America should be careful to single out TikTok
#America #careful #single #TikTok Welcome to InNewCL, here is the new story we have for you today:
Click Me To View Restricted Videos
If you utter the words “TikTok” to middle-aged executives and financiers this Christmas, many will cringe.
No wonder. Since launching in 2016, the short-form video platform has been hugely popular with kids and is now used by two-thirds of American teens. Which, in turn, causes baffled irritation for many parents — especially when it comes up at family dinners.
But for now, adult investors have another cause for concern: TikTok is becoming a powerful symbol of the geopolitical pitfalls that await markets in 2023.
On Friday, the US Congress is expected to pass a $1.7 trillion spending bill. Deep within its 4,100+ pages lies a measure devised by Republican Senator Josh Hawley to ban TikTok from all US federal government devices, arguing that its parent, ByteDance, was created in China.
Hawley’s initiative is more low-key than another bipartisan bill co-authored by Marco Rubio, the Republican senator. This aims to “ban Beijing-controlled TikTok from America for good” and claims that the platform “is being used to manipulate feeds and influence elections [and] Answers to the People’s Republic of China”.
But while Rubio’s math likely won’t work, more than a dozen states have already banned TikTok from government computers. And this has not only created a sticking point for the platform; it also underscores how political tensions between China and America are bringing nasty surprises to wealth managers.
A crucial but widely overlooked point about TikTok is that its owner, ByteDance, isn’t just “Chinese”. Far from it: As company representatives recently stated, around 60 percent of the company belongs to western funds such as BlackRock, Fidelity and General Atlantic. In fact, the head of the latter. Bill Ford sits on the TikTok board.
Those funds dove in to gain access to a media and fintech play. After all, ByteDance has built a hugely successful e-commerce business via Chinese app Douyin (the Chinese equivalent of TikTok) and is said to be copying that in America.
But while this used to mean considering TikTok as a retail business rather than a military asset or sensitive area of technology, it now becomes necessary to redraw those definitional lines. Finally, consumer technology has become so powerful that it can be reused in novel ways.
So investors not only have to think about what’s happening with TikTok, but also the risks related to other technologies exposed in China. Will senators like Rubio start to fret over Apple’s supply chain, shall we say? And where does the technical decoupling between the USA and China stop?
It’s fiendishly hard to judge since US-China economic relations are defined by both economic “codependence” and “false narratives,” as former Morgan Stanley banker Stephen Roach puts it in a powerful new book, Accidental Conflict , writes.
TikTok is an example of this. The topics that triggered the current congress criticism can be divided into three categories. One is concern that social media is damaging America’s mental health in general, for example in relation to eating disorders.
A second is fear that TikTok in particular is designed to undermine American teens by distracting them with addictive celebrity quizzes — or digital fentanyl, to quote a term used by Tristan Harris, a former Google Employee turned whistleblower. This differs from ByteDance’s offering in China, Harris says, where Douyin offers healthy educational content to children.
The third problem is surveillance. Congressional critics argue that the Chinese government can use TikTok to steal Americans’ personal information. A few years ago, Beijing passed a law that obliges all Chinese companies to cooperate with its security forces.
Unsurprisingly, TikTok refuses to do so. It insists that the content users see is selected by automatic algorithms, not humans.
The company also points out that American users’ data is stored on American soil on servers in Virginia and uploaded to the cloud through the American company Oracle. And while Chinese engineers are using small bits of it to develop products in mainland China, TikTok insists this doesn’t fall into Beijing’s hands. “We have a US-based security team and we work with the US government,” said Michael Beckerman, the public order chief. He promises that the company “has solutions” to all of the critics’ concerns.
Maybe like this. But the problem plaguing TikTok — and investors — is that it’s impossible for outsiders to really know whether or not the criticism is warranted. I suspect many of these concerns could be cast at other American tech companies as well. Apple devices, for example, collect sensitive data, and US tech giants often use China-based product teams.
So the real priority for Congress should be to create overarching controls, not company-specific prohibitions. (Especially since there are no laws in the US requiring user data to be kept on American shores.)
But don’t bet it’s going to happen any time soon. So the key point is this: as long as data science remains a mystery to most voters (and politicians), tech companies are always in danger of becoming geopolitical soccer balls. American kids might not care. Your investor parents should definitely do it.
gillian.tett@ft.com
