A TIKTOK -ING TIME BOMB?

America contemplates prohibiting a wildly popular social medium that just might be a trojan horse for espionage

By Garrett Baldwin

IN 2021, Matthew Pottinger, a former national security adviser to the Trump administration, sounded the alarm on the threat posed by China’s penchant for collecting data on U.S. citizens.

Pottinger told a Senate panel the Chinese Communist Party (CCP) had stolen enough information to create a dossier on every American. He said bad actors could use the data to “influence and intimidate, reward and blackmail, flatter and humiliate, divide and conquer.”

To protect private data, the Trump administration banned the social media platform TikTok, owned by ByteDance, a company with links to the CCP. Trump cited emergency economic powers to kick the video-sharing app out of the country.

However, in December 2020, a federal judge blocked the Trump order. U.S. District Judge Carl Nichols ruled the Trump administration had overstepped its authority. That still didn’t end regulatory pressure on the app, which competes with U.S. tech firms like Meta Platforms and Snapchat.

Over the last two years, political efforts to curb the use of TikTok have become commonplace, with at least 30 states banning the platform on phones and devices used by public employees.

The anti-TikTok movement gained even more momentum in March with a Congressional hearing that gave voice to the platform’s opponents on both sides of the aisle. They delivered a bipartisan message to the CEO of TikTok: We don’t like you. You’re a danger to national security. And we will shut you down.

Now, votes are pending on Capitol Hill on two bills that would ban TikTok in the United States.

Against that backdrop, let’s examine the platform’s broader impact, including the scope of its influence, the potential regulatory response and the expected fallout from this rare display of bipartisan outrage.

The background

Younger generations have flocked to the social media platform, downloading the application more than 2 billion times worldwide.

The platform enables users to create and share videos from 15 seconds to 10 minutes. Content includes everything from hilarious skits to helpful financial recommendations and investment advice. It showcases pranks, recipes, dance routines and just about everything else.

TikTok debuted in China in September 2016 under “Douyin” as a rival to social networking services like Instagram and Facebook. The latter two were banned in China, giving ByteDance a pathway to dominance there.

DO YOU SUPPORT OR OPPOSE A NATIONWIDE BAN ON TIKTOK?

58% Support; 42% Oppose

—Luckbox Reader Survey

The platform’s growth accelerated with the purchase of the rival app Musical.ly in the fall of 2017. The merger made TikTok available in far more places around the globe.

In a March 21 video on the platform, TikTok CEO Shou Zi Chew said TikTok now has more than 150 million users in the U.S., a higher total than in any other country. According to the trends-following website DataReportal, Indonesia is TikTok’s No. 2 country, with 109.9 million active users ages 18 and above.

TikTok differentiates itself from rivals like Snapchat and Instagram with an algorithm that makes the video experience engaging if not addictive. It tracks users’ comments, shares, likes and preferences for long or short videos. It then uses that information to determine what videos to deliver to each user.

The algorithm also gathers information about users’ device settings, location and language preferences. Combining that with information on their interest in popular trends culminates in a “For You” page customized for each user.

The algorithm aligns with the user’s behavior and interests to create a digital profile. While this customization creates a dynamic user experience, it raises questions about privacy and how the data is used.

The audience for TikTok expanded during the COVID-19 lockdown as Americans turned inward for entertainment. Users are typically millennials, born between 1981 and 1996, or members of Generation Z, born between the late 1990s and early 2000s, according to the consulting firm SocialSphere. They’re split nearly evenly between males and females.

Social media automation software firm Hootsuite says TikTok was the second-most downloaded app globally in 2022, trailing only Instagram. But TikTok was the most-downloaded app on the Apple App Store that year, HootSuite says.

China: The data broker

As with most social media apps, users can download TikTok for free. That’s the first sign of a business model centered on data. If an application carries no fee, the user is typically the product.

However, TikTok has plenty of company when it comes to collecting reams of personal data. Companies like Facebook and Apple also gather extensive information for marketing purposes.

It’s the company that TikTok keeps that sets it apart from rivals.

The global version of TikTok is incorporated in the Cayman Islands and isn’t available in China. But whistleblowers allege ByteDance exercises crucial influence over the company. Last year, ByteDance went so far as to create a division called Beijing Douyin Information Service to operate Douyin—the version of TikTok offered in China. The CCP owns shares in that business, according to CNN.

Such relationships have prompted scrutiny of TikTok by the U.S. government over concerns about security and privacy. China has no privacy laws, and the CCP enjoys unfettered access to all personal data.

The CCP could also use TikTok to spread propaganda or censor criticism. Other foreign powers might also use the platform to spread anti-American sentiment or misinformation. Interference in U.S. elections is causing particular concern.

In addition, officials in China have reportedly prohibited videos that mention the Tibetan independence movement, or anything related to Tiananmen Square, Newsweek magazine says.

According to Forbes magazine, U.S. intelligence agencies haven’t publicly shared any evidence that TikTok sends data to the CCP. But a hypothetical straight line stretches between the company and members of a ruling party with a history of exploiting data inefficiencies.

