Washington’s bumbling attempt to mitigate risk exposure of Americans’ personal data from using TikTok is bewildering. This is particularly so for those of us who are experts in global science and technology policy, including how knowledge from research and development activities flows among nations; the international negotiation and domestic execution of rules governing national security and foreign investment; and how Chinese firms operate and the state-dominated ecosystem in which they must function.
Within that context, it was hard to not wince at the March 23, 2023, hearing held by the U.S. House of Representatives Energy and Commerce Committee before which Shou Chew, the CEO of TikTok Inc., testified. By the same token, the inability of the U.S. government’s Executive Branch, specifically the Committee on Foreign Investment in the U.S. (CFIUS), to negotiate or mandate a resolution with TikTok—over multiple years—not only under President Biden’s watch but also that of his immediate predecessor, Donald Trump, is truly mystifying.
After many years of working on the ground throughout China, I’m hardly naïve about the complexities of negotiating with the Chinese. Nor do I understate the challenges of policy-making in the U.S.—in this case, trying to achieve a balance of the benefits and costs to the American citizens, teachers, and businesses who highly value access to the wildly popular TikTok app.
Yes, TikTok is not only a source of entertainment but is also used as an educational tool as well as a channel by which U.S. firms—both traditional and modern—seek to grow their customer base and expand their bottom lines.
That Washington seemingly is now on a trajectory to implement a government-mandated across-the-board public ban on the private use of TikTok—that is, beyond existing prohibitions of its use on federal- and many state government-issued electronic devices—belies our country’s long-practiced pursuit of market-based innovation-driven approach to economic progress that, if effectively harnessed, could certainly counter or even supplant the use of China’s TikTok in our and in our economic partners’ markets.
Like the U.S., a growing number of countries—mostly democracies—have placed TikTok bans on official equipment. But our nation seems—at this juncture, especially in light of what took place during the recent House hearings—to be the most prominent exception among the world’s democracies to veer towards placing a ban on private devices as well. As was the case in earlier attempts to proceed in this fashion—by the Trump administration—there will surely be legal challenges in U.S. courts to the implementation of a such ban insofar as it will be seen as undercutting freedom of expression by U.S. citizens.
But beyond the legal prism, there is a far more significant implication if Washington (or state capitals) seeks an outright ban on the use of TikTok by America’s citizenry: We will be seen as taking a page from China’s Communist Party’s playbook. One can be sure that if Washington tries to proceed in this manner, the irony of us doing so will not be lost on Xi Jinping and his Communist Party comrades across China.
How and why did the U.S. get into this TikTok dilemma, and what are some sensible paths forward?
Origins of TikTok
As a short-form video app, the origins of TikTok trace back to the China-based company ByteDance, whose Chinese entrepreneurs invented a core of what would become TikTok’s algorithm in 2016. TikTok, itself, was formally established after ByteDance’s 2017 acquisition of Musical.ly Inc., a video app company headquartered in Shanghai but with an American office in California. That transaction was consummated following approval in Washington, D.C. by CFIUS. A year later—in the summer of 2018—Musical.ly Inc. became TikTok.
Today, excluding Douyin—the subsidiary of ByteDance that is the Chinese-based counterpart to TikTok—the app provided by TikTok has been downloaded globally more than 2 billion times, has at least 800 million monthly active users—of which 150 million are Americans—and is available in 75 languages.
The Run-Up to The March Hearings
The years since CFIUS allowed the Musical.ly transaction to proceed have been anything but quiet. A metaphor for the ferment characterizing that period is “CFIUS” has been transformed from an esoteric expression in ‘Washington-speak’ to become a common part of today’s business and economic policy lexicon.
In judging the astuteness of policy actions taken by CFIUS, its decision to allow ByteDance to acquire Musical.ly is now seen as myopic, if not a downright display of poor judgment. Of course, hindsight almost always yields 20-20 vision. But in this case, that decision is viewed as a whopper of a mistake.
In fact, soon thereafter—in 2019—CFIUS opened a formal investigation to assess the acquisition. And in 2020, then-President Trump issued two Executive Orders: one, mandating a nation-wide public ban on the operations of TikTok in the U.S. and the other stipulating TikTok was to be divested from ByteDance.
