TikTok nears the endgame
Breaking off TikTok from ByteDance might be the right thing to do — but it will come at a high cost. PLUS: How Twitter keeps competitors off its For You page
I.
After months of silence, and a multi-billion-dollar effort from ByteDance to avoid this scenario, the Biden administration is picking up where its predecessor left off: attempting to force the company to divest itself of TikTok in the name of national security.
ByteDance is now faced with a pair of deeply unpalatable choices: agree to the sale, or risk being banned in the United States — and, before long, in many other countries around the world.
Here’s John D. McKinnon in the Wall Street Journal:
The Committee on Foreign Investment in the U.S., or Cfius—a multiagency federal task force that oversees national-security risks in cross-border investments—made the sale demand recently, the people said. […]
It wasn’t immediately clear what the next step by the U.S. would be, and the people familiar with the matter say a resolution could be months away. TikTok’s chief executive, Shou Zi Chew, is scheduled to appear before the House Energy and Commerce Committee next week to address lawmakers’ questions on the security issues.
Few subjects have inspired more columns in Platformer history than the fate of TikTok, which is by some measures the world’s most popular app and is almost certainly the most geopolitically fraught. To most of its users, it is a profoundly engaging entertainment app and an engine for creating culture.
To a growing number of regulators around the world, though, it represents a profound and possibly unacceptable liability: a tool that could and arguably already has enabled Chinese surveillance and propaganda.
With the conclusion of this saga now likely to be reached within months, I want to lay out my own deeply mixed feelings about this state of affairs. Weighing the pros and cons of the Biden administration’s move, I can understand why the administration came to the conclusion it has.
But I’m deeply uncomfortable about the implications of governments making one-off decisions to eliminate social apps on national security grounds, while at the same time taking a pass on national privacy legislation and other regulations that would take a more systematic approach to protecting Americans’ security.
II.
Let’s start by acknowledging that the current state of affairs is untenable.
After all, even ByteDance stipulates to this much. Last month, when I visited TikTok’s offices in Los Angeles, the company outlined Project Texas: its $1.5 billion effort to fully silo all data attached to American users of TikTok within the United States. A new data security regime overseen by Oracle would make the app’s source code available to regulators, and be subject to regular audits.
We don’t know why, exactly, this plan proved unpersuasive to the Biden administration. Security researchers have criticized the proposal for putting the onus on regulators to detect anomalies, while also arguing that TikTok’s code base is so vast that monitoring risks associated with changes would not be feasible. It seems fair to say that ByteDance did not prove to the government’s satisfaction that its proposed solutions addressed their concerns around surveillance and propaganda.
These concerns are not theoretical. Today we learned that the FBI and Department of Justice are investigating how the app was used to surveil journalists in 2022. And one of the surveilled reporters, Forbes’ Emily Baker-White, previously reported that ByteDance pushed pro-China messaging in another, now-defunct US app. Even if you dismiss these incidents as one-off mistakes — which I have great trouble doing myself — they cut against criticism, including from ByteDance, that the Biden administration is acting purely out of xenophobia.
At the same time, one obvious solution here — to ban the app outright — comes with many problems of its own.
One, it will prove hugely disruptive to thousands of Americans who now make their living, either in whole or part, as TikTok creators. Two, it eliminates a huge amount of speech — including political speech — from the internet.
Three, it will massively benefit YouTube and Meta, delivering them billions in advertising revenue and millions of new users at the same time the government’s antitrust enforcers are working to reduce the size of those giants.
Four, it seems likely to further splinter the internet, as more governments threaten to ban foreign apps in the name of national security, whether they have been found to pose a legitimate risk or not. (What’s to stop India, which banned TikTok before anyone else, to ban Facebook or Twitter on similar grounds? What if that serves as a pretext for suppressing internal dissent?)
Five — and this has been TikTok’s refrain since the beginning — a ban would let the Biden administration and Congress move on from the issue without addressing the huge number of other cases in which Americans’ data privacy is at risk. (To name only one recent example, check out the Washington Post’s recent investigation into how right-wing Catholics bought the location data of individual priests who had been found using hookup apps and shamed them out of their jobs.)
“If protecting national security is the objective, divestment doesn't solve the problem: a change in ownership would not impose any new restrictions on data flows or access,” the company told me in a statement today. “The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing.”
