Speaker 1: Tell me, tell me why this is a real industry
Speaker 1: challenge and we're working no industry. This is TikTok is.
Speaker 1: They're talking about TikTok. We're talking about why is it
Speaker 1: that you can't control this? From Bloomberg News and iHeartRadio.
Speaker 1: It's the big take. I'm West Kasova today Washington puts
Speaker 1: TikTok in the hot seat. If TikTok's CEO show Chew
Speaker 1: thought he could come fears in Washington that the company
Speaker 1: is handing over Americans user data to the Chinese government, well,
Speaker 1: he quickly learned otherwise, the committee will come to order
Speaker 1: before I begin. I'd like when Chu stepped into a
Speaker 1: hearing room in the US capital, he was grilled for
Speaker 1: hours by angry members of Congres, Democrats and Republicans alike,
Speaker 1: and they were in no mood to be mollified. TikTok
Speaker 1: told us that you weren't tracking the geolocation of American citizens.
Speaker 1: You were. TikTok told us you weren't spying on journalists.
Speaker 1: You were. And I have to tell you, I came
Speaker 1: to this hearing interested to hear the actions that TikTok
Speaker 1: is taking to combat misinformation, protect our young people and
Speaker 1: ensure our national security. But I've not been reassured by
Speaker 1: anything you've said so far, and I think, quite frankly,
Speaker 1: your testimony has raised more questions for me than answers.
Speaker 1: If anything, that tensions between Washington and TikTok may not
Speaker 1: be worse than they were before. Bloomberg reporters Alex Barrinka,
Speaker 1: they are really thinking about the specter of a really
Speaker 1: powerful adversary in China that's kind of looming over TikTok
Speaker 1: and Anna Edgerton, the most dangerous thing for TikTok that
Speaker 1: came out of this hearing was that every word that
Speaker 1: you've said now becomes material for the apps. Critics have
Speaker 1: been covering this story and what happens next in this
Speaker 1: increasingly tense standoff. Alex. I think when TikTok's CEO showed
Speaker 1: you walked into that hearing room, he thought maybe he
Speaker 1: would be able to persuade lawmakers that they didn't have
Speaker 1: anything to be concerned about. But by the time he
Speaker 1: walked out, it was pretty clear that was not the case. Yeah,
Speaker 1: I talked to it people close to the company before
Speaker 1: this even happened, and that was exactly their goal. And
Speaker 1: how they were prepping him. They talked about asking him
Speaker 1: to stay within his body, be really calm, and lean
Speaker 1: into the facts that he so often likes to give.
Speaker 1: He sees TikTok's position, with all of these questions whirling
Speaker 1: around them, that they are going to answer the questions
Speaker 1: with facts in action, and he thought he would have
Speaker 1: this opportunity to come in with those actions they're taking
Speaker 1: around data privacy, around protecting users and trust and safety
Speaker 1: on the platform and kind of lay those out. He
Speaker 1: didn't get that opportunity. He basically walked into room. From
Speaker 1: the drop from the opening statements from the lawmakers was
Speaker 1: really clear that they were coming from a stance of
Speaker 1: disbelief to anything he was going to say. So it
Speaker 1: was almost kind of a situation that would have been
Speaker 1: really tough to navigate out of. We had talked before
Speaker 1: the hearing about how the best case scenario for TikTok
Speaker 1: was kind of a low newsday, not making things any worse.
Speaker 1: But after the hearing, even during the hearing, there was
Speaker 1: kind of this fervor whipped up not only in the
Speaker 1: hearing room, but our inboxes and our colleagues were hearing
Speaker 1: from senators in the other part of Congress from other
Speaker 1: regulators who were chiming in. Even Janet Yellen had her
Speaker 1: moment where she was feeling questions about TikTok. It became
Speaker 1: a very kind of feverish moment, and they just did
Speaker 1: not get out of this unscathed. I think there are
Speaker 1: a few moments it really showed what she was up against.
