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Forcing TikTok’s divestiture from the CCP is both reasonable and necessary

Washington, D.C. – Yesterday, a bipartisan group of US House legislators introduced a bill that would force ByteDance Ltd. to sell its US version of TikTok or face massive fines and federal investigations. This would have big ramifications for the video-sharing app, which is estimated to have over 150 million users in the US.

In practice, HR7521 designates the popular social media application TikTok as a “foreign adversary controlled application,” invoking the government’s ability to force the firm into new ownership by any private, legal entity in the United States —  a full forced divestiture.

Yaël Ossowski, deputy director of the consumer advocacy group, Consumer Choice Center, responded:

“In recent years, the default mode for the federal government has been to wage a regulatory war against American tech companies, all the while leaving the Chinese Communist Party-linked app TikTok to grow uninhibited,” said Ossowski. “While consumers generally do not want wholesale bans on popular tech, considering the unique privacy and security concerns implicit in TikTok’s ownership structure as well as its accountability and relationship to the CCP, the solution of a forced divestiture is both appropriate and necessary.”

Reports have already revealed that European TikTok users can, and have, had their data accessed by company officials in Beijing. The same goes for US users. Given the ownership structure of TikTok, there isn’t anything that can be done about this to shield American consumers from privacy violations. A forced divestiture would bring TikTok under the legal authority of the US and thus alleviate many of the concerns that consumers have about their security on the app. 

We praise Reps. Gallagher and Krishnamoorthi for spearheading this effort in a constitutionally nuanced and legal way that does not risk furthering the anti-tech attitudes of so many in Washington,” concluded Ossowski. “Upholding consumer choice is among our core principles, as is ensuring that the ethos of liberal democracies continues to guide the arc of technological progress.

READ: The best answer to TikTok is a forced divestiture 

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Washington, D.C., Ottawa, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for  Consumer Choice. Learn more at consumerchoicecenter.org

The best answer to TikTok is a forced divestiture 

As consumer advocates, we pride ourselves as standing for policies that promote policies fit for growth, lifestyle freedom, and tech innovation. 

In usual regulatory circumstances, that means protecting consumers’ platform and tech choices  from the zealous hands of regulators and government officials who would otherwise seek to shred basic Internet protections and freedom of speech, as well as break up innovative tech companies. Think Section 230, government jawboning, and consequences of deplatforming.

As such, the antitrust crusades by select politicians and agency heads in the United States and Europe are of primary concern for consumer choice. We have written extensively about this, and better ways forward. Many of these platforms make mistakes and severe errors on content moderation, often in response to regulatory concerns. But that does not invite trust-busting politicians and regulators to meddle with companies that consumers value.

In the background of each of these legislative battles and proposals, however, there is a special example found in the Chinese-owned firm TikTok, today one of the most popular social apps on the planet. 

RELATED: Forcing TikTok’s divestiture from the CCP is both reasonable and necessary

The Special Case of TikTok

Now owned by Bytedance, TikTok offers a similar user experience to Instagram Reels, Snapchat, or Twitter, but is supercharged by an algorithm that serves up short videos that entice users with constant content that autoloads and scrolls by. Many social phenomena, dances, and memes propagate via TikTok.

In terms of tech innovation and its proprietary algorithm, TikTok is a dime a dozen. There is a reason it is one of the most downloaded apps on mobile devices in virtually every market and language. 

Researchers have already revealed that China’s own domestic version of TikTok, Douyin, restricts content for younger users. Instead of dances and memes, Douyin features science experiments, educational material, and time limits for underage users. TikTok, on the other hand, seems to have a suped-up algorithm that has an ability to better attract, and hook, younger children.

What makes it special for consumer concern beyond the content, however, is its ownership, privacy policies, and  far-too-cozy relationship with the leadership of the Chinese Communist Party, the same party that oversees concentration camps of its Muslim minority and repeatedly quashes human rights across its territories.

