Can The US Really Ban TikTok? It’s Complicated

TikTok in the hot seat. If TikTok's CEO show Chew thought he could come fears in Washington that the company is handing over Americans user data to the Chinese government, well, he quickly learned otherwise, the committee will come to order before I begin. I'd like when Chu stepped into a hearing room in the US capital, he was grilled for hours by angry members of Congres, Democrats and Republicans alike,

and they were in no mood to be mollified. TikTok told us that you weren't tracking the geolocation of American citizens. You were. TikTok told us you weren't spying on journalists. You were. And I have to tell you, I came to this hearing interested to hear the actions that TikTok is taking to combat misinformation, protect our young people and

ensure our national security. But I've not been reassured by anything you've said so far, and I think, quite frankly, your testimony has raised more questions for me than answers. If anything, that tensions between Washington and TikTok may not

be worse than they were before. Bloomberg reporters Alex Barrinka, they are really thinking about the specter of a really powerful adversary in China that's kind of looming over TikTok and Anna Edgerton, the most dangerous thing for TikTok that came out of this hearing was that every word that you've said now becomes material for the apps. Critics have been covering this story and what happens next in this

increasingly tense standoff. Alex. I think when TikTok's CEO showed you walked into that hearing room, he thought maybe he would be able to persuade lawmakers that they didn't have anything to be concerned about. But by the time he walked out, it was pretty clear that was not the case. Yeah, I talked to it people close to the company before this even happened, and that was exactly their goal. And

how they were prepping him. They talked about asking him to stay within his body, be really calm, and lean into the facts that he so often likes to give. He sees TikTok's position, with all of these questions whirling around them, that they are going to answer the questions with facts in action, and he thought he would have this opportunity to come in with those actions they're taking around data privacy, around protecting users and trust and safety on the platform and kind of lay those out. He

didn't get that opportunity. He basically walked into room. From the drop from the opening statements from the lawmakers was really clear that they were coming from a stance of disbelief to anything he was going to say. So it was almost kind of a situation that would have been really tough to navigate out of. We had talked before the hearing about how the best case scenario for TikTok was kind of a low newsday, not making things any worse.

But after the hearing, even during the hearing, there was kind of this fervor whipped up not only in the hearing room, but our inboxes and our colleagues were hearing from senators in the other part of Congress from other regulators who were chiming in. Even Janet Yellen had her moment where she was feeling questions about TikTok. It became a very kind of feverish moment, and they just did not get out of this unscathed. I think there are a few moments it really showed what she was up against.

And right from the beginning, we saw Kathe mc morris Rodgers, the Republican chair of the committee, come out in her opening statement and say we think TikTok should be banned. So that's what he was starting with, and that's what kind of the environment that he was walking into. When he really got into trouble was when he was asked yes or no questions because he didn't have a satisfactory answer.

For example, when he was asked by Republican Neil Dunn from Florida whether or not Bite Dance, TikTok's Chinese owner, spies on US citizens through the app, the only answer you could have given that would have been satisfactory was no. But that's not what he said. I ask you again, has Bite Dance spied on American citizens? I don't think

the spying is the right way to describe it. This is ultimately differ It was another moment when Ohio Representative Bob Ladda asked Chew yes or no. Do Chinese employees including engineers have access to US user data today? All US user data is stored by default in the article Cloud Infrastructure and Access to Data Control. Any American dance employees and including engineers currently have access to US data A congressman, I would appreciate this is a complex topic.

In the room, that response drew incredulous chuckles from lawmakers and folks in the gallery. We're going to come back and talk more about this hearing and where it leaves this battle between Washington and TikTok a little bit later in the show. But Alex, let's just take a moment to sort of recap exactly what is this argument between lawmakers and TikTok. This argument between TikTok and the US

government has actually gone on for two presidential administrations. This started back when Trump wanted to ban the app because he was worried about its connections to China because of its parent company. There was an executive order that was ultimately tossed by the courts and kind of put aside by the Biden administration, and in the past year, these concerns around China's in fluence on TikTok have really been whipped up, even with kind of new faces in the