Speaker 1: And right from the beginning, we saw Kathe mc morris Rodgers,
Speaker 1: the Republican chair of the committee, come out in her
Speaker 1: opening statement and say we think TikTok should be banned.
Speaker 1: So that's what he was starting with, and that's what
Speaker 1: kind of the environment that he was walking into. When
Speaker 1: he really got into trouble was when he was asked
Speaker 1: yes or no questions because he didn't have a satisfactory answer.
Speaker 1: For example, when he was asked by Republican Neil Dunn
Speaker 1: from Florida whether or not Bite Dance, TikTok's Chinese owner,
Speaker 1: spies on US citizens through the app, the only answer
Speaker 1: you could have given that would have been satisfactory was no.
Speaker 1: But that's not what he said. I ask you again,
Speaker 1: has Bite Dance spied on American citizens? I don't think
Speaker 1: the spying is the right way to describe it. This
Speaker 1: is ultimately differ It was another moment when Ohio Representative
Speaker 1: Bob Ladda asked Chew yes or no. Do Chinese employees
Speaker 1: including engineers have access to US user data today? All
Speaker 1: US user data is stored by default in the article
Speaker 1: Cloud Infrastructure and Access to Data Control. Any American dance
Speaker 1: employees and including engineers currently have access to US data
Speaker 1: A congressman, I would appreciate this is a complex topic.
Speaker 1: In the room, that response drew incredulous chuckles from lawmakers
Speaker 1: and folks in the gallery. We're going to come back
Speaker 1: and talk more about this hearing and where it leaves
Speaker 1: this battle between Washington and TikTok a little bit later
Speaker 1: in the show. But Alex, let's just take a moment
Speaker 1: to sort of recap exactly what is this argument between
Speaker 1: lawmakers and TikTok. This argument between TikTok and the US
Speaker 1: government has actually gone on for two presidential administrations. This
Speaker 1: started back when Trump wanted to ban the app because
Speaker 1: he was worried about its connections to China because of
Speaker 1: its parent company. There was an executive order that was
Speaker 1: ultimately tossed by the courts and kind of put aside
Speaker 1: by the Biden administration, and in the past year, these
Speaker 1: concerns around China's in fluence on TikTok have really been
Speaker 1: whipped up, even with kind of new faces in the
Speaker 1: US government. Behind the scenes, there is also this undercurrent
Speaker 1: that follows all social media companies of what does this
Speaker 1: mean for young people on the app? How does this
Speaker 1: app impact youth's mental health? Then you have in the
Speaker 1: last you know, six months, a lot of the rhetoric
Speaker 1: and action from the US government toward China has gotten
Speaker 1: a lot more confrontational. So as these things have kind
Speaker 1: of layered together, it's put TikTok in a really tough
Speaker 1: position and one that they just haven't been able to
Speaker 1: navigate out of. And why is the US government going
Speaker 1: after TikTok, Well, there are two main things that lawmakers
Speaker 1: are concerned about. The first is the national security concerns,
Speaker 1: and this has to do with TikTok's Chinese parent company,
Speaker 1: Bye Dance, which is based in Beijing. So they're concerned
Speaker 1: that that company kind of put a thumb on the
Speaker 1: scale of the algorithm and slightly influence what US users see,
Speaker 1: and this could be content about Hong Kong or content
Speaker 1: about the oppression of wagers and Shenjang just slightly tweaking
Speaker 1: what Americans see on TikTok and thus their perception of reality.
Speaker 1: And they're also concerned about US user data getting to China.
Speaker 1: Now this is not a really big concern for individuals,
Speaker 1: but when you look at one hundred million Americans using
Speaker 1: this app for so many minutes of the day, that
Speaker 1: gives potentially the Chinese government an aggregate idea of what
Speaker 1: Americans care about and what they're spending their time on.
Speaker 1: TikTok's platform really set off this boom of algorithmically generated content.
