It is exactly that, but you'll see a lot of mental gymnastics to try to bend around it, or they'll just mask off say "Eh, gotta fight fire with fire"

No, it's like banning a newspaper because it is operated by Chinese intelligence agencies, regardless of what it publishes.

No. Unlike a newspaper, they host videos and photos of a third of (?) the US population, have detailed reader data on who reads what when, who is friends with whom, location history, etc.

This data treasure trove may be stored in US, but it isn't protected from Chinese govt access. It is the same for data by American companies, which US Patriot act lets the US govt access.