debate over the balance between corporate autonomy, data governance, and national security. It has also raised broader questions about future industry-wide regulations, indicating that social media platforms may soon face heightened scrutiny and standardized requirements for data handling and corporate transparency.
TikTok’s rise, birth of the PAFACA, and where we are now
TikTok officially launched in the U.S. in August 2018. From that point onward, TikTok’s popularity grew with younger users and surged among the general U.S. population during the COVID-19 pandemic. At its core, TikTok is a social media platform that allows users to create, share, and view short-form videos. The application’s interface incorporates a swipe up feature, allowing users to quickly navigate content. The application also utilizes an artificial intelligence (AI)-based algorithm that creates a personalized feed for the user. Both these components have been key factors in making TikTok the fastest growing social media platform, with an estimated 150 million U.S. users as of September 2025.
In 2020, with TikTok’s popularity surging within the U.S., regulators began expressing concerns about its Chinese ownership. These worries revolved around data privacy, national security, and the fear of foreign influence on U.S. citizens. This resulted in the passing of the No TikTok on Government Devices Act, which prohibits the download or use of TikTok on all government devices and requires its removal if already installed. Ultimately, the aforementioned fears led to the PAFACA being signed into law by President Biden on April 24, 2024.
The PAFACA prohibits distributing, maintaining, or providing internet hosting services for foreign adversary-controlled applications. The PAFACA bans any social media platform within 270 days of it being defined as a foreign adversary-controlled application, though the President may grant a 90-day extension if needed. The ban does not apply to any application that executes a qualified divestiture, as determined by the President. Notably, the PAFACA explicitly mentioned TikTok and ByteDance, indicating that ByteDance is a foreign adversary and TikTok is their application. Thus, after signing the PAFACA, President Biden instructed ByteDance to sell TikTok’s U.S. operations or face a nationwide ban.
Since January 2025, President Trump has signed three executive orders pushing the enforcement of the nationwide TikTok ban to December 2025. During this time, the White House has facilitated a pending deal to transfer TikTok’s U.S. operations to a majority American ownership group, overseen by Oracle. ByteDance will retain a less than 20% stake in TikTok U.S., though the full investor group and its details have not been finalized. On October 30, 2025, U.S. Treasury Secretary Scott Bessent announced that China has approved the transfer agreement for TikTok, with the agreement to move forward in the coming weeks and months.
Industry-wide compliance ramifications
The compelled sale of TikTok’s U.S. operations is a significant shift from the traditional capitalistic approach taken by the U.S. government. TikTok’s sale and the enactment of the PAFACA have set the regulatory precedent for both foreign and American owned corporations. With the rise of AI and a focus on data governance by U.S. regulators, it is within reason to anticipate significant pressure on both AI developers and social media platforms to store, process, and handle data in a manner that meets the U.S. government’s expectations.
By invoking national security to justify its involvement in sale of TikTok, the federal government has signaled an expanded and more assertive regulatory approach to the technology sector. Corporations, in response, might be required to increase transparency towards the U.S government and integrate strict data handling regulations to meet any new scrutiny from regulators.
These developments bring up the question of whether the U.S. government could have pursued less intrusive approaches to data regulation and whether the forced sale of TikTok was necessary. An argument could be made that the U.S. government should have implemented greater transparency requirements for TikTok, with the compelled sale being used only after TikTok failed to meet the strict regulatory standards. A compelled sale runs against the fundamental principles of free-market capitalism and corporate autonomy that the U.S. has long advocated for. These circumstances raise the question of whether the TikTok case is primarily a response to China or if it signals a greater shift in U.S. policy towards expanding governmental influence over private markets to achieve regulatory objectives.