Speaker 1: They have this really sophisticated algorithm that knows you, as
Speaker 1: folks joke online better than you even know yourself. So
Speaker 1: in China, the government can request in secret any kind
Speaker 1: of data they want from any of the domestic companies.
Speaker 1: So the like pure delightfulness and the reason why people
Speaker 1: are spending so much time on this app here in
Speaker 1: the US ends up doubling down and looking that much
Speaker 1: more sinister because there's some kind of connection to China
Speaker 1: through TikTok's parentage. And what exactly is the US afraid
Speaker 1: that China is going to do with people dancing and
Speaker 1: showing pictures of their pads and doing challenges and all
Speaker 1: the kinds of stuff that people do on TikTok. Yeah,
Speaker 1: I think it's more kind of like the detailed understanding
Speaker 1: of American society. I mean, like Alex was saying, this
Speaker 1: app is so deeply ingrained, especially in almost an entire
Speaker 1: generation of young people, like they're like defined almost as
Speaker 1: the TikTok generation. We heard from FBI Director Christopher Ray
Speaker 1: last week calling this a really powerful surveillance weapon. We've
Speaker 1: also heard lawmakers comparing it to a Chinese spy balloon
Speaker 1: in your pocket. Getting at that image is like, this
Speaker 1: is potentially a company beholden to the Chinese government that
Speaker 1: can get this kind of information. These what ifs make
Speaker 1: it almost that much more difficult to kind of regulate
Speaker 1: and legislate, and the calls to band TikTok didn't really
Speaker 1: get bipartisan until kind of the middle to end of
Speaker 1: last year. TikTok had a few kind of really big scandals.
Speaker 1: There was some reporting by a number of journalists that
Speaker 1: they were looking at the IP location data of users.
Speaker 1: The company denied it. Then in December, the company finally
Speaker 1: admitted that an audit team at byte Dance, which is
Speaker 1: TikTok's parent company, actually access the IP data of journalists
Speaker 1: who were doing some of this reporting on them in
Speaker 1: order to help find their sources. TikTok's CEO sent a
Speaker 1: letter to employees laying out what had happened. That those
Speaker 1: employees were then fired, and it ended up being kind
Speaker 1: of both a black eye for the company but also
Speaker 1: a real tipping point for a lot of lawmakers on
Speaker 1: both sides to look at this company and say, hey,
Speaker 1: there are some really concerning things here happening, and we
Speaker 1: probably should be taking more action than we have been.
Speaker 1: Who exactly in the US government is warning about these dangers.
Speaker 1: Who's leading this effort to try to curtail or and
Speaker 1: band TikTok. Well, we've definitely heard it from the intelligence community,
Speaker 1: from the FBI and other agencies that are looking into
Speaker 1: this kind of threat. We've heard it from lawmakers of
Speaker 1: both parties, both Republicans and Democrats on the Hill, and
Speaker 1: especially from Republicans. They've really come at the Biden administration
Speaker 1: from a kind of anti China angle. So we see
Speaker 1: President Joe Biden, some of his officials Injustice and Treasury
Speaker 1: responding to that kind of pressure and really taking a
Speaker 1: hard stance with TikTok to make sure that these security
Speaker 1: threats are addressed. The heart of TikTok's argument of why
Speaker 1: it should be able to continue to operate in the
Speaker 1: US is something called Project Texas. They're spending one point
Speaker 1: five billion dollars to get this thing going and about
Speaker 1: a billion a year after that. It largely consists of
Speaker 1: partnering with American tech giant Oracle to move all of
Speaker 1: you with user data to Oracle servers. It would allow
Speaker 1: Oracle to review a lot of their software and policies,
Speaker 1: and they're also doing organizational things like off all of
Speaker 1: the folks who work on US user sensitive US information
Speaker 1: into kind of a new business unit called the USDs.