US government. Behind the scenes, there is also this undercurrent that follows all social media companies of what does this mean for young people on the app? How does this app impact youth's mental health? Then you have in the last you know, six months, a lot of the rhetoric and action from the US government toward China has gotten a lot more confrontational. So as these things have kind of layered together, it's put TikTok in a really tough position and one that they just haven't been able to

navigate out of. And why is the US government going after TikTok, Well, there are two main things that lawmakers are concerned about. The first is the national security concerns, and this has to do with TikTok's Chinese parent company,

Bye Dance, which is based in Beijing. So they're concerned that that company kind of put a thumb on the scale of the algorithm and slightly influence what US users see, and this could be content about Hong Kong or content about the oppression of wagers and Shenjang just slightly tweaking what Americans see on TikTok and thus their perception of reality. And they're also concerned about US user data getting to China.

Now this is not a really big concern for individuals, but when you look at one hundred million Americans using this app for so many minutes of the day, that gives potentially the Chinese government an aggregate idea of what Americans care about and what they're spending their time on. TikTok's platform really set off this boom of algorithmically generated content. They have this really sophisticated algorithm that knows you, as

folks joke online better than you even know yourself. So in China, the government can request in secret any kind of data they want from any of the domestic companies. So the like pure delightfulness and the reason why people are spending so much time on this app here in the US ends up doubling down and looking that much more sinister because there's some kind of connection to China

through TikTok's parentage. And what exactly is the US afraid that China is going to do with people dancing and showing pictures of their pads and doing challenges and all the kinds of stuff that people do on TikTok. Yeah, I think it's more kind of like the detailed understanding of American society. I mean, like Alex was saying, this app is so deeply ingrained, especially in almost an entire generation of young people, like they're like defined almost as

the TikTok generation. We heard from FBI Director Christopher Ray last week calling this a really powerful surveillance weapon. We've also heard lawmakers comparing it to a Chinese spy balloon in your pocket. Getting at that image is like, this is potentially a company beholden to the Chinese government that

can get this kind of information. These what ifs make it almost that much more difficult to kind of regulate and legislate, and the calls to band TikTok didn't really get bipartisan until kind of the middle to end of last year. TikTok had a few kind of really big scandals. There was some reporting by a number of journalists that they were looking at the IP location data of users.

The company denied it. Then in December, the company finally admitted that an audit team at byte Dance, which is TikTok's parent company, actually access the IP data of journalists who were doing some of this reporting on them in order to help find their sources. TikTok's CEO sent a

letter to employees laying out what had happened. That those employees were then fired, and it ended up being kind of both a black eye for the company but also a real tipping point for a lot of lawmakers on both sides to look at this company and say, hey, there are some really concerning things here happening, and we probably should be taking more action than we have been. Who exactly in the US government is warning about these dangers. Who's leading this effort to try to curtail or and

band TikTok. Well, we've definitely heard it from the intelligence community, from the FBI and other agencies that are looking into this kind of threat. We've heard it from lawmakers of both parties, both Republicans and Democrats on the Hill, and especially from Republicans. They've really come at the Biden administration

from a kind of anti China angle. So we see President Joe Biden, some of his officials Injustice and Treasury responding to that kind of pressure and really taking a hard stance with TikTok to make sure that these security threats are addressed. The heart of TikTok's argument of why it should be able to continue to operate in the US is something called Project Texas. They're spending one point five billion dollars to get this thing going and about

a billion a year after that. It largely consists of partnering with American tech giant Oracle to move all of you with user data to Oracle servers. It would allow Oracle to review a lot of their software and policies, and they're also doing organizational things like off all of the folks who work on US user sensitive US information into kind of a new business unit called the USDs.

The people who are hired into this unit will go through high levels of security review, the company has said, and they're also appointing a three person independent panel to oversee the operations, with all three of those individuals being

signed off on by the government. So rit large, it is much more than you see from the likes of Meta or Twitter or some of the other competitors when it comes to kind of the security processes that they're putting in place, and yet it hasn't persuaded people in Washington that that's enough to make them think that this data is being safeguarding. It has it, you know, all of the kind of quirks that you see about social media, the concerns that the algorithm is influencing our minds in

a way. We don't understand that they hoover up so much data that the mental health of teens could be threatened by the types of content people see. All of those ideas are applicable to all of TikTok's competitors, but with that potential involvement from China, all of those concerns have become so much more sinister, to the point where TikTok has not been able to explain or promise them away. Now.

