All eyes on TikTok

The technology cold war is trying to claim its biggest victim: TikTok. The wildly popular social media app is under increasing scrutiny from governments and business leaders around the globe.

At the heart of the criticism are TikTok’s alleged ties to China, a reputational challenge the company has tried aggressively to remedy.

• But it’s also a result of the existential threat that TikTok poses to Silicon Valley’s biggest names — many facing their own problems when it comes to consumer privacy and unethical business practices.

It’s becoming increasingly clear that it’s TikTok against the world, as efforts intensify to undermine its popularity.

• In the U.S., political leaders have warned that national security concerns could spark regulatory action against TikTok. The Trump administration famously issued a stark directive on the domestic threat posed by ByteDance, which owns TikTok. That was replaced by another executive order from Biden, who critics say has moved too slowly on addressing the risks posed by the platform.
• Amid the backlash, TikTok hired Oracle to put a privacy firewall between its U.S. and Chinese operations. But in a shocking twist, it appears China has robust access to U.S. user data. The company has vigorously denied these claims, including recently in testimony before a Senate panel, and suggested an agreement will be reached soon with the government addressing concerns over the app’s information gathering apparatus.
• Increasingly, revelations of the sort are becoming a death knell for TikTok. For example, the U.K. parliament shut down its account until the company can prove that information won’t be shared with the Chinese government. And Australian politicians are pushing for the country to consider banning the app outright.

Anti-China sentiment is all the rage right now. The Biden administration is expected to issue a new directive blocking China from obtaining older semiconductor tech in an effort to blunt the growth of its nascent chipmaking sector. Political leaders are flocking to Taiwan to show their allegiance to the disputed territory. Even Zoom, a company that seemingly has no ties to China besides the nationality of its founder, Eric Yuan, just narrowly escaped similar scrutiny to TikTok. It did, however, affect Zoom’s now-defunct deal to buy Five9.

• TikTok maintains that it’s not owned or operated by the Chinese government. But the assurances have done little to stop the opposition campaigns.
• For example, critics point to the huge investment that TikTok was surprisingly able to make to quickly grow the U.S. user base: “It was just something that was unimaginable — no startup could afford to invest billions and billions and billions of dollars in user acquisition like that around the world,” Snap CEO Evan Spiegel said at the recent CODE Conference.
• Some have even called for the app to be blackballed, in part as retribution for the requirements China puts on Google, Apple and other foreign companies in order to operate in the country: “TikTok should be banned in every democracy,” Axel Springer CEO Mathias Döpfner said at the same event. (Disclaimer: Axel Springer owns Protocol.)

But in the face of all the negative press — including over the rapid spread of disinformation on the platform, a perennial challenge for most social media sites — TikTok remains massively popular.

Still, the scandals could be denting its previously rapid growth as rivals try their best to prevent users from hopping.

• Competitors like Instagram that are struggling to counter Tiktok’s rapid success are now copying features in a bid to lure users back — naturally, because Meta is so much more trustworthy.
• Those attempts appear to be failing. And the resulting shift in power is having a major effect on corporate marketing, influencers and other economic segments tied to social media platforms.
• However, even TikTok isn’t immune and has already been forced to copy from rivals. But with a revamped advertising platform, it seems the threat the platform poses to Meta and others will remain.

The increasingly hostile tensions between the U.S. and China have claimed many victims, from Hawaiian tourism to Hollywood. But TikTok is different given its prominence: Millions of people basically live on it every day, not unlike WeChat, which underpins a sizable segment of the Chinese economy.

• Even at the height of its worst scandals, Facebook didn’t face nearly the same existential threats that TikTok is facing. Still, it won’t be easy for any country, let alone a company, to dampen TikTok’s popularity. Amazon, for example, relented on its TikTok ban after just a few hours.

The app is fast becoming top of mind among politicians when it comes to national security, a tenuous position that puts the onus on TikTok to prove its independence from the Chinese government.

Sworn statements and carefully crafted blog posts are doing little to assuage its detractors. And with CEO Shou Zi Chew’s power reportedly curtailed by higher-ups at ByteDance, which is closely connected to the Chinese government, TikTok’s 15 seconds in the spotlight are at risk.

— Joe Williams

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