Speaker 1: The people who are hired into this unit will go
Speaker 1: through high levels of security review, the company has said,
Speaker 1: and they're also appointing a three person independent panel to
Speaker 1: oversee the operations, with all three of those individuals being
Speaker 1: signed off on by the government. So rit large, it
Speaker 1: is much more than you see from the likes of
Speaker 1: Meta or Twitter or some of the other competitors when
Speaker 1: it comes to kind of the security processes that they're
Speaker 1: putting in place, and yet it hasn't persuaded people in
Speaker 1: Washington that that's enough to make them think that this
Speaker 1: data is being safeguarding. It has it, you know, all
Speaker 1: of the kind of quirks that you see about social media,
Speaker 1: the concerns that the algorithm is influencing our minds in
Speaker 1: a way. We don't understand that they hoover up so
Speaker 1: much data that the mental health of teens could be
Speaker 1: threatened by the types of content people see. All of
Speaker 1: those ideas are applicable to all of TikTok's competitors, but
Speaker 1: with that potential involvement from China, all of those concerns
Speaker 1: have become so much more sinister, to the point where
Speaker 1: TikTok has not been able to explain or promise them away. Now.
Speaker 1: Oracle obviously has a esset interest. We've reported that TikTok
Speaker 1: would be one of their biggest customers with this new plan,
Speaker 1: and that's kind of cause some of the pause from
Speaker 1: some lawmakers who see this as a partner who's also
Speaker 1: benefiting from this arrangement with TikTok, and what does Oracle say.
Speaker 1: Oracle declined to comment on those concerns. An, what does
Speaker 1: TikTok say about the concerns that user data is going
Speaker 1: right to the Chinese government. Well, they of course say
Speaker 1: that their Project Texas plan, that this is the one
Speaker 1: point five billion dollars that they've poured into several layers
Speaker 1: of oversight and accountability. They say that they're doing way
Speaker 1: more than any other app out there, and that they're
Speaker 1: taking extreme measures to kind of isolate US user data.
Speaker 1: And they keep coming at their critics with this very
Speaker 1: fancy presentation in different formats to assure them that this
Speaker 1: will be enough. More with Anna and Alex after the
Speaker 1: break Anna, So we hear these various proposals of how
Speaker 1: TikTok might actually be banned. There's already been incremental steps
Speaker 1: to doing that. So, I mean Europe and now some
Speaker 1: in the US. Can you explain what that is? So
Speaker 1: what we see from the US Congress's four different measures
Speaker 1: that would take different approaches to benning TikTok. Three of
Speaker 1: those would kind of mandate the Biden administration to take
Speaker 1: this step, and one of them, which is the one
Speaker 1: that has received the most support, would empower the Commerce
Speaker 1: Secretary actually to evaluate the risk of any technology owned
Speaker 1: by foreign adversary. Now, this has more than a dozen
Speaker 1: bipartisan co sponsors and the support of the White House.
Speaker 1: And one reason why this approach has gained more gown
Speaker 1: is because it's a systemic approach that addresses a behavior,
Speaker 1: not just a specific company. So it's not a bill
Speaker 1: that goes after TikTok. It's a bill that would address
Speaker 1: this kind of threat that could be dealt with in
Speaker 1: the future as well. We also should mention that there
Speaker 1: is a national security review process that's been going on
Speaker 1: in the background for months now. TikTok's already been investigated
Speaker 1: by SYPHIUS, which is the Committee on Foreign Investment in
Speaker 1: the United States, an interagency panel that basically looks into
Speaker 1: large transactions or investments in the US and has been
Speaker 1: known to block deals because of national security concerns. And
Speaker 1: that is where kind of this plan that TikTok had
Speaker 1: tried to hash out to show how it's going to
Speaker 1: protect US users data, that's where kind of that plan
Speaker 1: was born out of that process basically became deadlocked. You
Speaker 1: had folks, according to our reporting and the Department of Justice,
Speaker 1: the FBI being in that mix, who basically didn't believe
Speaker 1: that there ever could be a proper solution that would
