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Speaker 1: Tell me, tell me why this is a real industry

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Speaker 1: challenge and we're working no industry. This is TikTok is.

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Speaker 1: They're talking about TikTok. We're talking about why is it

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Speaker 1: that you can't control this? From Bloomberg News and iHeartRadio.

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Speaker 1: It's the big take. I'm West Kasova today Washington puts

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Speaker 1: TikTok in the hot seat. If TikTok's CEO show Chew

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Speaker 1: thought he could come fears in Washington that the company

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Speaker 1: is handing over Americans user data to the Chinese government, well,

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Speaker 1: he quickly learned otherwise, the committee will come to order

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Speaker 1: before I begin. I'd like when Chu stepped into a

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Speaker 1: hearing room in the US capital, he was grilled for

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Speaker 1: hours by angry members of Congres, Democrats and Republicans alike,

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Speaker 1: and they were in no mood to be mollified. TikTok

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Speaker 1: told us that you weren't tracking the geolocation of American citizens.

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Speaker 1: You were. TikTok told us you weren't spying on journalists.

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Speaker 1: You were. And I have to tell you, I came

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Speaker 1: to this hearing interested to hear the actions that TikTok

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Speaker 1: is taking to combat misinformation, protect our young people and

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Speaker 1: ensure our national security. But I've not been reassured by

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Speaker 1: anything you've said so far, and I think, quite frankly,

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Speaker 1: your testimony has raised more questions for me than answers.

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Speaker 1: If anything, that tensions between Washington and TikTok may not

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Speaker 1: be worse than they were before. Bloomberg reporters Alex Barrinka,

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Speaker 1: they are really thinking about the specter of a really

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Speaker 1: powerful adversary in China that's kind of looming over TikTok

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Speaker 1: and Anna Edgerton, the most dangerous thing for TikTok that

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Speaker 1: came out of this hearing was that every word that

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Speaker 1: you've said now becomes material for the apps. Critics have

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Speaker 1: been covering this story and what happens next in this

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Speaker 1: increasingly tense standoff. Alex. I think when TikTok's CEO showed

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Speaker 1: you walked into that hearing room, he thought maybe he

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Speaker 1: would be able to persuade lawmakers that they didn't have

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Speaker 1: anything to be concerned about. But by the time he

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Speaker 1: walked out, it was pretty clear that was not the case. Yeah,

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Speaker 1: I talked to it people close to the company before

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Speaker 1: this even happened, and that was exactly their goal. And

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Speaker 1: how they were prepping him. They talked about asking him

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Speaker 1: to stay within his body, be really calm, and lean

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Speaker 1: into the facts that he so often likes to give.

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Speaker 1: He sees TikTok's position, with all of these questions whirling

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Speaker 1: around them, that they are going to answer the questions

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Speaker 1: with facts in action, and he thought he would have

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Speaker 1: this opportunity to come in with those actions they're taking

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Speaker 1: around data privacy, around protecting users and trust and safety

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Speaker 1: on the platform and kind of lay those out. He

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Speaker 1: didn't get that opportunity. He basically walked into room. From

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Speaker 1: the drop from the opening statements from the lawmakers was

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Speaker 1: really clear that they were coming from a stance of

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Speaker 1: disbelief to anything he was going to say. So it

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Speaker 1: was almost kind of a situation that would have been

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Speaker 1: really tough to navigate out of. We had talked before

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Speaker 1: the hearing about how the best case scenario for TikTok

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Speaker 1: was kind of a low newsday, not making things any worse.

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Speaker 1: But after the hearing, even during the hearing, there was

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Speaker 1: kind of this fervor whipped up not only in the

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Speaker 1: hearing room, but our inboxes and our colleagues were hearing

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Speaker 1: from senators in the other part of Congress from other

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Speaker 1: regulators who were chiming in. Even Janet Yellen had her

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Speaker 1: moment where she was feeling questions about TikTok. It became

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Speaker 1: a very kind of feverish moment, and they just did

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Speaker 1: not get out of this unscathed. I think there are

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Speaker 1: a few moments it really showed what she was up against.

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Speaker 1: And right from the beginning, we saw Kathe mc morris Rodgers,

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Speaker 1: the Republican chair of the committee, come out in her

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Speaker 1: opening statement and say we think TikTok should be banned.

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Speaker 1: So that's what he was starting with, and that's what

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Speaker 1: kind of the environment that he was walking into. When

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Speaker 1: he really got into trouble was when he was asked

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Speaker 1: yes or no questions because he didn't have a satisfactory answer.

