Montana becomes first U.S. state to issue TikTok ban

Yahoo Finance tech editor Dan Howley joins the Live Show to discuss the details surrounding a TikTok ban in Montana, making it the first state to do so, and the regulation of user data privacy in the U.S. on a federal level.

Video transcript

JULIE HYMAN: The TikTok crackdown is escalating. Montana has become the first state in the US to announce a complete ban on the social media app. It's due to take effect on January 1, 2024.

Yahoo Finance's Dan Howley joined us with the details. Dan, I'm sure we've talked about this before, but refresh my memory. How much power does that work, first of all? Like, what is the mechanism for banning an app in a state?

DAN HOWLEY: That's a great question. And I don't think a lot of people have the answer to that exactly. The only thing that you can imagine would be that they would geofence, basically, electronically, lock off Montana from the rest of the country. And then that would allow for the app to basically be kind of persona, non grata there. That would mean that Apple, the App Store, and Google, the Play Store, would no longer allow the app to be downloaded. And that's really the mechanism that Montana Governor Greg Gianforte is going for here.

Basically, stopping both Apple and Google from allowing users to download the app itself. Now, in a statement after signing this into law, the governor said "Today, Montana takes the most decisive action of any state to protect Montanans private data and sensitive personal information from being harvested by the Chinese Communist Party." So there's a few things here that are worth discussing outside of the broader geopolitical issue. And that's when you speak to a lot of privacy advocates regarding TikTok, the issue is, sure, there could be a problem where China could eventually harvest the data.

TikTok itself is kind of working-- or TikTok in the US is working with Oracle to get user data for US users onto Oracle servers in the US rather than anywhere else in the world so that it would be located here. They say that it wouldn't have access-- or China wouldn't have access to it and that there would be code reviews, everything along those lines. I think the broader discussion that the privacy advocates point to is that, sure, the issue with China is there. The real problem, though, is user data privacy.

And that's something that we frankly don't have in the US. There are some states that have enacted their own data privacy laws. But there's no federal data privacy law. And that's the bigger problem.

TikTok wouldn't be able to get user data if there was a federal law in place that could allow the users to opt-out of data collection. This is something that's been brought up for years. And so I've previously written about how TikTok is as dangerous as any other social media app out there, whether that's Facebook, Instagram, Twitter, YouTube. They all collect user data and they're all available to third parties who can then use that data to create some form of profile to kind of get a good idea of who you really are as a person.

And just to give you the scope of what these companies are able to do, people often think that their phone is listening to them, or something along those lines, because they thought of something. Or maybe they talked to their friends about something. Say you were talking about used cars. You're getting ads for used cars. I didn't search for it on my phone. It must be listening.

That's not true. The truth is that ad networks are so good at predicting who you are as a person that they already know that you were talking or would eventually start thinking about used cars and they served you up those ads before you even thought about looking for them. So that's the big problem, is that user data privacy in America really doesn't exist on a federal level. And that needs to be enacted rather than a wholesale ban on TikTok.

At least that's what the privacy advocates say.

BRAD SMITH: I sure wish you could tell me when I'm going to buy a house, Dan. Appreciate that. Thanks so much for the update on all things TikTok and the ways that certain platforms are already getting some of this data to create a profile. Appreciate it.