Speaker 1: one hundred percent guarantee that all of these scurity concerns
Speaker 1: could be addressed. So once that kind of clearly came
Speaker 1: to a halt with no new back and forth since
Speaker 1: basically last fall, these four bills started to kind of
Speaker 1: trickle up that would address TikTok. Now in a position
Speaker 1: where one of these bills, including that bill that is
Speaker 1: the lead bill, passes, that would do something like force
Speaker 1: a sale of byte Dance's steak in TikTok. That would
Speaker 1: be a much larger option than TikTok continued to operate
Speaker 1: in the structure it's in now and just working with
Speaker 1: the oracle. That would entail something like a steak sale
Speaker 1: that could look like selling it to another tech company,
Speaker 1: another partner, somebody like another US tech company that could
Speaker 1: be something like a listing. Once there's some kind of
Speaker 1: separation from byte Dance. We broke the news that TikTok's
Speaker 1: leadership is actually already discussing the option of a separation
Speaker 1: if this security agreement does fail in DC, But that
Speaker 1: would be kind of a la resort option. That kind
Speaker 1: of separation option has one really big hurdle that also
Speaker 1: should be mentioned. The Chinese government, based on current export laws,
Speaker 1: would also have to approve such a separation to have
Speaker 1: that kind of really advanced technology that TikTok has be
Speaker 1: separated from their Chinese parent company. So that right now
Speaker 1: is kind of seen as this like nuclear last resort,
Speaker 1: something that they would do in the event that TikTok
Speaker 1: might be completely banned in the United States. It is
Speaker 1: certainly not something that TikTok's leadership or byte Dance is
Speaker 1: jumping to do or else we would have seen them
Speaker 1: bring that up in conversations because lawmakers have kind of
Speaker 1: expressed that they prefer that option. But that being said,
Speaker 1: it is certainly something that is kind of floated up
Speaker 1: to the discussion level as TikTok is trying to kind
Speaker 1: of figure out how do they make this work. Another
Speaker 1: question to consider when we're talking about a sale is
Speaker 1: if China blocks the sale of this proprietary algorithm, which
Speaker 1: is really TikTok's secret saw, then the question for a
Speaker 1: new buyer would be can they reconstruct the algorithm. Now,
Speaker 1: I've talked to some people on Capitol Hill who are
Speaker 1: pushing these bills and say it can't be that hard.
Speaker 1: It can't be rocket science. They can rewrite this algorithm,
Speaker 1: but that could be surprisingly tricky to do. Can even
Speaker 1: just a slight tweak and how effect algorithm is at
Speaker 1: targeting what you want could really cost the app some
Speaker 1: of its most devoted viewership. And we know it's tricky.
Speaker 1: We know it's tricky. Instagram and Facebook metas Platforms have
Speaker 1: tried to copy it. They've been working on it for
Speaker 1: almost two years and they still haven't figured out a
Speaker 1: way to do it as well as TikTok has Alex.
Speaker 1: What does TikTok have to say when it comes to Divesseger,
Speaker 1: The company spokespersons say that this wouldn't actually address the
Speaker 1: specific national security concerns and that they are committed to
Speaker 1: instead going forward with their Project Texas plan. One of
Speaker 1: the questions facing TikTok is who could buy it? You know,
Speaker 1: And that's a big problem for US tech companies who
Speaker 1: would maybe love to have an asset this valuable, even
Speaker 1: after kind of recent troubles in the past few months,
Speaker 1: still have the cash to buy it. But Facebook's parent
Speaker 1: company Meta Platforms is being investigated by the Federal Trade
Speaker 1: Commission for their acquisition of what's happened Instagram. Regulators in
Speaker 1: the United States and Europe are seeking to block with
Speaker 1: a Microsoft's acquisitions. So you have all of the major
Speaker 1: tech companies that would be interested in nasset like this
Speaker 1: who are already facing antitrust scrutiny, so it makes it
Speaker 1: harder for them to go out and make another big
Speaker 1: purchase of a chief competitor. Alex you described selling the
Speaker 1: company is kind of like the nuclear option, but it
Speaker 1: seems like the super nuclear option is the US shutting
Speaker 1: down TikTok, not just on government phones, bet on everybody's phones.