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Speaker 1: For example, when he was asked by Republican Neil Dunn

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Speaker 1: from Florida whether or not Bite Dance, TikTok's Chinese owner,

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Speaker 1: spies on US citizens through the app, the only answer

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Speaker 1: you could have given that would have been satisfactory was no.

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Speaker 1: But that's not what he said. I ask you again,

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Speaker 1: has Bite Dance spied on American citizens? I don't think

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Speaker 1: the spying is the right way to describe it. This

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Speaker 1: is ultimately differ It was another moment when Ohio Representative

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Speaker 1: Bob Ladda asked Chew yes or no. Do Chinese employees

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Speaker 1: including engineers have access to US user data today? All

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Speaker 1: US user data is stored by default in the article

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Speaker 1: Cloud Infrastructure and Access to Data Control. Any American dance

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Speaker 1: employees and including engineers currently have access to US data

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Speaker 1: A congressman, I would appreciate this is a complex topic.

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Speaker 1: In the room, that response drew incredulous chuckles from lawmakers

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Speaker 1: and folks in the gallery. We're going to come back

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Speaker 1: and talk more about this hearing and where it leaves

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Speaker 1: this battle between Washington and TikTok a little bit later

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Speaker 1: in the show. But Alex, let's just take a moment

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Speaker 1: to sort of recap exactly what is this argument between

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Speaker 1: lawmakers and TikTok. This argument between TikTok and the US

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Speaker 1: government has actually gone on for two presidential administrations. This

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Speaker 1: started back when Trump wanted to ban the app because

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Speaker 1: he was worried about its connections to China because of

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Speaker 1: its parent company. There was an executive order that was

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Speaker 1: ultimately tossed by the courts and kind of put aside

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Speaker 1: by the Biden administration, and in the past year, these

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Speaker 1: concerns around China's in fluence on TikTok have really been

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Speaker 1: whipped up, even with kind of new faces in the

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Speaker 1: US government. Behind the scenes, there is also this undercurrent

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Speaker 1: that follows all social media companies of what does this

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Speaker 1: mean for young people on the app? How does this

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Speaker 1: app impact youth's mental health? Then you have in the

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Speaker 1: last you know, six months, a lot of the rhetoric

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Speaker 1: and action from the US government toward China has gotten

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Speaker 1: a lot more confrontational. So as these things have kind

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Speaker 1: of layered together, it's put TikTok in a really tough

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Speaker 1: position and one that they just haven't been able to

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Speaker 1: navigate out of. And why is the US government going

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Speaker 1: after TikTok, Well, there are two main things that lawmakers

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Speaker 1: are concerned about. The first is the national security concerns,

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Speaker 1: and this has to do with TikTok's Chinese parent company,

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Speaker 1: Bye Dance, which is based in Beijing. So they're concerned

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Speaker 1: that that company kind of put a thumb on the

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Speaker 1: scale of the algorithm and slightly influence what US users see,

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Speaker 1: and this could be content about Hong Kong or content

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Speaker 1: about the oppression of wagers and Shenjang just slightly tweaking

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Speaker 1: what Americans see on TikTok and thus their perception of reality.

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Speaker 1: And they're also concerned about US user data getting to China.

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Speaker 1: Now this is not a really big concern for individuals,

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Speaker 1: but when you look at one hundred million Americans using

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Speaker 1: this app for so many minutes of the day, that

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Speaker 1: gives potentially the Chinese government an aggregate idea of what

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Speaker 1: Americans care about and what they're spending their time on.

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Speaker 1: TikTok's platform really set off this boom of algorithmically generated content.

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Speaker 1: They have this really sophisticated algorithm that knows you, as

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Speaker 1: folks joke online better than you even know yourself. So

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Speaker 1: in China, the government can request in secret any kind

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Speaker 1: of data they want from any of the domestic companies.

