Speaker 1: Bloomberg Audio Studios, podcasts, radio news. The US House of
Speaker 1: Representatives passed a bill last week that would ban TikTok
Speaker 1: unless it's Chinese owners sell the platform, and many of
Speaker 1: the apps one hundred and seventy million American users are
Speaker 1: not happy about it.
Speaker 2: Oh, US Government of America, You've made a big mistake.
Speaker 3: When it comes to banning the renegade app.
Speaker 4: Is the one time that they decide to unite forces
Speaker 4: and come together.
Speaker 1: They look like bas Scooby Doo villains that need to retire,
Speaker 1: and I wish they would. It's not the first time
Speaker 1: lawmakers have gone up against this super popular app. Former
Speaker 1: President Donald Trump signed an executive order to ban it
Speaker 1: back in twenty twenty, but it was blocked in court,
Speaker 1: and last year Congress took up the idea of regulating it,
Speaker 1: but attempts to ban it outright have failed. Now renewed
Speaker 1: concerns have it back on the top of lawmakers' desks
Speaker 1: today on the show It's the US Government Versus TikTok.
Speaker 1: Why is Washington picking this fight again? And now does
Speaker 1: it really stand a chance of addressing the China related
Speaker 1: national security concerns? They're worried about and could any version
Speaker 1: of that proposal actually work? From Bloomberg's Washington bureau, This
Speaker 1: is the Big Take DC podcast. I'm David Gerra. Seleiah
Speaker 1: Mosen is promoting her new book out this week called
Speaker 1: Paper Soldiers, How the weaponization of the Dollar changed the
Speaker 1: world order.
Speaker 4: Depending on who you ask, the TikTok algorithm is either
Speaker 4: this hugely sophisticated, unique, powerful tech tool that is able
Speaker 4: to discern what you're interested in, with the inside joke
Speaker 4: on the app being it knows me better than I
Speaker 4: know myself, or, as some lawmakers see it, it is
Speaker 4: an incredibly sophisticated spy device for espionage to collect an
Speaker 4: information that I didn't even know about myself.
Speaker 1: Alex Birinka is a tech reporter at Bloomberg, and she says,
Speaker 1: the very thing that makes TikTok users rabid for the
Speaker 1: app is what the government is so concerned about. Its stickiness.
Speaker 1: Users love the app because it feeds them content that
Speaker 1: seems perfectly tailored to their interests, whether that's a viral
Speaker 1: fetapasta recipe or a puppy video.
Speaker 4: They spend upwards of an hour on the app every
Speaker 4: single day. It is absolutely an enviable asset to.
Speaker 1: Have that asset, The captive eyeballs and data of millions
Speaker 1: of American users ultimately belongs to a Chinese tech company
Speaker 1: called Byteedance, which owns TikTok, which makes many US lawmakers uneasy.
Speaker 1: We've seen politicians coming out of briefings with the FBI
Speaker 1: and the Justice Department saying, essentially, trust us, this app
Speaker 1: is a problem, but we can't share the details.
Speaker 4: Lawmakers and officials largely have thrown out a lot of
Speaker 4: hype patheticals, not a lot of specific evidence.
Speaker 1: So I turned to Dan Flatley, a national security reporter
Speaker 1: at Bloomberg. Dan, I want to ask you about the
Speaker 1: chorus of criticism or the concern that we're hearing from lawmakers.
Speaker 1: What are they saying about the specific risks they think
Speaker 1: this poses to national security?
Speaker 2: Well, the number one risk is data security. So TikTok's
Speaker 2: parent company, Byteedance, is based in China, has ties to
Speaker 2: the Chinese government, and there is a concern that the
Speaker 2: Chinese government could at some future date compelled byte Dance
Speaker 2: to turn over whatever data it has from TikTok to
Speaker 2: the government, and then that data can be used with
Speaker 2: other types of data that China has collected either through
Speaker 2: hacks or other forms of cyber attack, or just data
Speaker 2: that they've bought on the open market to profile people,
Speaker 2: or to blackmail people, or for some other purpose that
Speaker 2: we don't know about now. TikTok, it should be noted,
Speaker 2: has has always disputed this and has basically said TikTok
Speaker 2: Incorporated is a US incorporated company. The data is walled
Speaker 2: off from any government, but that has done very little
Speaker 2: to assuage the concerns of members of Congress who just
Speaker 2: see a real threat there. And then, of course, the
Speaker 2: secondary threat, or maybe the primary threat, depending on how
Speaker 2: you look at this, is whether the app could be
Speaker 2: used in some sort of influence operation.
