The US opens investigation into TikTok’s parent company ByteDance
This appeared in The Millennial Source
The US government has launched a national security investigation into TikTok’s owner ByteDance Technology regarding its $1 billion acquisition of the US social media app Musical.ly.
ByteDance, a Beijing-based technology giant, acquired Musical.ly in November 2017. At the time, Musical.ly had an estimated 60 million users in the United States and Europe. Less than a year after the acquisition, ByteDance merged Musical.ly with its own similar social app TikTok, which is now one of the world’s most popular social apps with more than 1 billion downloads globally.
Although the acquisition took place two years ago, US lawmakers are now raising national security concerns, especially regarding the Chinese company’s possible content censorship and collection of data from its US users. On October 24, US Senate Minority Leader Chuck Schumer and Senator Tom Cotton requested a national security probe in a letter to Joseph Macguire, acting director of national intelligence.
According to Reuters, ByteDance did not seek clearance from the Committee on Foreign Investment in the United States (CFIUS) for its acquisition of Musical.ly, which gives the US security panel scope to investigate it now. CFIUS is a government agency that reviews deals with foreign companies to identify potential national security risks.
The details of the probe could not be learned due to its confidential nature.
TikTok’s popularity in the US
Founded in 2012, ByteDance now owns a range of news, video, and selfie apps, most of which are used in China. Thanks to investment from powerhouses such as Japan’s SoftBank Group, ByteDance is now the world’s most valuable startup, with an estimated valuation of more than $75 billion. In the first half of this year, ByteDance reported revenue of $7 to $8.4 billion, according to Reuters.
TikTok’s acquisition of and subsequent merger with Musical.ly paved the way for its growth in the US market. According to Apptopia, TikTok’s monthly active US-based users increased by 30 million in the three months following the merger.
TikTok is currently the fourth most popular social media app in the US Google Play Store and App Store, following Facebook, Instagram, and Snapchat. The app currently has 26.5 million monthly active users in the US, 60% of whom are between the ages of 16 and 24.
Although a Chinese company owns the app, TikTok isn’t available in the Chinese market. Instead, ByteDance operates a separate Chinese version of TikTok, called Douyin.
US criticism against TikTok
ByteDance stated that TikTok’s operation in the US is independent of its parent company in China. However, TikTok US General Manager Vanessa Pappas told the Washington Post that her manager and Musical.ly co-founder Alex Zhu reports directly to Yiming, ByteDance’s founder.
The line of reporting raises the question of whether TikTok is truly free from Beijing’s influence.
In 2018, the Cyberspace Administration of China announced a new policy that required detailed logs on users from any internet platform that could be used to “socially mobilize” or lead to “major changes in public opinion.”
One national security concern raised is whether the Chinese government has access to the personal data of millions of US TikTok users.
According to the Washington Post, ByteDance has said in a statement that US user data is stored domestically. The company also said it had hired US consulting firm Special Counsel to analyze TikTok’s app and where it sent user data.
Douglas Brush, who led the analysis for Special Counsel, said that TikTok’s user data, including their names, dates of birth, and other information, was stored exclusively on servers in Virginia and Singapore. Brush added that during his three-month review from July to October this year, which included interviews with TikTok employees and a review of the app’s code, the Special Counsel team found no way TikTok could send data to China during those months.
In February this year, TikTok received a $5.7 FTC fine over allegations that its precursor, Musical.ly, illegally collected names, email addresses, pictures, and other data from children younger than 13.
ByteDance and TikTok are not participants in the Global Network Initiative (GNI), a collection of companies that have pledged to resist unlawful or unreasonable requests from governments to access user data. The GNI does an annual audit of its members to ensure they’re keeping their promises. ByteDance and TikTok are not subjected to this investigation.
In September 2019, the Guardian published leaked internal company guidelines that instructed TikTok moderators to ban videos and topics, similar to the Chinese government’s censorship policies. Among banned topics are the “distortion” of historical events such as the Tiananmen Square incidents, criticism/attack of countries’ policies or social rules, including the socialism system, and discussion of highly controversial topics, which the rules said included the independence of Tibet and Taiwan.
According to the Washington Post, ByteDance retired this set of rules in May this year, after the app reached 100 million downloads in the US. The company said that the rules were a relic of TikTok’s early days when they took “a blunt approach” to minimizing conflict.
In a press statement, TikTok said that their content moderation policy is not influenced by the Chinese government and that their California-based content moderation team only adheres to the company’s policies for the US.
“Let us be very clear: TikTok does not remove content based on sensitivities related to China. We have never been asked by the Chinese government to remove any content, and we would not do so if asked,” the statement says. “TikTok does not operate in China, nor do we have any intention of doing so in the future.”
TikTok’s content moderation policy is not public. According to the Washington Post, some former TikTok employees said that the strict content rules would minimize the anger and negativity often seen on social media. TikTok wanted to remain a place for light and positive videos, where political disputes were banned, and social discussions were fun.
However, the app still raised censorship concerns after news reports highlighted that the Hong Kong protests were rarely mentioned on the app and that TikTok moderators were told to censor videos that featured political themes, not just those related to China.
Among content being censored are videos featuring scantily clad women, suggestive dancing, heavy kissing, vaping, and political content — even if it includes constructive discussion unrelated to Chinese politics. Former TikTok employees told The Washington Post that flagged videos were either deleted or blocked from appearing on the streams where most videos are seen and shared.
In October, TikTok said in a press statement that it was working with the law firm K&L Gates on its moderation policies.
US efforts to thwart Chinese influence
The NY Times reported that the Trump administration and many US lawmakers saw Chinese companies’ success in the US market as a threat to national security. As a result, they have set up barriers to prevent Chinese firms from acquiring American data and technology.
Last year, the US blocked the merger between Moneygram and Alibaba’s payment affiliate Ant Financial. President Trump has also blocked Huawei and other Chinese tech firms from purchasing American products due to national security and human rights concerns. Additionally, he has also imposed tariffs on more than $360 billion of Chinese products in a trade war.