Speaker 1: And I imagine that would cause quite the stir. It
Speaker 1: absolutely would, and we've already started to get a little
Speaker 1: bit of a taste for what that would look like.
Speaker 1: When some of the states in the US banned TikTok
Speaker 1: on government devices, some universities took that to mean, hey,
Speaker 1: that also means technology that moves our internet the WiFi.
Speaker 1: So number of universities, including University of Texas at Austin,
Speaker 1: the kind of flagship university in Texas, have banned TikTok
Speaker 1: from campus wi fi, and obviously there's been a bit
Speaker 1: of a backlash. I've talked to some students and professors
Speaker 1: on the ground at UT. One student, Grace Featherstone, even
Speaker 1: told me that she sees a ban of TikTok on
Speaker 1: the same scale as a ban of the right to
Speaker 1: have an abortion. It's just another way that the government
Speaker 1: is getting involved in your day to day life and
Speaker 1: telling you what you can or cannot do. It's something
Speaker 1: that harkens back to the executive order that Donald Trump
Speaker 1: put in place to attempt to ban this app where
Speaker 1: the pushback was on grounds of free speech. So you
Speaker 1: can expect to start to see some people bubble up
Speaker 1: as this process potentially progresses and really push back and
Speaker 1: possibly see a bit of an uprising from young people
Speaker 1: who want to voice their concerns. When you look back
Speaker 1: at the midterms, that voter group under thirty, they voted
Speaker 1: for Democrats sixty percent of them. That's a twenty eight
Speaker 1: point margin for that voter group they were credited with
Speaker 1: blocking this red wall. That was right after they felt
Speaker 1: the government had started taking away their rights. If you're
Speaker 1: somebody who is a liberal leaning young voter, now, if
Speaker 1: you take away something that is the cultural artifact of
Speaker 1: your generation that you think of in the same vein
Speaker 1: that certain generations might think of the Beatles as like
Speaker 1: core to the identity of your generation. Then you can
Speaker 1: really start to expect that folks are going to get
Speaker 1: really upset. Yeah, this is a huge consideration for the
Speaker 1: Biden administration, and we do see a division between the
Speaker 1: intelligence community that is very worried about the national security
Speaker 1: concerns and some of the political appointees who recognize that
Speaker 1: there is a political risk and taking such a drastic step.
Speaker 1: Gina Raimundo, the Commerce Secretary, told Bloomberg Business Week several
Speaker 1: weeks ago that if you were to ban TikTok, you
Speaker 1: would lose like every voter under thirty five. It would
Speaker 1: be kind of fascinating and wholly unprecedented for consumer focused
Speaker 1: app that is this big and this popular to be
Speaker 1: banned based on a slate of concerns that some folks
Speaker 1: would argue are not really specific, but are just kind
Speaker 1: of big scary clouds hanging over this company. I will say,
Speaker 1: as TikTok's concerns have been very much in the media
Speaker 1: these days, meta and snap share prices have reacted have
Speaker 1: increased just every time that we see another big move
Speaker 1: against TikTok and We've seen Mark Zuckerberg, however, come out
Speaker 1: and say banning TikTok would set a dangerous precedent because
Speaker 1: they would be worried about the operations of Facebook in
Speaker 1: other countries. You know, could another country take a similar
Speaker 1: position and say, well, Facebook can't operate unless user data
Speaker 1: is housed in country, and we have the same kind
Speaker 1: of protections that TikTok is offering American users. And we
Speaker 1: have seen pushback from some civil society groups in the
Speaker 1: United States against the threat of a band. We've seen
Speaker 1: the ACLU and a group called Fight for the Future
Speaker 1: who have warned that this could really restrict freedom of
Speaker 1: expression in the United States and that this would be
Speaker 1: a very bad precedent for the US government to take.