Speaker 1: The thinking goes a foreign government or some other entity
Speaker 1: could use the app to push certain perspectives to US users,
Speaker 1: to promote propaganda or misinformation talking.
Speaker 2: To folks on the hill. One of the developments that
Speaker 2: really sort of galvanized a lot of support for this
Speaker 2: push was the aftermath of the October seventh attacks in Israel.
Speaker 1: Since October seventh, lawmakers have expressed concern that TikTok's algorithm
Speaker 1: has been favoring pro Palestinian content on the platform.
Speaker 2: On top of that, it's an election year, so there's
Speaker 2: a lot of focus on the voters that TikTok is reaching.
Speaker 2: This is a very coveted demographic, a lot of potential
Speaker 2: young voters, a lot of young people, and politicians are
Speaker 2: interested in reaching those kinds of voters.
Speaker 1: It's sort of a perfect storm and one that brought
Speaker 1: lawmakers together across the aisle in this rare moment of bipartisanship.
Speaker 2: What you have, at least according to the folks that
Speaker 2: I've talked to, was a moment in which all parties
Speaker 2: are sort of worried about China. Some parties want to
Speaker 2: take a really hard line. There's potentially more of a
Speaker 2: concern from Republicans on kind of traditional national security issues
Speaker 2: with regard to China. There is a concern more from
Speaker 2: Democrats about misinformation and disinformation. TikTok sort of found itself
Speaker 2: right in the middle of that than diagram.
Speaker 1: This led lawmakers to hit the gas on passing legislation
Speaker 1: to rein in TikTok. But unlike most previous TikTok bills,
Speaker 1: this time around, lawmakers didn't immediately jump to a ban.
Speaker 1: Could you walk us through this bill? I gather It's
Speaker 1: about a dozen pages long. But what does it spell
Speaker 1: out exactly?
Speaker 2: Essentially, it spells out a process by which TikTok would
Speaker 2: be forced to sell itself to a US company or
Speaker 2: a company that's located in a what we would call
Speaker 2: a quote unquote friendly country, so anybody but China essentially,
Speaker 2: but also you don't want to be sold to Russia
Speaker 2: or Iran. It would require TikTok to do this sale
Speaker 2: within six months, otherwise it would face a band in
Speaker 2: the US, so it would be blocked from app stores,
Speaker 2: it would be blocked from internet service providers. You wouldn't
Speaker 2: be able to get any updates to it, and essentially
Speaker 2: it would just sort of die of starvation because you know,
Speaker 2: the back end stuff would no longer be able to happen.
Speaker 1: In other words, this is an ultimatum to Bite Dance.
Speaker 1: Congress is saying, sell off TikTok to a new owner,
Speaker 1: or the US is going to ban the app.
Speaker 4: This film moved incredibly fast.
Speaker 1: Tech reporter Alex Birinka again, from.
Speaker 4: Its introduction to its vote. It moved it to speed
Speaker 4: that we haven't really seen before or not in recent years.
Speaker 4: With the make up of Congress as it is right now.
Speaker 1: TikTok saw this happening, and it tried hard to slow
Speaker 1: this down. As lawmakers prepared to vote on the bill,
Speaker 1: the app sent out alerts urging millions of users to
Speaker 1: call their representatives and stop the TikTok shut down. TikTok
Speaker 1: users made videos of their own, too, and that campaign
Speaker 1: went viral.
Speaker 2: Do you want to save TikTok, Let me tell you
Speaker 2: a couple of things that you can do.
Speaker 4: We had lawmakers coming out to the steps of Capitol
Speaker 4: Hill the week this bill was voted on, complaining about
Speaker 4: just the vast number of phone calls they were getting.
Speaker 1: These people will listen to us because they want to
Speaker 1: keep their jobs, so let's make sure to spam their inboxes.