Oracle obviously has a esset interest. We've reported that TikTok would be one of their biggest customers with this new plan, and that's kind of cause some of the pause from some lawmakers who see this as a partner who's also benefiting from this arrangement with TikTok, and what does Oracle say. Oracle declined to comment on those concerns. An, what does TikTok say about the concerns that user data is going

right to the Chinese government. Well, they of course say that their Project Texas plan, that this is the one point five billion dollars that they've poured into several layers of oversight and accountability. They say that they're doing way more than any other app out there, and that they're taking extreme measures to kind of isolate US user data. And they keep coming at their critics with this very fancy presentation in different formats to assure them that this

will be enough. More with Anna and Alex after the break Anna, So we hear these various proposals of how TikTok might actually be banned. There's already been incremental steps to doing that. So, I mean Europe and now some in the US. Can you explain what that is? So what we see from the US Congress's four different measures

that would take different approaches to benning TikTok. Three of those would kind of mandate the Biden administration to take this step, and one of them, which is the one that has received the most support, would empower the Commerce Secretary actually to evaluate the risk of any technology owned by foreign adversary. Now, this has more than a dozen bipartisan co sponsors and the support of the White House.

And one reason why this approach has gained more gown is because it's a systemic approach that addresses a behavior, not just a specific company. So it's not a bill that goes after TikTok. It's a bill that would address this kind of threat that could be dealt with in the future as well. We also should mention that there is a national security review process that's been going on

in the background for months now. TikTok's already been investigated by SYPHIUS, which is the Committee on Foreign Investment in the United States, an interagency panel that basically looks into large transactions or investments in the US and has been known to block deals because of national security concerns. And that is where kind of this plan that TikTok had tried to hash out to show how it's going to protect US users data, that's where kind of that plan

was born out of that process basically became deadlocked. You had folks, according to our reporting and the Department of Justice, the FBI being in that mix, who basically didn't believe that there ever could be a proper solution that would one hundred percent guarantee that all of these scurity concerns could be addressed. So once that kind of clearly came to a halt with no new back and forth since basically last fall, these four bills started to kind of

trickle up that would address TikTok. Now in a position where one of these bills, including that bill that is the lead bill, passes, that would do something like force a sale of byte Dance's steak in TikTok. That would be a much larger option than TikTok continued to operate in the structure it's in now and just working with

the oracle. That would entail something like a steak sale that could look like selling it to another tech company, another partner, somebody like another US tech company that could be something like a listing. Once there's some kind of separation from byte Dance. We broke the news that TikTok's leadership is actually already discussing the option of a separation if this security agreement does fail in DC, But that

would be kind of a la resort option. That kind of separation option has one really big hurdle that also should be mentioned. The Chinese government, based on current export laws, would also have to approve such a separation to have that kind of really advanced technology that TikTok has be separated from their Chinese parent company. So that right now is kind of seen as this like nuclear last resort, something that they would do in the event that TikTok

might be completely banned in the United States. It is certainly not something that TikTok's leadership or byte Dance is jumping to do or else we would have seen them bring that up in conversations because lawmakers have kind of expressed that they prefer that option. But that being said, it is certainly something that is kind of floated up to the discussion level as TikTok is trying to kind

of figure out how do they make this work. Another question to consider when we're talking about a sale is if China blocks the sale of this proprietary algorithm, which is really TikTok's secret saw, then the question for a new buyer would be can they reconstruct the algorithm. Now, I've talked to some people on Capitol Hill who are pushing these bills and say it can't be that hard. It can't be rocket science. They can rewrite this algorithm,

but that could be surprisingly tricky to do. Can even just a slight tweak and how effect algorithm is at targeting what you want could really cost the app some of its most devoted viewership. And we know it's tricky. We know it's tricky. Instagram and Facebook metas Platforms have tried to copy it. They've been working on it for almost two years and they still haven't figured out a way to do it as well as TikTok has Alex.