In November 2022, Luckbox explored the opaque nature of the data brokering business. Brokers collect data that includes demographic information, location and more to sell to advertisers and other willing buyers. Despite intrusive practices, the industry remains largely unregulated.

In many ways, China behaves like a data broker. But instead of gathering information to bolster corporate power and make economic gains, China leverages it for political purposes, says Aynne Kokas, associate professor of media studies at the University of Virginia and the author of "Trafficking Data: How China is Winning the Battle for Digital Sovereignty."

She argues that technology has surged in China with the help of Silicon Valley’s fondness for market disruption, Wall Street’s addiction to growth stocks and any number of failures in U.S. regulatory policy.

But the real danger is that most Americans fail to understand their data is critical. If the CCP can aggregate enough personal information, it can come to a profound understanding of the U.S. economy and political system, Kokas says.

DUNN: I ASK YOU AGAIN, MR. CHEW, HAS BYTEDANCE SPIED ON AMERICAN CITIZENS?

CHEW: I DON’T THINK THAT SPYING IS THE RIGHT WAY TO DESCRIBE IT.

DUNN: ANY TIKTOK OR BYTEDANCE DATA THAT IS VIEWED, STORED OR PASSES THROUGH CHINA IS SUBJECT TO THE LAWS OF CHINA, A ONE-PARTY, AUTHORITARIAN STATE, HOSTILE TO ALL AMERICAN STANDARDS OF PRIVACY.

—BEFORE THE HOUSE ENERGY AND COMMERCE COMMITTEE IN MARCH 2023, TIKTOK CEO SHOU ZI CHEW RESPONDS TO QUESTIONS FROM U.S. REP. NEAL DUNN, R-FLA.

Therein lies the critical issue, says Anton Dahbura, executive director of the Johns Hopkins Information Security Institute and co-director of the Johns Hopkins Institute for Assured Autonomy.

“No one thinks about ways to get into systems of interest more than bad guys,” Dahbura told Luckbox in a March interview. “So, for the average person, the app itself doesn’t seem like it’s doing anything harmful. But it can be—even the Metadata around apps includes your location.”

TikTok can track individuals engaged in 18 enterprises critical to national security, such as research, agriculture, manufacturing, technology and education, he said. The Chinese government has even been accused of hacking a Marriott database to find out who had stayed in certain hotels.

Such acts of espionage also abet intellectual property theft, Dahbura says. What’s more, hackers target anyone who’s associated with a person who has information they want.

“They can quickly sort through millions of records,” he notes, “to find the persons that are of interest to them. [They can] connect people, so their interest isn’t limited to people who work at key facilities, their friends and even people who live nearby or in the same building.”

That qualifies multitudes of people as possible targets, according to Kokas. “People think: ‘I’m not a person of interest; I’m nobody. I don’t work for the military,’” she says. “Our critical infrastructure ... involves many more people.”

Bad guys can also easily harvest and use location data to identify individuals. That can target them for phishing scams at universities, law firms and research labs.

Congress contemplates a ban

In March 2023, TikTok CEO Shou Zi Chew testified for five hours before mostly hostile members of Congress. Democrats and Republicans were united in their concern about the possibility of China using TikTok to spy on the United States.

Rep. Cathy McMorris Rodgers, R-Wash., chair of the House Energy and Commerce Committee, captured the mood of the event in her opening statement: “To the American people watching today, hear this: TikTok is a weapon by the Chinese Communist Party to spy on you, manipulate what you see and exploit it for future generations.”

It didn’t end there. “Your platform should be banned,” Rep. McMorris told Chew.

Khaby Lame, who has more TikTok followers than any other personality with 157.8 million, attends the 79th Venice International Film Festival in September 2022

During Chew’s testimony, he stressed the company’s independence from China. But as he made his case, members repeatedly interrupted to stress their dissatisfaction with his answers. In one showdown with Rep. Anna Eshoo, D-Calif., Chew argued that no evidence existed that the CCP had access to TikTok data or that the party requested it.

Verbal fireworks aside, Congress is considering two bills that would not only ban TikTok but would also extend far beyond banishing just that platform.

The proposed bans

The government is considering several options for banning TikTok, according to Darrell M. West, a senior fellow at the Brookings Institution Center for Technology Innovation.

One approach would simply prohibit downloading the app onto platforms like Apple, Google and Amazon. That would discourage developers from creating new functions and thus cause the application to fall from favor. Legislators could write that law on a single sheet of paper.

But a bill requiring thousands of pages of description seems more likely. A proposal called RESTRICT, short for “Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act,” raised alarms among Democrats and Republicans. Critics dubbed it the “Patriot Act on steroids,” and the digital rights advocacy group Electronic Frontier Foundation (EFF) said it could criminalize the use of security measures known as virtual private networks, or VPNs.

“Instead of passing this broad and overreaching bill,” the EFF says, “Congress should limit the opportunities for any company to collect massive amounts of our detailed personal data, which is then made available to data brokers, U.S. government agencies and even foreign adversaries, China included.”

The RESTRICT bill would carry penalties of up to $1 million in fines and up to 20 years in prison for using VPNs to circumvent content blocking.