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Speaker 1: So the like pure delightfulness and the reason why people

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Speaker 1: are spending so much time on this app here in

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Speaker 1: the US ends up doubling down and looking that much

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Speaker 1: more sinister because there's some kind of connection to China

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Speaker 1: through TikTok's parentage. And what exactly is the US afraid

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Speaker 1: that China is going to do with people dancing and

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Speaker 1: showing pictures of their pads and doing challenges and all

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Speaker 1: the kinds of stuff that people do on TikTok. Yeah,

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Speaker 1: I think it's more kind of like the detailed understanding

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Speaker 1: of American society. I mean, like Alex was saying, this

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Speaker 1: app is so deeply ingrained, especially in almost an entire

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Speaker 1: generation of young people, like they're like defined almost as

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Speaker 1: the TikTok generation. We heard from FBI Director Christopher Ray

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Speaker 1: last week calling this a really powerful surveillance weapon. We've

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Speaker 1: also heard lawmakers comparing it to a Chinese spy balloon

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Speaker 1: in your pocket. Getting at that image is like, this

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Speaker 1: is potentially a company beholden to the Chinese government that

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Speaker 1: can get this kind of information. These what ifs make

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Speaker 1: it almost that much more difficult to kind of regulate

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Speaker 1: and legislate, and the calls to band TikTok didn't really

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Speaker 1: get bipartisan until kind of the middle to end of

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Speaker 1: last year. TikTok had a few kind of really big scandals.

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Speaker 1: There was some reporting by a number of journalists that

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Speaker 1: they were looking at the IP location data of users.

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Speaker 1: The company denied it. Then in December, the company finally

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Speaker 1: admitted that an audit team at byte Dance, which is

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Speaker 1: TikTok's parent company, actually access the IP data of journalists

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Speaker 1: who were doing some of this reporting on them in

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Speaker 1: order to help find their sources. TikTok's CEO sent a

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Speaker 1: letter to employees laying out what had happened. That those

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Speaker 1: employees were then fired, and it ended up being kind

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Speaker 1: of both a black eye for the company but also

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Speaker 1: a real tipping point for a lot of lawmakers on

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Speaker 1: both sides to look at this company and say, hey,

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Speaker 1: there are some really concerning things here happening, and we

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Speaker 1: probably should be taking more action than we have been.

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Speaker 1: Who exactly in the US government is warning about these dangers.

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Speaker 1: Who's leading this effort to try to curtail or and

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Speaker 1: band TikTok. Well, we've definitely heard it from the intelligence community,

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Speaker 1: from the FBI and other agencies that are looking into

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Speaker 1: this kind of threat. We've heard it from lawmakers of

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Speaker 1: both parties, both Republicans and Democrats on the Hill, and

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Speaker 1: especially from Republicans. They've really come at the Biden administration

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Speaker 1: from a kind of anti China angle. So we see

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Speaker 1: President Joe Biden, some of his officials Injustice and Treasury

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Speaker 1: responding to that kind of pressure and really taking a

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Speaker 1: hard stance with TikTok to make sure that these security

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Speaker 1: threats are addressed. The heart of TikTok's argument of why

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Speaker 1: it should be able to continue to operate in the

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Speaker 1: US is something called Project Texas. They're spending one point

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Speaker 1: five billion dollars to get this thing going and about

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Speaker 1: a billion a year after that. It largely consists of

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Speaker 1: partnering with American tech giant Oracle to move all of

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Speaker 1: you with user data to Oracle servers. It would allow

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Speaker 1: Oracle to review a lot of their software and policies,

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Speaker 1: and they're also doing organizational things like off all of

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Speaker 1: the folks who work on US user sensitive US information

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Speaker 1: into kind of a new business unit called the USDs.

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Speaker 1: The people who are hired into this unit will go

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Speaker 1: through high levels of security review, the company has said,

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Speaker 1: and they're also appointing a three person independent panel to

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Speaker 1: oversee the operations, with all three of those individuals being

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Speaker 1: signed off on by the government. So rit large, it

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Speaker 1: is much more than you see from the likes of

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Speaker 1: Meta or Twitter or some of the other competitors when

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Speaker 1: it comes to kind of the security processes that they're

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Speaker 1: putting in place, and yet it hasn't persuaded people in

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Speaker 1: Washington that that's enough to make them think that this

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Speaker 1: data is being safeguarding. It has it, you know, all

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Speaker 1: of the kind of quirks that you see about social media,

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Speaker 1: the concerns that the algorithm is influencing our minds in

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Speaker 1: a way. We don't understand that they hoover up so

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Speaker 1: much data that the mental health of teens could be

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Speaker 1: threatened by the types of content people see. All of

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Speaker 1: those ideas are applicable to all of TikTok's competitors, but

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Speaker 1: with that potential involvement from China, all of those concerns

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Speaker 1: have become so much more sinister, to the point where

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Speaker 1: TikTok has not been able to explain or promise them away. Now.