What does TikTok have to say when it comes to Divesseger, The company spokespersons say that this wouldn't actually address the specific national security concerns and that they are committed to instead going forward with their Project Texas plan. One of the questions facing TikTok is who could buy it? You know, And that's a big problem for US tech companies who would maybe love to have an asset this valuable, even after kind of recent troubles in the past few months,

still have the cash to buy it. But Facebook's parent company Meta Platforms is being investigated by the Federal Trade Commission for their acquisition of what's happened Instagram. Regulators in the United States and Europe are seeking to block with a Microsoft's acquisitions. So you have all of the major tech companies that would be interested in nasset like this who are already facing antitrust scrutiny, so it makes it harder for them to go out and make another big

purchase of a chief competitor. Alex you described selling the company is kind of like the nuclear option, but it seems like the super nuclear option is the US shutting down TikTok, not just on government phones, bet on everybody's phones. And I imagine that would cause quite the stir. It absolutely would, and we've already started to get a little bit of a taste for what that would look like.

When some of the states in the US banned TikTok on government devices, some universities took that to mean, hey, that also means technology that moves our internet the WiFi. So number of universities, including University of Texas at Austin, the kind of flagship university in Texas, have banned TikTok from campus wi fi, and obviously there's been a bit of a backlash. I've talked to some students and professors

on the ground at UT. One student, Grace Featherstone, even told me that she sees a ban of TikTok on the same scale as a ban of the right to have an abortion. It's just another way that the government is getting involved in your day to day life and telling you what you can or cannot do. It's something that harkens back to the executive order that Donald Trump put in place to attempt to ban this app where

the pushback was on grounds of free speech. So you can expect to start to see some people bubble up as this process potentially progresses and really push back and possibly see a bit of an uprising from young people who want to voice their concerns. When you look back at the midterms, that voter group under thirty, they voted for Democrats sixty percent of them. That's a twenty eight point margin for that voter group they were credited with blocking this red wall. That was right after they felt

the government had started taking away their rights. If you're somebody who is a liberal leaning young voter, now, if you take away something that is the cultural artifact of your generation that you think of in the same vein that certain generations might think of the Beatles as like core to the identity of your generation. Then you can really start to expect that folks are going to get

really upset. Yeah, this is a huge consideration for the Biden administration, and we do see a division between the intelligence community that is very worried about the national security concerns and some of the political appointees who recognize that there is a political risk and taking such a drastic step. Gina Raimundo, the Commerce Secretary, told Bloomberg Business Week several weeks ago that if you were to ban TikTok, you

would lose like every voter under thirty five. It would be kind of fascinating and wholly unprecedented for consumer focused app that is this big and this popular to be banned based on a slate of concerns that some folks would argue are not really specific, but are just kind

of big scary clouds hanging over this company. I will say, as TikTok's concerns have been very much in the media these days, meta and snap share prices have reacted have increased just every time that we see another big move against TikTok and We've seen Mark Zuckerberg, however, come out and say banning TikTok would set a dangerous precedent because they would be worried about the operations of Facebook in

other countries. You know, could another country take a similar position and say, well, Facebook can't operate unless user data is housed in country, and we have the same kind of protections that TikTok is offering American users. And we have seen pushback from some civil society groups in the

United States against the threat of a band. We've seen the ACLU and a group called Fight for the Future who have warned that this could really restrict freedom of expression in the United States and that this would be a very bad precedent for the US government to take. We'll be right back and at the top of the show, we talked about how tiktox CEO showed too had a pretty difficult time for all the reasons that we've been discussing, all these suspicions about whether China has access to the

data of US users. He walked into that hearing room thinking that he had something to offer them, and what exactly was it? So Choo's best answer to questions about security is this Project Texas plan we talked about. However, we're already very familiar with the details of this because TikTok has advertised it for months. There's posters all over the Washington metro ads in the Washington Post, in the New York Times about how great this plan is. So

we already know the details of this plan. But what he wasn't prepared for was the other questions that he got. Lawmakers asking him specifically which by Dance executives are members of the Chinese Communist Party, and his answer to that was, I don't necessarily know. He was also asked about human rights abuses in China and whether or not he agrees that there are human rights abuses, especially of the weaker minority in West China, and his answer was all human