Speaker 4: But lawmakers also, particularly the ones who are critical of TikTok,
Speaker 4: saw this as kind of just another way that TikTok
Speaker 4: has a hold over the minds and hearts of users.
Speaker 1: Lawmakers like Republican Congresswoman Kathy mac Morris Rogers. She's the
Speaker 1: chair of the House committee that advanced the bill this morning.
Speaker 3: Prior to our hearing, TikTok used as influence and power
Speaker 3: to force users to contact their representatives if they wanted
Speaker 3: to continue using TikTok.
Speaker 1: She basically cites that call in campaign as evidence that
Speaker 1: TikTok needs to be stopped and implicated the Chinese Communist
Speaker 1: Party or the CCP.
Speaker 4: This is just a small.
Speaker 3: Taste of how the CCP weaponizes applications it controls to
Speaker 3: manipulate tens of millions of people to further their agenda.
Speaker 1: TikTok has done a few things to reassure lawmakers that
Speaker 1: American user data is safe. The company works with Oracle,
Speaker 1: a US based tech company, to protect American user data
Speaker 1: from bad actors and foreign governments. They're also taking another approach,
Speaker 1: lobbying lawmakers directly.
Speaker 4: I got to review one of the pamphlets they're passing
Speaker 4: out to lawmakers defending themselves against some of the Department
Speaker 4: of Justice's claims. They say things like, you think we
Speaker 4: share all this information, well, that's just what every social
Speaker 4: media company shares, like name, email, address, phone number. And
Speaker 4: by the way, TikTok doesn't ask you for your real name,
Speaker 4: or your employment status or your relationship status like some
Speaker 4: other apps do.
Speaker 1: It's a lobbying pushed that actually aligns with what many
Speaker 1: tech critics and privacy advocates are saying they've been trying
Speaker 1: to press the issue even further.
Speaker 4: To blow this up and actually say, hey, this shouldn't
Speaker 4: just be about TikTok, this should be about comprehensive data
Speaker 4: privacy policy. TikTok behind the scenes has been fanning those flames, saying, yes,
Speaker 4: we would love industrywide policy, don't single us out.
Speaker 1: According to Alex, privacy experts think this is a fair point.
Speaker 1: She spoke to one named Callie Schroeder, who works at
Speaker 1: a privacy advocacy organization called Epic.
Speaker 4: She said, Look, if the Internet is a calender, then
Speaker 4: banning TikTok from the US is like plugging one of
Speaker 4: those tiny holes, and you're leaving all the rest open
Speaker 4: for data to kind of seep out, not only from
Speaker 4: rivals who have had a litany of data breaches and
Speaker 4: kind of bad situations come up, but also from things
Speaker 4: like data brokers, these third parties that vacuum up hordes
Speaker 4: of information from the Internet and sell it to the
Speaker 4: highest bidder.
Speaker 2: It's very unusual to see a specific company named in
Speaker 2: legislation like this, and that actually has some members of
Speaker 2: Congress concern. You know, does this actually address the problem
Speaker 2: or is this just kind of a band aid. Okay,
Speaker 2: today it's TikTok, Tomorrow it may be something else. Do
Speaker 2: we need to pass a piece of legislation every time this.
Speaker 1: Happens, Whether it's a problem with TikTok alone or with
Speaker 1: the entire social media environment, lawmakers have decided there is
Speaker 1: cause for concern. But now that the House has passed
Speaker 1: this bill, it goes to the Senate, and if it
Speaker 1: manages to become a law, which again is a long shot,
Speaker 1: there are still huge questions about how to actually implement
Speaker 1: it that's coming up. The US House of Representatives has
Speaker 1: given TikTok's parent company, Byte Dance a warning, we want
Speaker 1: the app out of Chinese control, and we're not afraid
Speaker 1: to force your hand. But that bill still faces some hurdles.
Speaker 1: It's already slowed down since landing on the Senate's plate,
Speaker 1: and even if it does pass the Senate, which is
Speaker 1: again a long shot, and the President were to sign it,
Speaker 1: there is no indication that Byte Dance or the Chinese
Speaker 1: government would give this up without a fight. Here's my colleague,
Speaker 1: Alex Barinka.
