TikTok war

A day after U.S. lawmakers voted overwhelmingly to force TikTok's Chinese owners to sell the video-sharing app, the company's chief executive, Shou Zi Chew, expressed confusion.

“There’s a lot of noise,” Zhou exclaimed during a visit to Capitol Hill on Friday. “But I haven't heard what exactly we did wrong.”

It was an odd comment as lawmakers made clear their concerns that Chinese company ByteDance owns the social media site that has become the go-to social media site for American teens and young adults.

The FBI and U.S. intelligence agencies are concerned about everything from China's access to Americans' personal data to the use of the app's algorithms to help spread disinformation and interfere with U.S. elections.

Last March, as tensions between the United States and China grew, Zhou was grilled on Capitol Hill and lawmakers told him directly what they thought was wrong.

On Wednesday, the House finally acted on those concerns, passing a bill 362 to 65 that would ban app stores from distributing TikTok unless ByteDance divests the popular video-sharing platform within 180 days. Zhou condemned the results, which were supported by both Republicans and Democrats, as “very disappointing.”

The Senate must now decide whether to take up the measure, and it's unclear how it will do so. But President Joe Biden said he would sign the bill if it reaches his desk, a comment that surprised some as his presidential campaign uses TikTok to appeal to younger voters.

TikTok argued the House bill was unconstitutional and insisted it was outside the control of the Chinese government. But some critics argue that Chinese-owned apps should not be allowed to operate in the United States, just as foreign ownership of traditional media such as newspapers and television stations is restricted.

Some critics worry about more than just national security. More and more Americans get their news from TikTok, which some say gives it undue influence. Jewish groups in the United States, for example, have accused it of giving pro-Palestinian voices more prominence in its algorithm than pro-Israel voices as the war in Gaza unfolded.

Anti-Defamation League CEO Jonathan Greenblatt said in an interview late last year that TikTok “is a 24/7 news channel for many of our young people” and “fuels anti-Semitism and anti-Semitism[ism] There is no impact. ”

While Chew insists he didn't know TikTok did anything wrong, some inside Bytedance feel let down and deceived by the CEO and others involved in crafting the strategy that opened up the app to becoming Huawei's successor Gate, the Chinese telecom giant has essentially withdrawn from the U.S. market due to national security concerns.

“Our strategy was wrong,” a ByteDance insider said, adding that the company’s general counsel “got stuck in a black box, got defensive and failed to come up with a more proactive strategy.” They added, Chew was “stubborn about, or unaware of, what was going to happen.”

immediate problem For TikTok, that's what the Senate is doing now.

Democratic Senate Majority Leader Chuck Schumer has not said whether or how the upper chamber of Congress will consider the bill. But a strong majority in the House — and rare bipartisan support — gives it a huge boost.

TikTok itself has also helped create some of the momentum behind this support. A week before the vote, many politicians were outraged when TikTok used its own app to help subscribers register complaints with congressional representatives.

House members also received a series of classified briefings from intelligence officials, which observers said helped boost support for the bill. Senators will receive similar briefings in the coming weeks, which will help determine how they vote.

Several key senators have expressed strong support. Senate Intelligence Committee Democratic Chairman Mark Warner and Republican Vice Chairman Marco Rubio said in a joint statement that they “look forward to working together to get this bill passed in the Senate and signed into law.” Progressive Democratic Sen. John Fetterman of Pennsylvania and hawkish Republican Josh Hawley of Missouri also called for the bill to be introduced as soon as possible.

Schumer himself has previously supported calls for divestment. “An American company should buy TikTok so everyone can keep using it and your data is safe,” he wrote on social media in 2020.

But it's unclear whether senators are ready to support Measure 60, a number that would shield it from certain procedural mechanisms. Libertarian Republican Rand Paul opposed the bill on free speech grounds, as did some Democrats. Utah Republican Mike Lee condemned the move as an executive branch overreach.

The Senate's more complicated path led TikTok executives to believe senators would not support the House bill. “It looks like it will die in the Senate,” said a person familiar with the Chinese company’s strategy. “If it is not defeated in the Senate and signed into law, ByteDance will definitely take the legal route.”