rights abuses are bad. I'm here to talk about TikTok. That was a very unsatisfactory answer and also made it look like he was trying to avoid criticizing China, and he was actually called out for that. You have absolutely tied yourself and not to avoid criticizing the CCP's treatment of the weaker population. And then there were also a couple of additional moments I think it was the chairwoman who cut him off, didn't allow him to answer questions

around some of the more emotional moments. Some of the lawmakers brought up users who had committed suicide, young users. They showed some videos and it kind of sucked the air out of the room about content around taking one's own life, and when Choo wanted to respond to those moments, he was not given the time. On the hearing day, that room was absolutely packed to the gills, from the media gallery to the public viewers and a row of TikTok influencers that the company had brought in to try

to show off who is benefiting from this app. But in the end, the kind of most important folks in the room were the lawmakers sitting up in their seats, and both sides, the Republicans choose left, the Democrats on choose right. Both of them were coming at him with a level of agreement and fervor that was match with both the Republicans and the Democrats. Now, one new thing that he did bring in that wasn't already outlined in Project Texas was this idea of trying to explode this

conversation to not be just about TikTok. He kept trying to broaden the scope and say what about other social media companies, but lawmakers again were not willing. Most of

them were not willing to talk more broadly. So it seemed like lawmakers were really there to kind of pin them down and focus directly on TikTok and its ties, even though a lot of industry watchers and perhaps policy watchers would say there are bigger issues here than just what TikTok is bringing to the table, that there are also problems with social media writ large that should be acknowledged. But TikTok seems to be the issue that both sides,

both parties, can actually get behind. And this is the committee that would be responsible for privacy legislation. They had a bill last year, the American Data Privacy and Protection Act, that got bipartisan support in the committee. So we did hear lawmakers naming that bill and saying we need to revisit this comprehensive privacy plan for all companies that use

user data. And that was kind of the only olive branch that we heard to chew during this hearing, is we need to look at a larger data privacy standard Eventually, where does the company go from here? For example, what happens with this big Project Texas. Are they going to move forward with it? This has really been a battle of public sentiment, So this is a moment that does not help that battle. Project Texas is something the company has still said it's committed to. They are still moving

forward with that plan. They're still trying to put up what you continue to call a firewall around US user data. And now when you think about what's next, we've heard calls for a divestment from both lawmakers and according to people familiar with the matter, from Biden's administration as well. But there was a bit of a curveball to that plan. Just before the hearing, the Chinese Commerce Ministry came out and said any kind of sale would have to be

approved by the Chinese government. So that adds another kind of hit to his argument that there's no Chinese influence on TikTok. So the company at this point is going to continue moving forward with its plan, and the best thing they can kind of hope for is more time.

That time drags on, that legislative process drags on, that the US government is still kind of not in perfect alignment as to what happens next, and perhaps some discord between exactly how these two parties should come together and what's going to happen next. I spoke with Senator John Thune.

He's the Republican from South Dakota who's sponsored the leading legislation that could result in a TikTok ban, and he said he hopes this hearing kind of shakes loose support for his legislation and really speeds along the process to get this not just through the Democratic led Senate, but

also through the Republican led House. And that's really the equation we're looking at now, is how these two majorities, different parties can come together and decide on the same course of action to give the administration the tools it needs in order to actually take this step. The other element of this is the National Security review that the Biden administration is doing, led by the same agencies that are part of the Committee on Foreign Investment in the

United States SIFIA. So we talked about before. So this is another process that we see playing out. And one thing that was interesting that cho said in the hearing is that those conversations are ongoing. Now. We have people saying that the administration has rejected what TikTok is offering in this Project Texas plan, but Chu says the company continues to talk to the government and it's trying to find a way forward that can allow the platform to

continue operating in the United States. The last piece is really the piece that TikTok tried to bring to the forefront, is what do users have to say about this. They came out talking about one hundred and fifty million people who are using the app. Lawmakers didn't love to see that this number is growing because that means potentially growing concerns. But these are really important voices, and we are just

a year out from a full election season. So if there becomes kind of an uprising of young voters who are really vocal and kind of pushing back on some of these political optics, and if there are not strong reasons for the government to ban this app, then that could be another factor that plays in TikTok's favor. But you know, we haven't seen that uprising yet, so perhaps that will be something that bubbles up in the coming months. Alex Sparenka, Anna Edgerton, thanks for coming on the show.

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