Speaker 1: We'll be right back and at the top of the show,
Speaker 1: we talked about how tiktox CEO showed too had a
Speaker 1: pretty difficult time for all the reasons that we've been discussing,
Speaker 1: all these suspicions about whether China has access to the
Speaker 1: data of US users. He walked into that hearing room
Speaker 1: thinking that he had something to offer them, and what
Speaker 1: exactly was it? So Choo's best answer to questions about
Speaker 1: security is this Project Texas plan we talked about. However,
Speaker 1: we're already very familiar with the details of this because
Speaker 1: TikTok has advertised it for months. There's posters all over
Speaker 1: the Washington metro ads in the Washington Post, in the
Speaker 1: New York Times about how great this plan is. So
Speaker 1: we already know the details of this plan. But what
Speaker 1: he wasn't prepared for was the other questions that he got.
Speaker 1: Lawmakers asking him specifically which by Dance executives are members
Speaker 1: of the Chinese Communist Party, and his answer to that was,
Speaker 1: I don't necessarily know. He was also asked about human
Speaker 1: rights abuses in China and whether or not he agrees
Speaker 1: that there are human rights abuses, especially of the weaker
Speaker 1: minority in West China, and his answer was all human
Speaker 1: rights abuses are bad. I'm here to talk about TikTok.
Speaker 1: That was a very unsatisfactory answer and also made it
Speaker 1: look like he was trying to avoid criticizing China, and
Speaker 1: he was actually called out for that. You have absolutely
Speaker 1: tied yourself and not to avoid criticizing the CCP's treatment
Speaker 1: of the weaker population. And then there were also a
Speaker 1: couple of additional moments I think it was the chairwoman
Speaker 1: who cut him off, didn't allow him to answer questions
Speaker 1: around some of the more emotional moments. Some of the
Speaker 1: lawmakers brought up users who had committed suicide, young users.
Speaker 1: They showed some videos and it kind of sucked the
Speaker 1: air out of the room about content around taking one's
Speaker 1: own life, and when Choo wanted to respond to those moments,
Speaker 1: he was not given the time. On the hearing day,
Speaker 1: that room was absolutely packed to the gills, from the
Speaker 1: media gallery to the public viewers and a row of
Speaker 1: TikTok influencers that the company had brought in to try
Speaker 1: to show off who is benefiting from this app. But
Speaker 1: in the end, the kind of most important folks in
Speaker 1: the room were the lawmakers sitting up in their seats,
Speaker 1: and both sides, the Republicans choose left, the Democrats on
Speaker 1: choose right. Both of them were coming at him with
Speaker 1: a level of agreement and fervor that was match with
Speaker 1: both the Republicans and the Democrats. Now, one new thing
Speaker 1: that he did bring in that wasn't already outlined in
Speaker 1: Project Texas was this idea of trying to explode this
Speaker 1: conversation to not be just about TikTok. He kept trying
Speaker 1: to broaden the scope and say what about other social
Speaker 1: media companies, but lawmakers again were not willing. Most of
Speaker 1: them were not willing to talk more broadly. So it
Speaker 1: seemed like lawmakers were really there to kind of pin
Speaker 1: them down and focus directly on TikTok and its ties,
Speaker 1: even though a lot of industry watchers and perhaps policy
Speaker 1: watchers would say there are bigger issues here than just
Speaker 1: what TikTok is bringing to the table, that there are
Speaker 1: also problems with social media writ large that should be acknowledged.
