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TikTok’s tricky standoff with American lawmakers is heating up. Will the U.S., China, or ByteDance blink first?

July 8, 2022, 4:55 PM UTC
A man in Shanghai using a smartphone
TikTok’s vast user data gives it a window into America.
HECTOR RETAMAL—AFP/Getty Images

TikTok’s lobbyists in Washington better be working overtime this week.

The world’s fastest-growing social media platform, owned by Chinese company ByteDance, is facing the most aggressive assault on its American operations since former President Donald Trump sought to ban it two years ago.

The issue behind the latest episode isn’t necessarily novel. U.S. policymakers fear the Chinese government could access vast troves of data collected by TikTok on the app’s 100 million–plus American users, allowing their geopolitical enemy to push out propaganda and build profiles on U.S. citizens.

Yet the renewed hostility shows that TikTok remains firmly in American politicians’ sights—and isn’t getting let off the hook anytime soon.

The latest rift stems from a BuzzFeed News report last month in which multiple TikTok employees admitted in recordings from internal company meetings that Chinese engineers had access to U.S. data in late 2021 and early 2022. Those admissions appear to contradict the sworn testimony of a TikTok executive, who said at an October 2021 Senate hearing that American users’ data was overseen by a U.S.-based security team.

The BuzzFeed report prompted immediate squawking by the GOP’s most ardent China hawks, and it picked up more steam this week as Senate Intelligence Committee chair Mark Warner, D-Va., and vice chair Marco Rubio, R-Fla., called on the Federal Trade Commission to investigate TikTok’s data sharing policies

“In light of repeated misrepresentations by TikTok concerning its data security, data processing, and corporate governance practices, we urge you to act promptly on this matter,” the bipartisan duo wrote to FTC Chair Lina Khan.

The Wall Street Journal reported Friday on the mounting pressure for President Joe Biden’s administration to take a stronger stance against TikTok. At the Washington Post, columnist Josh Rogin, who authored a book last year on modern U.S.-China relations, warned that TikTok “can’t be trusted to oversee itself,” because it “answer[s] to a government that has no checks on its power and no privacy or surveillance standards at all.”

TikTok has disputed the notion that the Chinese government could nefariously meddle with American user data. In a statement to Fortune’s David Meyer this week, a TikTok spokesperson said the company has “never shared U.S. user data with the Chinese government, nor would we if asked.” (Skeptics have fairly noted that the autocratic Chinese government doesn’t exactly ask when it wants something from its domestic businesses.)

The hubbub leaves TikTok, yet again, in a state of political limbo.

An outright ban on TikTok in the U.S. appears unlikely after federal courts blocked Trump’s earlier attempt to expel the app, with one judge calling the move “arbitrary and capricious.” Biden subsequently withdrew Trump’s order, describing it as unenforceable.

ByteDance officials and American regulators could reach some sort of mutual agreement on data access following months of negotiations, which are still ongoing, according to the Wall Street Journal

Or the Chinese government could intervene, rejecting U.S. demands for greater access to TikTok’s internal plumbing.

The staring contest among the U.S., TikTok, and China is likely to last many more months, if not years, with more flare-ups along the way. But as Adam Segal, an expert on technology and Chinese policy at the Council on Foreign Relations, told The Economist: “At some point, someone has to blink.”

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Jacob Carpenter

NEWSWORTHY

A dark day for Sunny. A federal jury convicted former Theranos president Ramesh “Sunny” Balwani on 12 fraud-related counts Thursday, finding him guilty of perpetuating scams that preceded the blood-testing company’s collapse, Bloomberg reported. Balwani’s conviction came six months after a separate jury found Elizabeth Holmes, Theranos’s founder and Balwani’s ex-girlfriend, guilty on four felony counts. Balwani, who lied to investors and patients about Theranos’s blood-testing machines, faces up to 20 years in prison.

Still chipping away. Taiwan Semiconductor Manufacturing Co. beat analysts’ second-quarter revenue estimates, another positive economic indicator in the face of inflation-driven concerns about electronics demand, Bloomberg reported Friday. The world’s largest chip manufacturer totaled $17.9 billion in quarterly revenue, edging past analyst forecasts of $17.4 billion. The earnings report comes one day after semiconductor rival and electronics giant Samsung also topped revenue estimates.

The lawsuits begin. A former investment manager at the beleaguered cryptocurrency lender Celsius Network sued the outfit Thursday, alleging the company ran a Ponzi scheme and failed to protect investors, Reuters reported. Former manager Jason Stone claimed in court filings that Celsius Network leaders used consumer deposits to manipulate the price of the company’s crypto token, while also neglecting to take steps toward protecting customers’ investments. Celsius, which hasn’t commented on the lawsuit, froze the accounts of its 1.7 million customers in mid-June, citing “extreme” market conditions.

Services no longer needed. Twitter has laid off 30% of its talent acquisition team amid a hiring freeze wrought by advertising headwinds and uncertainty surrounding Elon Musk’s potential takeover of the social media company, the Wall Street Journal reported Thursday. Twitter officials confirmed that fewer than 100 people were laid off from the company’s hiring department, with no additional job cuts made. Twitter had previously announced its corporate hiring freeze in May.

FOOD FOR THOUGHT

Courting public opinion? The PR battle between Twitter and prospective buyer Elon Musk is reaching a fever pitch. The Washington Post reported Thursday that Musk’s agreed-upon $44 billion acquisition of the social media company “is in serious jeopardy,” with the Tesla CEO digging in his heels on claims that Twitter has understated the prevalence of bots on the platform. A few hours later, a story from the Financial Times bolstered the profile of current Twitter CEO Parag Agrawal, who is reportedly speaking out more aggressively against Musk’s claims and refusing to stand idle amid the back-and-forth.

From the Timesarticle:

After an initially understated start, Agrawal has been more vocal and present in the office a few days a week, three people with knowledge of operations said, and took a recent tour of several global headquarters. His focus has been on overhauling Twitter’s management structure to encourage better performance and quicker product rollouts in areas such as commerce.

In May, he decided to freeze hiring and implement cost-cutting measures. He also fired two popular senior leaders in charge of ads and product, shocking some employees—though others noted the moves came after user and revenue targets had been missed.

He has been frank with staff rather than attempting to reassure them, an approach that has won over loyal longtime employees but unsettled newer joiners, several employees said.

IN CASE YOU MISSED IT

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Want internet service on your yacht? It’ll run you $5,000 per month, by Chris Morris

Stakers betting on Ethereum’s big upgrade are “underwater,” and they can’t cash out until the “merge,” by Taylor Locke

Crypto just suffered its worst first half ever. Now what? by Declan Harty

Musk admitted that Tesla made a mistake in removing speed limiter before crash that killed teenager, father tells court, by Malathi Nayak and Bloomberg

XPO’s CEO thinks self-driving trucks are coming—just not anytime soon, by Phil Wahba

BEFORE YOU GO

It’s a strange world. Add this to the annals of “completely useless but strangely cool” skills, right next to solving Rubik’s Cube and juggling bowling pins. A quirky New York Times feature Thursday explored the phenomenon of GeoGuessr, a nine-year-old game in which geography whizzes try to guess the location of random Google Street View images from around the world. The task is perfectly suited for TikTok, where expert GeoGuessr players record themselves identifying far-flung locales within seconds and post video of their triumphs. One high-profile GeoGuessr devotee with a huge TikTok following told the Times: “Candidly, I haven’t had any social life for the past year. But it’s worth it, because it’s so fun and I enjoy learning.” To each their own, I suppose.

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