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Speaker 1: Oracle obviously has a esset interest. We've reported that TikTok

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Speaker 1: would be one of their biggest customers with this new plan,

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Speaker 1: and that's kind of cause some of the pause from

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Speaker 1: some lawmakers who see this as a partner who's also

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Speaker 1: benefiting from this arrangement with TikTok, and what does Oracle say.

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Speaker 1: Oracle declined to comment on those concerns. An, what does

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Speaker 1: TikTok say about the concerns that user data is going

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Speaker 1: right to the Chinese government. Well, they of course say

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Speaker 1: that their Project Texas plan, that this is the one

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Speaker 1: point five billion dollars that they've poured into several layers

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Speaker 1: of oversight and accountability. They say that they're doing way

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Speaker 1: more than any other app out there, and that they're

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Speaker 1: taking extreme measures to kind of isolate US user data.

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Speaker 1: And they keep coming at their critics with this very

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Speaker 1: fancy presentation in different formats to assure them that this

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Speaker 1: will be enough. More with Anna and Alex after the

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Speaker 1: break Anna, So we hear these various proposals of how

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Speaker 1: TikTok might actually be banned. There's already been incremental steps

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Speaker 1: to doing that. So, I mean Europe and now some

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Speaker 1: in the US. Can you explain what that is? So

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Speaker 1: what we see from the US Congress's four different measures

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Speaker 1: that would take different approaches to benning TikTok. Three of

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Speaker 1: those would kind of mandate the Biden administration to take

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Speaker 1: this step, and one of them, which is the one

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Speaker 1: that has received the most support, would empower the Commerce

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Speaker 1: Secretary actually to evaluate the risk of any technology owned

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Speaker 1: by foreign adversary. Now, this has more than a dozen

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Speaker 1: bipartisan co sponsors and the support of the White House.

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Speaker 1: And one reason why this approach has gained more gown

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Speaker 1: is because it's a systemic approach that addresses a behavior,

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Speaker 1: not just a specific company. So it's not a bill

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Speaker 1: that goes after TikTok. It's a bill that would address

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Speaker 1: this kind of threat that could be dealt with in

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Speaker 1: the future as well. We also should mention that there

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Speaker 1: is a national security review process that's been going on

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Speaker 1: in the background for months now. TikTok's already been investigated

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Speaker 1: by SYPHIUS, which is the Committee on Foreign Investment in

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Speaker 1: the United States, an interagency panel that basically looks into

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Speaker 1: large transactions or investments in the US and has been

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Speaker 1: known to block deals because of national security concerns. And

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Speaker 1: that is where kind of this plan that TikTok had

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Speaker 1: tried to hash out to show how it's going to

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Speaker 1: protect US users data, that's where kind of that plan

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Speaker 1: was born out of that process basically became deadlocked. You

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Speaker 1: had folks, according to our reporting and the Department of Justice,

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Speaker 1: the FBI being in that mix, who basically didn't believe

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Speaker 1: that there ever could be a proper solution that would

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Speaker 1: one hundred percent guarantee that all of these scurity concerns

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Speaker 1: could be addressed. So once that kind of clearly came

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Speaker 1: to a halt with no new back and forth since

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Speaker 1: basically last fall, these four bills started to kind of

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Speaker 1: trickle up that would address TikTok. Now in a position

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Speaker 1: where one of these bills, including that bill that is

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Speaker 1: the lead bill, passes, that would do something like force

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Speaker 1: a sale of byte Dance's steak in TikTok. That would

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Speaker 1: be a much larger option than TikTok continued to operate

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Speaker 1: in the structure it's in now and just working with

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Speaker 1: the oracle. That would entail something like a steak sale

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Speaker 1: that could look like selling it to another tech company,

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Speaker 1: another partner, somebody like another US tech company that could

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Speaker 1: be something like a listing. Once there's some kind of

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Speaker 1: separation from byte Dance. We broke the news that TikTok's

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Speaker 1: leadership is actually already discussing the option of a separation

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Speaker 1: if this security agreement does fail in DC, But that

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Speaker 1: would be kind of a la resort option. That kind

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Speaker 1: of separation option has one really big hurdle that also

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Speaker 1: should be mentioned. The Chinese government, based on current export laws,

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Speaker 1: would also have to approve such a separation to have

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Speaker 1: that kind of really advanced technology that TikTok has be

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Speaker 1: separated from their Chinese parent company. So that right now

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Speaker 1: is kind of seen as this like nuclear last resort,

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Speaker 1: something that they would do in the event that TikTok

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Speaker 1: might be completely banned in the United States. It is

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Speaker 1: certainly not something that TikTok's leadership or byte Dance is