Speaker 1: But TikTok seems to be the issue that both sides,
Speaker 1: both parties, can actually get behind. And this is the
Speaker 1: committee that would be responsible for privacy legislation. They had
Speaker 1: a bill last year, the American Data Privacy and Protection Act,
Speaker 1: that got bipartisan support in the committee. So we did
Speaker 1: hear lawmakers naming that bill and saying we need to
Speaker 1: revisit this comprehensive privacy plan for all companies that use
Speaker 1: user data. And that was kind of the only olive
Speaker 1: branch that we heard to chew during this hearing, is
Speaker 1: we need to look at a larger data privacy standard Eventually,
Speaker 1: where does the company go from here? For example, what
Speaker 1: happens with this big Project Texas. Are they going to
Speaker 1: move forward with it? This has really been a battle
Speaker 1: of public sentiment, So this is a moment that does
Speaker 1: not help that battle. Project Texas is something the company
Speaker 1: has still said it's committed to. They are still moving
Speaker 1: forward with that plan. They're still trying to put up
Speaker 1: what you continue to call a firewall around US user data.
Speaker 1: And now when you think about what's next, we've heard
Speaker 1: calls for a divestment from both lawmakers and according to
Speaker 1: people familiar with the matter, from Biden's administration as well.
Speaker 1: But there was a bit of a curveball to that plan.
Speaker 1: Just before the hearing, the Chinese Commerce Ministry came out
Speaker 1: and said any kind of sale would have to be
Speaker 1: approved by the Chinese government. So that adds another kind
Speaker 1: of hit to his argument that there's no Chinese influence
Speaker 1: on TikTok. So the company at this point is going
Speaker 1: to continue moving forward with its plan, and the best
Speaker 1: thing they can kind of hope for is more time.
Speaker 1: That time drags on, that legislative process drags on, that
Speaker 1: the US government is still kind of not in perfect
Speaker 1: alignment as to what happens next, and perhaps some discord
Speaker 1: between exactly how these two parties should come together and
Speaker 1: what's going to happen next. I spoke with Senator John Thune.
Speaker 1: He's the Republican from South Dakota who's sponsored the leading
Speaker 1: legislation that could result in a TikTok ban, and he
Speaker 1: said he hopes this hearing kind of shakes loose support
Speaker 1: for his legislation and really speeds along the process to
Speaker 1: get this not just through the Democratic led Senate, but
Speaker 1: also through the Republican led House. And that's really the
Speaker 1: equation we're looking at now, is how these two majorities,
Speaker 1: different parties can come together and decide on the same
Speaker 1: course of action to give the administration the tools it
Speaker 1: needs in order to actually take this step. The other
Speaker 1: element of this is the National Security review that the
Speaker 1: Biden administration is doing, led by the same agencies that
Speaker 1: are part of the Committee on Foreign Investment in the
Speaker 1: United States SIFIA. So we talked about before. So this
Speaker 1: is another process that we see playing out. And one
Speaker 1: thing that was interesting that cho said in the hearing
Speaker 1: is that those conversations are ongoing. Now. We have people
Speaker 1: saying that the administration has rejected what TikTok is offering
Speaker 1: in this Project Texas plan, but Chu says the company
Speaker 1: continues to talk to the government and it's trying to
Speaker 1: find a way forward that can allow the platform to
Speaker 1: continue operating in the United States. The last piece is
Speaker 1: really the piece that TikTok tried to bring to the forefront,
Speaker 1: is what do users have to say about this. They
Speaker 1: came out talking about one hundred and fifty million people
Speaker 1: who are using the app. Lawmakers didn't love to see
Speaker 1: that this number is growing because that means potentially growing concerns.
Speaker 1: But these are really important voices, and we are just
Speaker 1: a year out from a full election season. So if
Speaker 1: there becomes kind of an uprising of young voters who
Speaker 1: are really vocal and kind of pushing back on some
Speaker 1: of these political optics, and if there are not strong
Speaker 1: reasons for the government to ban this app, then that
Speaker 1: could be another factor that plays in TikTok's favor. But
Speaker 1: you know, we haven't seen that uprising yet, so perhaps
Speaker 1: that will be something that bubbles up in the coming months.
Speaker 1: Alex Sparenka, Anna Edgerton, thanks for coming on the show.
Speaker 1: Thank you so much. Thanks for listening to us here
Speaker 1: at The Big Take. It's a daily podcast from Bloomberg
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