TikTok CEO Shou Zi Chew's testimony before Congress on Thursday appears to have done little to allay Washington's concerns about whether the social media platform poses a threat to Americans' privacy and to national security. In five hours of grueling bipartisan questioning, lawmakers seemed skeptical that the app, owned by Chinese company ByteDance, could be made safe for domestic users.
"We don't think anything said by Mr. Chew alleviated concerns about sensitive TikTok data eventually reaching the Chinese government," CFRA analyst Angelo Zino said in a note. "[A]n outright sale or ban is looking increasingly likely in the next 12-18 months."
TikTok is now at a crossroads: Split up and stay in the U.S., or face a possible ban.
Here's where the company could go from here and what that means for TikTok users.
Prior to the TikTok chief exective's testimony this week, ByteDance had planned to remain a single company, while segregating data for American users of the app into a separate U.S.-based facility run by Oracle and routing any requests for that info through a data-security board. However, lawmakers weren't convinced that the project, dubbed "Project Texas," would protect U.S. users.
The Committee on Foreign Investment in the United States (CFIUS), which reviews transactions that could affect national security, has been pressuring ByteDance to spin off its U.S. subsidiary or sell it to an American company, CBS News has confirmed. However, China pushed back against this possibility Thursday, with a government spokesperson saying "China will firmly oppose" any forced sale of the app.
The RESTRICT Act, a bipartisan bill introduced in the Senate this month, allows the U.S. Commerce Secretary to ban foreign technology companies, as well as encourages the intelligence service to declassify information on potential risks.
One law and technology expert said any TikTok ban wouldn't kick in immediately, since the video platform and some users would likely challenge it in court. If a ban survived the lawsuits, it would most likely result in Apple and Google, who run the vast majority of smartphones in the U.S., removing TikTok from their app stores and turning off app updates.
"Everyone who's installed it would still have it. But my guess is that for everyone who has it on their phone, it would stop working in various ways," said Kentaro Toyama, a professor at the University of Michigan's School of Information.
Because apps are constantly being updated, turning off updates would eventually make it unusable by becoming incompatible with the phone's operating system.
If Apple or Google wanted to take a harder line, it would theoretically be possible, although difficult, for them to push a software update to phones that would stop TikTok from working, noted Caitlin Chin, a fellow at the Center for Strategic and International Studies.
To be sure, users would still be able to get around the bans to view TikTok content and download it from other sources by using virtual private networks that mask the location of a device. But for most users "who are not technically savvy, [a ban] would essentially eliminate TikTok," Chin said.
One option the U.S. government may be encouraging is for TikTok to spin off from its Beijing parent so it can be acquired by a U.S. company. But the list of suitors for TikTok could be short, with the service likely costing between $40 billion and $100 billion, according to Business Insider, while any deal would likely attract scrutiny from antitrust enforcers.
"Any company interested in buying TikTok needs to be very wealthy and have a high enough risk tolerance, because there's a good chance this deal is not going through," Chin said.
She added, "Any acquisition of this size is almost certainly going to raise antitrust concerns. That rules out Meta and YouTube, which is owned by Google. I don't think it would be easy."
Industry analysts told Insider that both Microsoft and Oracle were potential buyers. U.S.-based Oracle is currently working with TikTok on its efforts to segregate Americans' data to its servers. It had previously put together a bid for TikTok in 2020, when the Trump administration tried to force a divestiture.
During the Trump administration, the federal government moved to ban network hardware made by Huawei and ZTE, two Chinese telecom gear manufacturers, on national security grounds. In 2020, CFIUS also pressured the Chinese owner of Grindr to sell the dating app to a U.S.-based company.
But a move to outright ban a software program would be unprecedented, lawyers and technologists said.
"I can't even think of a precedent where you have a platform with more than 100 million users out there all of a sudden get banned," said CFRA's Zino. "This would absolutely draw the ire of the Chinese government."
The American Civil Liberties Union, the Electronic Frontier Foundation and other civil liberties groups strongly oppose the bill banning TikTok.
"We're talking about not just the hundreds of millions of Americans expressing themselves on the platform, but the many more who are getting information from it," said Ryan Calo, a law and technology professor at the University of Washington. "It would be obviously unconstitutional for the United States to shut down communications with American citizens because they disagree with the content."
The government's concerns fall into three major groups, Calo said.
Politicians have said that, as a subsidiary of a Chinese company, TikTok could be pressured to hand over sensitive information on Americans to the Chinese government or be used by China's leadership as a propaganda tool.
For instance, China could purportedly use TikTok to gather sensitive information about Americans' likes and dislikes for political purposes — as happened with user information on Facebook in the Cambridge Analytica scandal. The app could also potentially be used to install spyware or other malicious software on Americans' phones, Calo said, or to launch phishing attacks.
There's no evidence that TikTok is being used maliciously, nor that propaganda is being funneled through the app, experts told CBS MoneyWatch. However, the app has used some questionable practices. TikTok's operating documents, revealed by The Intercept and The Guardian in 2020, showed that moderators were instructed to suppress certain political discussions, such as mentions of Tiananmen Square or posts that were otherwise embarrassing to Chinese government officials.
The Wall Street Journal reported Tuesday that trackers made by TikTok's parent company were found on 30 state government websites. Tracking pixels, also offered by Meta, Google and smaller websites, helps site administrators measure the effectiveness of ads, but they could also relay sensitive information about a person's online activity.
What's more, executives at TikTok accessed personal information of two journalists in an attempt to locate a sensitive information leak, the New York Times has reported. (American companies, notably Uber, have been guilty of similar infractions.) TikTok said it fired the employees involved and would cooperate with any government investigation.
Experts say that, without restricting data collection more broadly, changing TikTok's owner is unlikely to accomplish much.
"Passing a bill specific to TikTok isn't going to do very much, but the best thing it can do is get people talking on the national level about privacy," said Anton Dahbura, co-director of the Johns Hopkins University Institute for Assured Autonomy. "Until policies change, there are uncountable ways to obtain user data."
He added, "We need to look more closely at the marketplace for user data and determine what's OK and what's not."
Civil liberties advocates have seized on the TikTok debate to push Congress for data privacy laws, which it has so far failed to do despite bipartisan concerns about widespread data collection.
"The No. 1 thing Congress can do to support privacy is support stronger regulations across all industries," Chin said. "Mobile apps in the U.S. are very under-regulated. They build their business on collecting vast amounts of personal information, and instead of charging users they monetize their information and sell advertising based upon it.
"There's nothing to legally stop either Grindr or any other U.S. company from sharing information with just about anybody," she said.
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