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Speaker 1: jumping to do or else we would have seen them

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Speaker 1: bring that up in conversations because lawmakers have kind of

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Speaker 1: expressed that they prefer that option. But that being said,

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Speaker 1: it is certainly something that is kind of floated up

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Speaker 1: to the discussion level as TikTok is trying to kind

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Speaker 1: of figure out how do they make this work. Another

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Speaker 1: question to consider when we're talking about a sale is

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Speaker 1: if China blocks the sale of this proprietary algorithm, which

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Speaker 1: is really TikTok's secret saw, then the question for a

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Speaker 1: new buyer would be can they reconstruct the algorithm. Now,

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Speaker 1: I've talked to some people on Capitol Hill who are

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Speaker 1: pushing these bills and say it can't be that hard.

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Speaker 1: It can't be rocket science. They can rewrite this algorithm,

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Speaker 1: but that could be surprisingly tricky to do. Can even

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Speaker 1: just a slight tweak and how effect algorithm is at

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Speaker 1: targeting what you want could really cost the app some

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Speaker 1: of its most devoted viewership. And we know it's tricky.

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Speaker 1: We know it's tricky. Instagram and Facebook metas Platforms have

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Speaker 1: tried to copy it. They've been working on it for

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Speaker 1: almost two years and they still haven't figured out a

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Speaker 1: way to do it as well as TikTok has Alex.

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Speaker 1: What does TikTok have to say when it comes to Divesseger,

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Speaker 1: The company spokespersons say that this wouldn't actually address the

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Speaker 1: specific national security concerns and that they are committed to

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Speaker 1: instead going forward with their Project Texas plan. One of

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Speaker 1: the questions facing TikTok is who could buy it? You know,

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Speaker 1: And that's a big problem for US tech companies who

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Speaker 1: would maybe love to have an asset this valuable, even

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Speaker 1: after kind of recent troubles in the past few months,

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Speaker 1: still have the cash to buy it. But Facebook's parent

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Speaker 1: company Meta Platforms is being investigated by the Federal Trade

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Speaker 1: Commission for their acquisition of what's happened Instagram. Regulators in

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Speaker 1: the United States and Europe are seeking to block with

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Speaker 1: a Microsoft's acquisitions. So you have all of the major

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Speaker 1: tech companies that would be interested in nasset like this

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Speaker 1: who are already facing antitrust scrutiny, so it makes it

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Speaker 1: harder for them to go out and make another big

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Speaker 1: purchase of a chief competitor. Alex you described selling the

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Speaker 1: company is kind of like the nuclear option, but it

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Speaker 1: seems like the super nuclear option is the US shutting

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Speaker 1: down TikTok, not just on government phones, bet on everybody's phones.

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Speaker 1: And I imagine that would cause quite the stir. It

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Speaker 1: absolutely would, and we've already started to get a little

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Speaker 1: bit of a taste for what that would look like.

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Speaker 1: When some of the states in the US banned TikTok

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Speaker 1: on government devices, some universities took that to mean, hey,

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Speaker 1: that also means technology that moves our internet the WiFi.

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Speaker 1: So number of universities, including University of Texas at Austin,

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Speaker 1: the kind of flagship university in Texas, have banned TikTok

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Speaker 1: from campus wi fi, and obviously there's been a bit

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Speaker 1: of a backlash. I've talked to some students and professors

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Speaker 1: on the ground at UT. One student, Grace Featherstone, even

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Speaker 1: told me that she sees a ban of TikTok on

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Speaker 1: the same scale as a ban of the right to

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Speaker 1: have an abortion. It's just another way that the government

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Speaker 1: is getting involved in your day to day life and

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Speaker 1: telling you what you can or cannot do. It's something

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Speaker 1: that harkens back to the executive order that Donald Trump

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Speaker 1: put in place to attempt to ban this app where

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Speaker 1: the pushback was on grounds of free speech. So you

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Speaker 1: can expect to start to see some people bubble up

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Speaker 1: as this process potentially progresses and really push back and

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Speaker 1: possibly see a bit of an uprising from young people

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Speaker 1: who want to voice their concerns. When you look back

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Speaker 1: at the midterms, that voter group under thirty, they voted

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Speaker 1: for Democrats sixty percent of them. That's a twenty eight

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Speaker 1: point margin for that voter group they were credited with

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Speaker 1: blocking this red wall. That was right after they felt

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Speaker 1: the government had started taking away their rights. If you're

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Speaker 1: somebody who is a liberal leaning young voter, now, if

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Speaker 1: you take away something that is the cultural artifact of

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Speaker 1: your generation that you think of in the same vein

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Speaker 1: that certain generations might think of the Beatles as like

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Speaker 1: core to the identity of your generation. Then you can

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Speaker 1: really start to expect that folks are going to get

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Speaker 1: really upset. Yeah, this is a huge consideration for the

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Speaker 1: Biden administration, and we do see a division between the

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Speaker 1: intelligence community that is very worried about the national security

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Speaker 1: concerns and some of the political appointees who recognize that

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Speaker 1: there is a political risk and taking such a drastic step.