This is self-serving but also true: you could almost certainly do much more to protect Americans by passing national privacy legislation than by banning one app, no matter how popular.
III.
All that said — I still can’t quite bring myself to say that TikTok should be left alone. One reason is simple reciprocity: if China won’t allow Instagram Reels and YouTube Shorts, why should the United States allow the Chinese version? (Ezra Klein wrote a good column on this subject last year that explores that issue.)
The other reason is a basic trust deficit. To remain independent and under Chinese ownership, ByteDance must be asked to prove a negative continuously — that it did nothing to unduly influence or monitor Americans today, and will not do so again tomorrow. No expert or pundit on the subject I have read has offered a convincing solution that would let ByteDance demonstrate that to anyone’s satisfaction.
That leaves one obvious compromise — a forced divestiture of TikTok from ByteDance. TikTok’s leadership has been discussing the possibility, which the company views as a last resort, Bloomberg reported this week.
But this is not Trump’s mafioso version of forced divestiture. The former president’s scheme would have entrusted TikTok to one of his biggest supporters, in Larry Ellison’s Oracle; he also wanted TikTok to pay a kickback to the US Treasury.
This one appears to be a more normal action from CFIUS, one that could lead either to TikTok being sold or to it going public.
But many significant questions remain, though. ByteDance has maintained strict control over TikTok from the start, developing it in parallel with its Chinese counterpart, Douyin. Can TikTok continue to thrive once it is separated from the product teams, data scientists, and other ByteDance talent that have turned it into such a success?
Even more pressing is the question of whether China will allow ByteDance to sell TikTok in the first place. In the Journal, McKinnon speculates that TikTok will say that China will not allow ByteDance’s recommendation algorithm to be sold off, among other arguments it might make in court.
This is important because, even if forced divestiture is the least-bad option here, in practice it might serve as an actual ban: either because China won’t allow ByteDance to sell, or ByteDance won’t sell key parts of the technology needed for TikTok to operate.
Of course, given the money at stake — Bloomberg says a standalone TikTok could be valued at up to $50 billion — ByteDance is strongly incentivized to find a solution here, no matter how distasteful the company finds it.
But its incentives are different from the Chinese government, which is in the middle of a tense and expanding trade war with the United States. It’s easy to imagine the government deciding it does not want to hand the Biden administration a win, and keep ByteDance’s technology to itself.
After talking to Chinese lawyers and investors, The Information reported Thursday that China would be unlikely to approve a sale. “In 2020, when the Trump administration tried to force a sale, the Chinese government widened the list of technologies it restricted from export, ensuring that it had to approve a sale of any part of TikTok to a foreign buyer,” the outlet noted.
The likeliest outcome here, then, is that TikTok’s fate will be decided not by principle or policy but by politics. Those politics are rooted in legitimate concerns, to be sure. But if TikTok goes away, a huge amount of value — including value to Americans — will be lost along the way. And once governments decide they can get rid of social apps in the name of national security, I suspect there will be further losses to come.
Elsewhere in TikTok: The United Kingdom is the latest to ban the app from government phones. Chris Stokel-Walker makes the case against a ban. TikTok added a way for users to “refresh” For You page content when they want to switch up their feed. And finally, Abu Dhabi AI firm G42 acquired a $100 million-plus stake in ByteDance from existing investors at a $220 billion valuation.
How Twitter keeps competitors off its For You page
Twitter has been down-ranking the corporate accounts of its competitors, including TikTok, Snap, Meta, and Instagram, Platformer has learned. The change, which was rolled out in December, means that tweets from these accounts are not recommended to users who do not follow them, and won’t show up in their For You tab, we’re told.
The down-ranking has been applied to more of TikTok’s accounts than any other company’s, according to internal documents obtained by Platformer. At least 19 of TikTok’s corporate accounts, including @TikTok_US, @TIkTokSports, and @TikTokSupport, are included in the down-ranking list, compared to three of Snap’s corporate accounts and two of Instagrams. Publicly available data shows that engagement on tweets from @TikTok_US saw a sharp downturn in January.
It’s not unusual for tech companies to down-rank their competitors. Last year, as Instagram was struggling to get Reels off the ground, the company rolled out a number of changes to promote original content and down-rank recycled TikToks.
Shadow-banning corporate accounts of competitors is more unusual – but consistent with Elon Musk’s ill-fated decision to ban people from posting links to their Mastodon accounts in December, which he quickly rolled back.
