TikTok’s U.S. Investigation and the Challenge Before Chinese Apps

Just months after the U.S. Government kicked Huawei out its soil for suspicion that it is enabling Chinese spy, another Chinese company has come under investigation. Two years ago, Beijing-based ByteDance Technology acquired Musical.ly, a short-form video sharing platform now rebranded as TikTok. In the latest curiosity move, the Committee on Foreign Investment in the U.S. (CFIUS), which has the responsibility of reviewing deals for national security deals, has launched an investigation into the activities of TikTok.

TikTok has pulled off a surprising growth speed to become one of the fastest growing social media platforms in the world. And it is popular among young people between the ages of 16 and 24. This has, however, stirred a national security inquiry over the concern that U.S. contents are being censored by Chinese authorities, and TikTok could be collecting personal data of its users.

In February, the FTC fined TikTok $5.7 million for illegally collecting children’s information. The agency said the video sharing app did not notify parents it is collecting data of minors. The FTC was also worried that the app’s open system could provide a room for pedophiles to contact children.

But that seems to be the beginning of what is to come. In the same month, the U.K’s Information Commissioner’s Office (ICO) opened inquiry on whether TikTok violated EU’s General Data Protection Regulation (GDPR), a privacy law which requires companies to provide specific protections when it comes to children’s’ data.

The head of ICO, Elizabeth Denham said: “We are looking at the kind of videos that are collected and shared by children online, so we do have an active investigation into TikTok right now.”

The ICO’s investigation in the UK is basically about children’s rights and protection, while in the U.S. it cuts across, the FTC and CFIUS are interested in the activities of TikTok beyond children’s interest. The CFIUS said it was not notified during the Musical.ly acquisition which cost $1billion, and that’s among other issues of security.

There have been a not-so-smooth relationship between CFIUS and Chinese companies recently regarding acquisitions of tech companies of U.S. origin, and TikTok is not exempt. And censorship and national security has been at the center of the squabble.

In the case of TikTok, there were concerns that video materials relating to Hong Kong protest were being censored to suit the Chinese narrative. And there was outrage earlier in October over an ISIS propaganda video allowed on the platform.

Although a Buzzfeed News Investigation found no evidence that TikTok censored or removed videos in support of the pro-democracy protests in Hong Kong, the regulatory bodies are not satisfied. They said they are worried Chinese law could force TikTok to hand over data on U.S. users to the Chinese authorities and that the company may censor videos that criticize China.

TikTok denied any wrongdoing, saying it does not remove content based on its sensitivities related to China. And moreover, it stores its data on U.S. servers with backup servers in Singapore. A TikTok spokesperson said: “TikTok has made clear that we have no higher priority than earning the trust of users and regulators in the U.S. part of that effort includes working with Congress and we are committed to doing so.”

ByteDance has been reported as one of the fastest Chinese growing startups. Owning the country’s leading news aggregator, Jinri Toutiao, and TikTok which has over 500 million users. The growing influence of these apps appears to be creating access for the Chinese government into the U.S. and that makes the U.S. government paranoid.

Last year, CFIUS halted China’s Ant Financial plans to buy MoneyGram International Inc, because of concerns about the safety of data of U.S. citizens. The agency also propelled Oceanwide Holdings and Genworth Financial Inc to go through a U.S. third party data administrator to ensure the Chinese company could not access the insurer’s U.S. customers’ private data.

So the United States is taking more than interest in tech innovations of Chinese origin, especially when the users will involve its military personnel or those who handle sensitive data.

Reuters reported that last month, Musical.ly founder Alex Zhu, who is the head of TikTok team, started to report directly to ByteDance CEO Zhang Yiming. He used to report to Zhang Nan, the head of ByteDance’s Douyin, another Chinese short video app. The change separates TikTok from other ByteDance companies, although it’s not clear if it’s as a result of TikTok’s meeting with CFIUS over mitigation.

However, one thing is sure; the trade war has altered the little elements of trust that used to exist between the two countries. And with the election coming next year, the U.S. is not ready to take chances that could result in another external influence of the elections.

The U.S. Minority Leader, Chuck Schumer, alongside other senators has long called for a probe into the activities of TikTok. And when it finally happened he said it is “validation of our concern that apps like TikTok… may pose serious risks to millions of Americans and deserve greater scrutiny.”

It is not certain when the dust of the political and economic differences between China and the U.S, will settle, what is sure is that more Chinese tech companies will bear the brunt.