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Speaker 1: Gina Raimundo, the Commerce Secretary, told Bloomberg Business Week several

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Speaker 1: weeks ago that if you were to ban TikTok, you

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Speaker 1: would lose like every voter under thirty five. It would

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Speaker 1: be kind of fascinating and wholly unprecedented for consumer focused

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Speaker 1: app that is this big and this popular to be

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Speaker 1: banned based on a slate of concerns that some folks

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Speaker 1: would argue are not really specific, but are just kind

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Speaker 1: of big scary clouds hanging over this company. I will say,

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Speaker 1: as TikTok's concerns have been very much in the media

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Speaker 1: these days, meta and snap share prices have reacted have

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Speaker 1: increased just every time that we see another big move

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Speaker 1: against TikTok and We've seen Mark Zuckerberg, however, come out

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Speaker 1: and say banning TikTok would set a dangerous precedent because

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Speaker 1: they would be worried about the operations of Facebook in

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Speaker 1: other countries. You know, could another country take a similar

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Speaker 1: position and say, well, Facebook can't operate unless user data

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Speaker 1: is housed in country, and we have the same kind

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Speaker 1: of protections that TikTok is offering American users. And we

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Speaker 1: have seen pushback from some civil society groups in the

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Speaker 1: United States against the threat of a band. We've seen

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Speaker 1: the ACLU and a group called Fight for the Future

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Speaker 1: who have warned that this could really restrict freedom of

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Speaker 1: expression in the United States and that this would be

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Speaker 1: a very bad precedent for the US government to take.

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Speaker 1: We'll be right back and at the top of the show,

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Speaker 1: we talked about how tiktox CEO showed too had a

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Speaker 1: pretty difficult time for all the reasons that we've been discussing,

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Speaker 1: all these suspicions about whether China has access to the

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Speaker 1: data of US users. He walked into that hearing room

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Speaker 1: thinking that he had something to offer them, and what

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Speaker 1: exactly was it? So Choo's best answer to questions about

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Speaker 1: security is this Project Texas plan we talked about. However,

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Speaker 1: we're already very familiar with the details of this because

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Speaker 1: TikTok has advertised it for months. There's posters all over

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Speaker 1: the Washington metro ads in the Washington Post, in the

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Speaker 1: New York Times about how great this plan is. So

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Speaker 1: we already know the details of this plan. But what

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Speaker 1: he wasn't prepared for was the other questions that he got.

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Speaker 1: Lawmakers asking him specifically which by Dance executives are members

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Speaker 1: of the Chinese Communist Party, and his answer to that was,

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Speaker 1: I don't necessarily know. He was also asked about human

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Speaker 1: rights abuses in China and whether or not he agrees

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Speaker 1: that there are human rights abuses, especially of the weaker

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Speaker 1: minority in West China, and his answer was all human

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Speaker 1: rights abuses are bad. I'm here to talk about TikTok.

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Speaker 1: That was a very unsatisfactory answer and also made it

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Speaker 1: look like he was trying to avoid criticizing China, and

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Speaker 1: he was actually called out for that. You have absolutely

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Speaker 1: tied yourself and not to avoid criticizing the CCP's treatment

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Speaker 1: of the weaker population. And then there were also a

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Speaker 1: couple of additional moments I think it was the chairwoman

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Speaker 1: who cut him off, didn't allow him to answer questions

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Speaker 1: around some of the more emotional moments. Some of the

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Speaker 1: lawmakers brought up users who had committed suicide, young users.