It has already been revealed that European users of the TikTok can, and have, had their data accessed by company officials in Beijing. And the same goes for US users. Considering the ownership location and structure, there isn’t much that can be done about this.

Unlike tech companies in liberal democracies, Chinese firms require direct corporate oversight and governance by Chinese Communist Party officials – often military personnel. In the context of a construction company or domestic news publisher, this doesn’t seemingly put consumers in liberal democracies at risk. But a popular tech app downloaded on the phones of hundreds of millions of users? That is a different story.

How best to address TikTok in a way that upholds liberal democratic values

Among liberal democracies, there are a myriad of opinions about how to approach the TikTok beast.

US FCC Commissioner Brendan Carr wants a total ban, much in line with Sen. Josh Hawley’s proposed ban in the U.S. Senate and U.S. Rep. Ken Buck’s similar ban in the House. But there are other ways that would be more in line with liberal democratic values.

One solution we would propose, much in line with the last US administration’s stance, would be a forced divestiture to a U.S.-based entity on national security grounds. This would mean a sale of US assets (or assets in liberal democracies) to an entity based in those countries that would be completely independent of any CCP influence.

In 2019-2020, when President Donald Trump floated this idea, a proposed buyer of TikTok’s U.S. assets would have been Microsoft, and later Oracle. But the deal fell through.

But this solution is not unique.

We have already seen such actions play out with vital companies in the healthcare space, including PatientsLikeMe, which uses sensitive medical data and real-time data to connect patients about their conditions and proposed treatments. 

When the firm was flooded with investments from Chinese partners, the Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) ruled that a forced divestiture would have to take place. The same has been applied to a Chinese ownership stake in Holu Hou Energy, a U.S.-subsidiary energy storage company.

In vital matters of energy and popular consumer technology controlled by elements of the Chinese Communist Party, a forced divestiture to a company regulated and overseen by regulators in liberal democratic nations seems to be the most prudent measure.

This has not yet been attempted for a wholly-owned foreign entity active in the US, but we can see why the same concerns apply.

An outright ban or restriction of an app would not pass constitutional muster in the US, and would have chilling effects for future innovation that would reverberate beyond consumer technology.

This is a controversial topic, and one that will require nuanced solutions. Whatever the outcome, we hope consumers will be better off, and that liberal democracies can agree on a common solution that continues to uphold our liberties and choices as consumers.

Yaël Ossowski is the deputy director of the Consumer Choice Center.

TikTok is problematic, and consumers should beware

CONTACT:
Yaël Ossowski
Deputy Director
Consumer Choice Center

TikTok is problematic, and consumers should beware

WASHINGTON, D.C. – This week, both President Donald Trump and Secretary of State Mike Pompeo have floated a ban on the controversial Chinese-owned video-sharing app TikTok, for national security concerns.

Consumer Choice Center Deputy Director Yaël Ossowski responded: “While the proximity to the Chinese Communist Party makes TikTok problematic, an outright ban would go too far by setting a dangerous precedent.

“The fact that the long arm of the Chinese Communist Party can reach into the phones of citizens of liberal democracies is indeed troubling and individuals should remain vigilant. A ban similar to critical network hardware components from companies like Huawei or ZTA is, however, not necessary. Contrary to infrastructure and network software, consumers can consciously choose to stay away from apps like TikTok,” said Ossowski.

“It is concerning that TikTok, with its security flaws and significant privacy issues, is used by over 80 million people in the United States.  

“Rather than a ban, we should be educating the public, especially younger consumers, on the dangers of low-security and risky applications tied to foreign regimes like the Chinese Communist Party.

“Resorting to bans should always be a last resort, while innovation and education can and should be used when all possible when faced with security concerns in the tech space,” said Ossowski.

***CCC Deputy Director Yaël Ossowski is available to speak with accredited media on consumer regulations and consumer choice issues. Please send media inquiries HERE.***

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

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