Speaker 4: TikTok right now is valuable for China, probably because it's
Speaker 4: valuable for byte Dance. We know according to our sources
Speaker 4: that they aim to sell almost eighteen billion dollars worth
Speaker 4: of goods on the app in the US in its
Speaker 4: first year of operating TikTok Shop. So when it comes
Speaker 4: to just like economic lift and having a parent company
Speaker 4: and byte Dance that owns some of the biggest apps
Speaker 4: in the world, it becomes really, really, really important.
Speaker 1: The Chinese government has made it clear that it would
Speaker 1: have to be involved in any potential sale of TikTok,
Speaker 1: but it's unclear who the US expects has that kind
Speaker 1: of cash lying around.
Speaker 4: The bill itself doesn't specify what kind of sale or
Speaker 4: divestiture would make lawmakers happy. So I kind of tapped
Speaker 4: my old deals reporting hat I used to cover M
Speaker 4: and A for US at Bloomberg, particularly in tech, and
Speaker 4: I think there are three specific options that I really see.
Speaker 1: The first option is ByteDance would sell TikTok to a
Speaker 1: US company or one that's more friendly to the United States.
Speaker 4: The problem with that is under the current administration, the
Speaker 4: Anti Trust regulator has been very, very tough on big tech.
Speaker 4: So when you think of the names that could afford
Speaker 4: a check of thirty five to forty billion dollars, which
Speaker 4: is what Bloomberg Intelligence values TikTok's US business at the
Speaker 4: list is short, it's Meta, it's alphabet, it's Apple, it's Amazon,
Speaker 4: it's all the names that the anti trust regulator would
Speaker 4: be hard pressed to not get involved and block that
Speaker 4: kind of deal.
Speaker 1: So that leaves two other options. One is a sale
Speaker 1: to private investors, so a group of venture capitalists investors
Speaker 1: who would keep it in private control. The other is
Speaker 1: investors buy it then take it public on the market.
Speaker 1: Steven Manuchin, the former Treasury Secretary, has already said he'd
Speaker 1: be interested in rounding up a group of investors to
Speaker 1: buy the app. No matter who buys it, the bill
Speaker 1: specifies that the President would have to sign off on
Speaker 1: the sale. Of course, to get to that point, the
Speaker 1: bill would have to become law.
Speaker 4: Now as we are recording this it is March. The bill,
Speaker 4: if pass would give basically six months for TikTok to
Speaker 4: be sold or blocked. If this passes, say in May,
Speaker 4: which would be pretty quick for this bill to get
Speaker 4: through the Senate, that would put that deadline in November,
Speaker 4: and this November is election season, so this timeline will
Speaker 4: be really important. As legislators look at this bill and
Speaker 4: potentially continue to hear from users who are staring at
Speaker 4: their ballots, thinking about who they're going to vote for,
Speaker 4: and thinking about who might try to snatch this app
Speaker 4: that they love from.
Speaker 1: Their hands, which would make things tricky for President Joe Biden,
Speaker 1: whose campaign and joined TikTok for the first time this year.
Speaker 4: They have been posting dozens of videos and clearly trying
Speaker 4: to reach an audience there. For the Democratic Party, young
Speaker 4: people have been incredibly important in Biden's first election. Young
Speaker 4: people turned out at record levels in the last midterm election.
Speaker 4: Some experts say that young Democrats blocked the prophesized red wave,
Speaker 4: So when you look at what Biden has to lose,
Speaker 4: it is those voters.
Speaker 1: White House officials have said they want to see some
Speaker 1: changes to the bill, but President Biden has said he
Speaker 1: would sign it into law, which could alienate some young voters.
Speaker 1: There's already been backlash against lawmakers who have targeted TikTok,
Speaker 1: particularly those who have used the app in the past,
Speaker 1: like one North Carolina Congressman.
Speaker 4: Jeff Jackson, is currently in the US House of Representatives,
Speaker 4: but he is running for attorney general in his state.
Speaker 4: He has been one of the most successful examples of
Speaker 4: a politician on TikTok, and he also voted for this bill.
Speaker 4: And after that happened, he has been just blasted on
Speaker 4: the app. He's lost over one hundred thousand followers of
Speaker 4: his two point five million, and he's had to come
Speaker 4: out with a few response videos basically trying to justify
Speaker 4: his decision.