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Speaker 1: They showed some videos and it kind of sucked the

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Speaker 1: air out of the room about content around taking one's

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Speaker 1: own life, and when Choo wanted to respond to those moments,

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Speaker 1: he was not given the time. On the hearing day,

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Speaker 1: that room was absolutely packed to the gills, from the

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Speaker 1: media gallery to the public viewers and a row of

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Speaker 1: TikTok influencers that the company had brought in to try

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Speaker 1: to show off who is benefiting from this app. But

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Speaker 1: in the end, the kind of most important folks in

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Speaker 1: the room were the lawmakers sitting up in their seats,

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Speaker 1: and both sides, the Republicans choose left, the Democrats on

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Speaker 1: choose right. Both of them were coming at him with

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Speaker 1: a level of agreement and fervor that was match with

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Speaker 1: both the Republicans and the Democrats. Now, one new thing

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Speaker 1: that he did bring in that wasn't already outlined in

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Speaker 1: Project Texas was this idea of trying to explode this

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Speaker 1: conversation to not be just about TikTok. He kept trying

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Speaker 1: to broaden the scope and say what about other social

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00:24:54,359 --> 00:24:58,600
Speaker 1: media companies, but lawmakers again were not willing. Most of

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00:24:58,600 --> 00:25:02,320
Speaker 1: them were not willing to talk more broadly. So it

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00:25:02,400 --> 00:25:05,000
Speaker 1: seemed like lawmakers were really there to kind of pin

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00:25:05,119 --> 00:25:08,280
Speaker 1: them down and focus directly on TikTok and its ties,

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00:25:08,800 --> 00:25:12,080
Speaker 1: even though a lot of industry watchers and perhaps policy

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00:25:12,119 --> 00:25:16,240
Speaker 1: watchers would say there are bigger issues here than just

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00:25:16,320 --> 00:25:18,840
Speaker 1: what TikTok is bringing to the table, that there are

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00:25:18,880 --> 00:25:22,000
Speaker 1: also problems with social media writ large that should be acknowledged.

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Speaker 1: But TikTok seems to be the issue that both sides,

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00:25:25,400 --> 00:25:28,199
Speaker 1: both parties, can actually get behind. And this is the

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00:25:28,200 --> 00:25:31,040
Speaker 1: committee that would be responsible for privacy legislation. They had

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00:25:31,080 --> 00:25:33,920
Speaker 1: a bill last year, the American Data Privacy and Protection Act,

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00:25:34,119 --> 00:25:37,160
Speaker 1: that got bipartisan support in the committee. So we did

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00:25:37,200 --> 00:25:40,639
Speaker 1: hear lawmakers naming that bill and saying we need to

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00:25:40,640 --> 00:25:44,760
Speaker 1: revisit this comprehensive privacy plan for all companies that use

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00:25:45,040 --> 00:25:47,879
Speaker 1: user data. And that was kind of the only olive

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00:25:47,880 --> 00:25:50,600
Speaker 1: branch that we heard to chew during this hearing, is

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00:25:51,000 --> 00:25:55,000
Speaker 1: we need to look at a larger data privacy standard Eventually,

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00:25:56,680 --> 00:26:00,359
Speaker 1: where does the company go from here? For example, what

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00:26:00,520 --> 00:26:02,800
Speaker 1: happens with this big Project Texas. Are they going to

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Speaker 1: move forward with it? This has really been a battle

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Speaker 1: of public sentiment, So this is a moment that does

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00:26:10,320 --> 00:26:14,040
Speaker 1: not help that battle. Project Texas is something the company

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00:26:14,119 --> 00:26:17,040
Speaker 1: has still said it's committed to. They are still moving

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00:26:17,080 --> 00:26:20,200
Speaker 1: forward with that plan. They're still trying to put up

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Speaker 1: what you continue to call a firewall around US user data.

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Speaker 1: And now when you think about what's next, we've heard

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Speaker 1: calls for a divestment from both lawmakers and according to

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00:26:33,400 --> 00:26:36,520
Speaker 1: people familiar with the matter, from Biden's administration as well.

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Speaker 1: But there was a bit of a curveball to that plan.

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Speaker 1: Just before the hearing, the Chinese Commerce Ministry came out

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Speaker 1: and said any kind of sale would have to be

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Speaker 1: approved by the Chinese government. So that adds another kind

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00:26:51,600 --> 00:26:55,440
Speaker 1: of hit to his argument that there's no Chinese influence

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00:26:55,520 --> 00:26:58,560
Speaker 1: on TikTok. So the company at this point is going

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00:26:58,600 --> 00:27:02,480
Speaker 1: to continue moving forward with its plan, and the best

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00:27:02,520 --> 00:27:05,920
Speaker 1: thing they can kind of hope for is more time.