The bill also grants unprecedented powers to the U.S. Secretary of Commerce to “take action to identify, deter, disrupt, prevent, prohibit, investigate or otherwise mitigate, including by negotiating, entering into, or imposing and enforcing any mitigation measure to address any risk arising from any covered transaction by any person, or with respect to any property, subject to the jurisdiction of the United States.”

That provision leaves a lot open for interpretation. But in the meantime, let’s look at TikTok’s attempts to cozy up to the U.S. government.

In one failed negotiation, TikTok proposed Project Texas, a business strategy that would wall off Americans’ user data and feed only an American-centric algorithm. Members of Congress dismissed the idea because they worried that China would still have access to such data.

Then there’s the lobbying effort. ByteDance and its subsidiaries, including TikTok, spent $5.3 million lobbying the U.S. government in 2022. The companies enlisted the help of lobbyists who included former Senate majority leader Trent Lott, a Mississippi Republican, and Joe Crowley, who formerly served as chair of the House Democratic Caucus. Its lobbying has centered on distancing the company from the CCP and emphasizing the goals of Project Texas.

WHO WINS, WHO LOSES FROM A TIKTOK BAN?

SOME PUBLIC companies stand to benefit if Congress banishes TikTok from the American cultural scene.

Snap Inc. (SNAP) and Meta Platforms (META), which owns Instagram, could both reach a wider audience as former TikTok fans search for an alternative social media app.

And that means a lot. TikTok users spent 10 times more hours watching video on the platform than users of Reels, which is Meta’s competitor to TikTok, according to a Wall Street Journal article published in September. The newspaper found that figure in internal Meta correspondence.

In contrast, Meta Platforms gleefully reported in 2016 that the average user spent 50 minutes daily using Facebook, Instagram and Messenger, but hasn’t released numbers since then.

Others who would benefit from a ban include online safety advocates, parents worried about children’s screen time and members of Congress who seized upon the controversy to boost their profiles. But content creators who make money from TikTok videos would take a hit if the medium’s banned.

Small businesses and companies with new products would lose access to TikTok’s purported audience of more than 150 million users each month.

A ban would send change rippling through the venture capital and private equity world. Sequoia Capital and KKR & Co. are among the institutions that own 60% of ByteDance, the company that owns TikTok. Politically, a ban could heighten tension between the United States and China.

The two powers are already at odds over semiconductors, rare earth metals and the green transition. This would be one of the largest product bans since Prohibition was enacted nearly 100 years ago and could trigger a political backlash among Generation Z voters.

But some aspects of a ban remain difficult to read. A far-reaching prohibition that dramatically expands consumer privacy laws or alters how companies can use consumer data might prove damaging to advertising companies, data brokers like Acxiom and other social media networks.

Concerned Americans

While ByteDance tries to win over the U.S. government, the American citizenry remains concerned about personal data and privacy. More than 60% of TikTok users suspect ByteDance has ties to the CCP, according to researchers at SocialSphere.

Some 46% of survey respondents support a nationwide ban of TikTok, a SocialSphere study indicates. The demand for a moratorium was greatest among millennials, aged 27 to 42, at 49%. Meanwhile, 53% of Generation Z, aged 10 to 26, oppose a ban.

A TikTok ban would be the most serious restriction of a product since Prohibition outlawed the sale, import and production of liquor in the United States in the 1920s. A 2022 survey shows two-thirds of American teens have used TikTok, with 16% admitting they use the application “almost constantly.” Moreover, an increasing number of Americans rely on TikTok for news, which reduces traffic for competitors like Facebook and Snapchat.

Hannah Maruyama, a TikTok creator, wrote in an April 2 USA Today column that a ban would have far-reaching implications. “If Congress bans TikTok, 150 million Americans lose access to education, opportunity and each other,” she wrote.

The RESTRICT legislation would give the U.S. government “unilateral control [over] any group of 1 million or more Americans doing anything together online,” she says in the column, adding that she believes Congress isn’t qualified to ban social media applications.

Meanwhile, rival Meta Platforms has hired public relations teams to push for a ban on TikTok, a report in USA Today says. Banishing TikTok would benefit Meta’s Instagram platform.

In addition, Maruyama alleges that many members of Congress own stock in Google-parent Alphabet, Meta Platforms and other U.S. tech companies that would gain from a ban on TikTok.

But as TikTok has grown, almost everyone has sought a bigger piece of the action. Some 86% of Americans aged 13 to 38 want to become social media influencers, a 2022 study by the market research firm Consult shows. TikTok influencers have demonstrated an uncanny ability to leverage their followings into significant paydays.

In fact, the top TikTok stars are earning more money than most S&P 500 CEOs, according to dot.LA., a website that covers tech news in Los Angeles. In 2021, influencer Addison Rae—who came to prominence for her dancing videos—earned $8.5 million. By comparison, Costco CEO Craig Jelinek earned $8.3 million.

This leaves America in an uncomfortable position—a love-hate relationship with TikTok. It’s a platform that’s simultaneously a force for good and a source of evil.