Speaker 5: I apologize I did not handle this situation well from
Speaker 5: top to bottom, and that is why I have been
Speaker 5: completely roasted on this app over the last forty eight hours.
Speaker 1: TikTok users they did not accept Jackson's apology.
Speaker 4: Congratulations, Jeffrey Jackson.
Speaker 2: I'm officially giving you this award for the single dumbus
Speaker 2: video I have ever seen on the Internet.
Speaker 1: All this is to say lawmakers are in a tough spot,
Speaker 1: not just Democrats who are scared of alienating young voters
Speaker 1: in an election year, Republicans two. Former President Trump has
Speaker 1: come out and said he's against the bill, even though
Speaker 1: he once tried to ban TikTok by executive order. Now
Speaker 1: he says this bill would give meta too much power.
Speaker 4: You'll remember, after the January sixth insurrection, Facebook removed Donald
Speaker 4: Trump from the platform. He was off the platform for
Speaker 4: two years. So perhaps there's a little bit of animosity
Speaker 4: there with Trump and Meta, which owns Facebook. But it
Speaker 4: is incredibly fascinating and honestly put a lot of Republicans
Speaker 4: in a bind.
Speaker 1: And that brings us to the very last wrinkle in
Speaker 1: this very complicated legislative picture. If byte Dance and the
Speaker 1: Chinese government refused to sell TikTok, the US government would
Speaker 1: ask American tech companies like Apple and Google to ban
Speaker 1: it from their app stores. That sort of ban might
Speaker 1: run into trouble with the Supreme Court.
Speaker 4: There is a really interesting legal argument that's come to
Speaker 4: the forefront. In nineteen sixty five, there was a US
Speaker 4: Supreme Court case where the justices voted unanimously that the
Speaker 4: First Amendment protects American's right to see and view communist propaganda.
Speaker 4: There was a moment where the Post Office was looking
Speaker 4: to block the sending of Chinese communist propaganda through the
Speaker 4: postal service, and that was protected by the First Amendment.
Speaker 1: Alex points out this kind of censorship of free speech
Speaker 1: would be pretty draconian. It's worth noting TikTok's main competitor
Speaker 1: is Instagram. Reels a video product owned by Meta, so
Speaker 1: a TikTok ban would give Meta a lot of power
Speaker 1: over the market, as Trump pointed out. Alex says, there's
Speaker 1: also a compelling argument that a TikTok ban would hurt
Speaker 1: other American tech companies by making the US look bad.
Speaker 4: The biggest social media companies in the world are American companies.
Speaker 4: And if America comes to the table and says we're
Speaker 4: going to pluck this gem, this global gem in TikTok
Speaker 4: and force it to be owned by another American company,
Speaker 4: how does that look on the world stage.
Speaker 1: All this is pretty unprecedented. Congress has never forced an
Speaker 1: international company to sell off part of its business, and
Speaker 1: my colleague Dan says they might not manage to do
Speaker 1: that this time around. Either. The Senate famously slows down
Speaker 1: the legislative process.
Speaker 2: I don't have a crystal ball, and I've gotten in
Speaker 2: trouble before trying to predict what Congress is going to do.
Speaker 2: But unless the Senate moves quickly on this, which there's
Speaker 2: no indication that they are at the moment, this is
Speaker 2: going to get bogged down in months and months of
Speaker 2: negotiations and nothing may ever happen with it.
Speaker 1: That's a safe ben. As far as congressional clairvoyance, I
Speaker 1: think that's pretty good. Thanks for listening to The Big
Speaker 1: Take DC podcast from Bloomberg News. I'm David Gera. This
Speaker 1: episode was produced by Julia Press. It was mixed by
Speaker 1: Ben O'Brien. It was fact checked by Naomi Ing. Naomi
Speaker 1: Shaven is our senior producer. It was edited by Caitlin Kenny,
Speaker 1: Aaron Edwards, and Michael Shepherd, who also provides editorial direction.
Speaker 1: With Wendy Benjaminson and Elizabeth Ponceaux. The Cole Beamster Boar
Speaker 1: is our executive producer. Sage is Bloomberg's head of Podcasts.
Speaker 1: Thanks for listening. We'll be back next week.
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