One inexplicable non-competitor that also appears on the down-ranking list: @HHSGov, the account belonging to the US Department of Health and Human Services.
We have no clear answer, yet, as to why.
— Zoë Schiffer
Coming Friday morning on the podcast: Kevin and I catch up on a huge week of AI news, led by the release of GPT-4, but also featuring appearances from our new overlords PaLM, LLaMA, and Claude. Plus: the group chat that caused a bank run.
Plus: Our first-ever Hard Fork Live! at South By Southwest last weekend in Austin was a total delight. Thanks to everyone who came out to say hi, take selfies, and play a rousing game of Bot or Not? with us. The rest of you can hear that game, along with our interview of Department of Justice antitrust chief Jonathan Kanter, in a bonus episode of the show that will land in your feed Monday.
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Governing
OpenAI is being criticized for not being more open about its technology and research, but its founders say there are good reasons for that. (James Vincent / The Verge)
Before releasing GPT-4, OpenAI convened a group of researchers to assess the risks of the technology, including "power-seeking behavior," self-replication, and self-improvement. (Benj Edwards / Ars Technica)
The new Republican leadership in the US House is unlikely to impose tougher antitrust rules on Apple, Amazon, and Google. (Brian Schwartz and Lauren Feiner / CNBC)
Federal regulators are still trying to auction off what remains of Silicon Valley Bank, but so far haven’t found a buyer. (Rob Copeland and Maureen Farrell / New York Times)
Snapchat said it will begin publishing guidelines that detail what types of content gets algorithmically distributed to users. (Sara Fischer / Axios)
More stadiums and venues are embracing facial recognition technology — here’s a list of 20 of them. (Georgia Gee / Slate)
Americans lost a record-setting $10 billion to online scammers last year. (Gareth Vipers / Wall Street Journal)
Industry
Microsoft is integrating GPT-4 into the Office suite, allowing people to use AI-powered assistants called Copilots to generate whole documents, emails and slide decks from knowledge the software has gained scanning corporate files and listening to conference calls. The tools will debut “in the coming months,” but are in testing now with a handful of companies. (Dina Bass and Emily Chang / Bloomberg)
Microsoft says AI chatbots can be useful even when they provide answers that are factually wrong. (Jonathan Vanian / CNBC)
Open AI partnered with Stripe to take payments and subscriptions for ChatGPT and Dall-E as it seeks to monetize the popular tools. (Aisha S Gani / Bloomberg)
Microsoft launched an AI chatbot / personal assistant for business customers. (Tom Warren and Richard Lawler / The Verge)
OpenAI president Greg Brockman explains how GPT-4 is different than its predecessor, and better at calculus and law. (Kyle Wiggers / TechCrunch)
Duolingo is introducing a new “Max” subscription tier with features powered by GPT-4. (Aisha Malik / TechCrunch)
Twitch CEO Emmett Shear is stepping down after more than a decade. (Taylor Hatmaker / TechCrunch)
Voice assistants like Siri and Alexa have failed to innovate and become useful to people outside a few limited tasks in the way AI chatbots already have. (Brian X. Chen, Nico Grant and Karen Weise / New York Times)
PwC is piloting a chatbot that it believes could help lawyers analyze contracts and carry out due diligence. (Michael O’Dwyer, Madhumita Murgia and Arjun Neil Alim / Financial Times)
PornHub parent company MindGeek has been acquired by the spectacularly named Ethical Capital Partners, a newly set-up Canadian private equity firm. (Patricia Nilsson / Financial Times)
A trip to Meta’s Horizon Worlds suggests this area of the metaverse is currently “desolate, like an abandoned mall.” (Paul Murray / Intelligencer)
YouTube gave some users early access to “multiview,” an option that allows them to watch up to four different preselected streams at the same time. (Sarah Perez / TechCrunch)
YouTube has announced that it’s raising the price of its YouTube TV subscription to $72.99 per month due to rising content costs. (Aisha Malik / TechCrunch)
LinkedIn launched AI-powered writing suggestions for people trying to improve their LinkedIn profiles and to recruiters writing job descriptions. (Ingrid Lunden / TechCrunch)
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Why does this reek of xenophobia guised as national security? Is this free market behavior? If an app is bad for its users and the country, why can an American company not make a better app? Or is data privacy not an issue with Facebook and Google? I'm not able to parse this at all...