The company has been down this road before. In 2020, then-President Donald Trump issued an executive order banning TikTok from operating in the United States and giving ByteDance 90 days to divest its U.S. assets. The company challenged the order in court and it was blocked hours before it took effect.

Trump spoke out against the legislation last week, in part because he said it would help Facebook, which banned him from the platform for two years.

TikTok supporters hope Trump will move in their favor. Some ByteDance investors have contacted Trump's presidential campaign to provide data highlighting the former president's popularity on TikTok compared to his rival Joe Biden, according to people familiar with the company. .

“Trump's people have definitely seen a bunch of data from TikTok about how he's overtaking Biden, and he obviously likes it,” said a person familiar with TikTok data. The Trump campaign did not respond for comment. ask.

Some believe the company might have avoided the situation altogether if Chew had made a similar offer to his most hostile critics after testifying before Congress last March. “What you need to do is make people like [Republicans] Ted Cruz and Marco Rubio came out and declared victory by offering them what they could call a winning deal. “A ByteDance insider said.

Another person close to ByteDance said the company now aims to “kick the can down the road” until Trump returns to the White House in 2025.

Until then, bigger questions One question facing TikTok is whether it can be sold and to whom.

Microsoft was in talks with TikTok about a deal in 2020, but the talks collapsed. Oracle later struck a deal with Walmart to acquire its U.S. operations, but the deal was shelved after the Biden administration decided to review the deal.

The Chinese government has made it clear it does not want ByteDance to spin off TikTok, and most people close to ByteDance insist the company will not sell even if Congress tries to force it.

But if Trump, who is close to Oracle Executive Chairman Larry Ellison, returns to power, reviving the deal with Oracle may not be impossible.

Investor Steven Mnuchin, who served as Trump's Treasury secretary, also said Thursday that he was assembling a team to acquire TikTok.

The company doesn't disclose specific numbers, but total global revenue in 2023 will be $120 billion, including $16 billion in the United States, according to five people familiar with its operations.

ByteDance investors face months of further uncertainty and are frustrated with how the parent company has handled the situation. An early investor who holds a large stake in the company and knows Chew said ByteDance “has not communicated any information about its development status.”

“They are a very communicative company. We are trying to find out what happened,” the person said. “Shou is also trying to find out, and he doesn't know what the hell they're doing. They believe things will never get to this, and that's TikTok's position. When I last spoke to Shou, he said things will never change. It’s so bad.”

While TikTok's situation in the U.S. is heading in a difficult direction, there's little evidence that pressure will lead other countries to follow suit, as has been the case with some U.S. allies targeting Huawei.

TikTok denies claims by U.S. intelligence and security officials that it poses a threat. It insists it has created a structure in the United States called “Project Texas” that isolates Americans' personal data from any Chinese.

But the company has previously had to admit that ByteDance’s Chinese employees had access to some U.S. data in the past. FBI Director Christopher Wray recently said on Capitol Hill that ByteDance would be required to hand over data to Beijing if Beijing requested it, as that obligation is outlined in China's national security law.

A TikTok spokesperson did not respond to questions about how ByteDance would reject such requests from Beijing.

TikTok is currently banned on government devices in several countries outside the United States, including other members of the Five Eyes intelligence-sharing network: Canada, Australia, New Zealand and the United Kingdom. In the UK, TikTok may also face problems over data protection laws that are about to be discussed in Parliament.

India has banned TikTok from operating in the country due to geopolitical tensions between the two Asian giants. The company has faced criticism in other countries, including Italy, for content deemed harmful to young people. But talk of banning the platform has been met with fierce resistance from politicians who use the app.

In Taiwan, a wave of disinformation and propaganda on TikTok targeting the ruling Democratic Progressive Party ahead of the January 13 presidential election has also sparked heated debate about how to counter the social media platform.

For those working at TikTok, the situation in Congress only adds to the pressure. Multiple employees said morale, already low due to the ongoing internal reorganization, fell further when management provided them with little communication about the potential ban.

“The ship is sinking and all my coworkers are discussing what our severance packages will be,” one employee said. “I would be happy if it was bought. Maybe it would be a better work culture.”

Additional reporting by Eleanor Alcott, Christina Criddle and Catherine Hill