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00:27:06,240 --> 00:27:09,919
Speaker 1: That time drags on, that legislative process drags on, that

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00:27:10,040 --> 00:27:13,080
Speaker 1: the US government is still kind of not in perfect

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00:27:13,119 --> 00:27:17,320
Speaker 1: alignment as to what happens next, and perhaps some discord

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Speaker 1: between exactly how these two parties should come together and

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Speaker 1: what's going to happen next. I spoke with Senator John Thune.

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Speaker 1: He's the Republican from South Dakota who's sponsored the leading

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Speaker 1: legislation that could result in a TikTok ban, and he

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00:27:32,600 --> 00:27:35,520
Speaker 1: said he hopes this hearing kind of shakes loose support

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00:27:35,640 --> 00:27:40,080
Speaker 1: for his legislation and really speeds along the process to

479
00:27:40,119 --> 00:27:42,600
Speaker 1: get this not just through the Democratic led Senate, but

480
00:27:42,720 --> 00:27:45,280
Speaker 1: also through the Republican led House. And that's really the

481
00:27:45,280 --> 00:27:48,800
Speaker 1: equation we're looking at now, is how these two majorities,

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00:27:49,000 --> 00:27:52,040
Speaker 1: different parties can come together and decide on the same

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00:27:52,119 --> 00:27:54,679
Speaker 1: course of action to give the administration the tools it

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00:27:54,720 --> 00:27:57,400
Speaker 1: needs in order to actually take this step. The other

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00:27:57,400 --> 00:27:59,679
Speaker 1: element of this is the National Security review that the

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00:27:59,680 --> 00:28:02,679
Speaker 1: Biden administration is doing, led by the same agencies that

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00:28:02,720 --> 00:28:05,080
Speaker 1: are part of the Committee on Foreign Investment in the

488
00:28:05,160 --> 00:28:08,320
Speaker 1: United States SIFIA. So we talked about before. So this

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00:28:08,440 --> 00:28:11,160
Speaker 1: is another process that we see playing out. And one

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00:28:11,200 --> 00:28:13,320
Speaker 1: thing that was interesting that cho said in the hearing

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00:28:13,720 --> 00:28:16,480
Speaker 1: is that those conversations are ongoing. Now. We have people

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Speaker 1: saying that the administration has rejected what TikTok is offering

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00:28:21,600 --> 00:28:25,040
Speaker 1: in this Project Texas plan, but Chu says the company

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00:28:25,080 --> 00:28:27,359
Speaker 1: continues to talk to the government and it's trying to

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00:28:27,400 --> 00:28:30,520
Speaker 1: find a way forward that can allow the platform to

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Speaker 1: continue operating in the United States. The last piece is

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00:28:33,640 --> 00:28:36,800
Speaker 1: really the piece that TikTok tried to bring to the forefront,

498
00:28:37,200 --> 00:28:40,080
Speaker 1: is what do users have to say about this. They

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00:28:40,120 --> 00:28:42,880
Speaker 1: came out talking about one hundred and fifty million people

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00:28:42,880 --> 00:28:45,440
Speaker 1: who are using the app. Lawmakers didn't love to see

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00:28:45,480 --> 00:28:48,400
Speaker 1: that this number is growing because that means potentially growing concerns.

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Speaker 1: But these are really important voices, and we are just

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00:28:52,720 --> 00:28:56,760
Speaker 1: a year out from a full election season. So if

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00:28:56,800 --> 00:29:00,360
Speaker 1: there becomes kind of an uprising of young voters who

505
00:29:00,360 --> 00:29:03,479
Speaker 1: are really vocal and kind of pushing back on some

506
00:29:03,560 --> 00:29:06,520
Speaker 1: of these political optics, and if there are not strong

507
00:29:06,640 --> 00:29:09,880
Speaker 1: reasons for the government to ban this app, then that

508
00:29:09,920 --> 00:29:13,640
Speaker 1: could be another factor that plays in TikTok's favor. But

509
00:29:13,800 --> 00:29:17,600
Speaker 1: you know, we haven't seen that uprising yet, so perhaps

510
00:29:17,720 --> 00:29:19,960
Speaker 1: that will be something that bubbles up in the coming months.

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Speaker 1: Alex Sparenka, Anna Edgerton, thanks for coming on the show.

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Speaker 1: Thank you so much. Thanks for listening to us here

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Speaker 1: at The Big Take. It's a daily podcast from Bloomberg

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00:29:29,920 --> 00:29:33,240
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Speaker 1: comments to Big Take at Bloomberg dot net. The supervising

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Speaker 1: producer of The Big Take is Vicky Bergolina. Our senior

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