With respect to the former, significant legal charges were filed in court by U.S. interest groups contending such a ban would jeopardize Americans’ freedom of speech. On the second, the White House—indeed Mr. Trump personally—sought to structure a buy-out of TikTok, including by enlisting a number of U.S. companies, most prominently Oracle as the purchaser. (Trump’s actions went so far as to assert that the White House, or possibly even himself, should be paid a commission for the consummation of a deal.)
For a number of reasons (as I’ve detailed earlier) such a transaction was never consummated—first and foremost because of China’s refusal to engage in such a sale. After all, while a country’s laws may stipulate its right to buy an asset from a foreign entity, if the government of the territory in which the entity exists refuses to allow such a sale to take place, consummating the transaction is unlikely to proceed smoothly, or at least not without significantly enlarging the price over and above what otherwise would be determined by market parameters.
Soon after President Biden came to office, he rescinded both of Trump’s TikTok’s Executive Orders. Not because he necessarily disagreed with them, but due to the fact he wanted to assess freshly the overall situation without being hampered by the legacy issues put on the table by his predecessor. Still, under Biden, CFIUS has resumed negotiations with both ByteDance and TikTok about the latter’s divestiture but with little success to show for its efforts .
The House of Representatives’ Committee Hearing
CFIUS’s lack of progress over the last two-plus years to resolve Washington’s concerns about TikTok—recently exacerbated by heightened Sino-U.S. tensions in the defense and foreign policy spheres—propelled the newly elected Congress to hold the televised March House committee hearings. In a House so deeply divided along party lines, the hearings were stunningly striking if for no other reason that it was difficult to distinguish remarks made by Democratic members from those of Republican members.
Lest you believe the reference to “wince” that I made at the very outset pertains to Mr. Chew’s performance, in fact, it refers largely to many—though not all—of the statements made by the committee members, regardless of Party affiliation.
To be sure, Mr. Chew was extraordinarily ill-prepared and insufficiently coached ahead of time on how to testify at a Congressional hearing, especially one focused on such a hot-button topic, let alone one being broadcast live on television—which unquestionably offered the Representatives a huge—and unique—opportunity for national exposure.
Indeed, that committee members had every incentive to exploit such a situation was hardly unexpected. Particularly for me. Why? Because years ago, I served as a senior professional staff member for the Chair of a Senate Committee (the late John Glenn) and organized a number of committee hearings for him on high profile issues, including five days of hearings on the competitiveness threat posed to the U.S. by Japan’s advances in technology. Naturally, the presence of television cameras led to some grandstanding. Astute observers, however, knew this and chalked it up as a natural reaction for a politician.
Having said this, the vast majority of the behavior displayed by the House members at the TikTok hearings was really over the top.
I took away two major conclusions from those hearings. First, many committee members appeared to be ill-informed (or poorly briefed by their staff) about even the basics of how TikTok works, as well as rudimentary facts about China and the Chinese economy.
Second, and far more important, notwithstanding Mr. Chew’s difficulty in responding to the questions posed to him in a fully coherent and strategic manner—which could have been mitigated had he been well-prepped by his lawyers and advisors—if anything, the substance of Mr. Chew’s responses did little to buttress his contention that TikTok operates in an arms-length fashion from Beijing.
What Comes Next
After watching the hearing it was hard to conclude any prevailing sentiment other than the vast majority of committee members are strongly in favor of the U.S. imposing an across-the-board ban of TikTok, not only on official devices but also on private ones.
While there were sentiments expressed by some members about trying to compel the Chinese to divest TikTok to U.S. firms, there was very little support for that approach, if for no other reason than the prospects for getting Beijing to engage on consummating such a transaction seemed fanciful.
Strangely, there was little if any discussion about an alternative, far more robust approach centered on American ingenuity: namely encouraging U.S. high tech firms themselves to produce algorithms that would compete head-to-head with TikTok. After all, if TikTok, which for all intents and purposes occupies a monopoly position and is as profitable as many people believe, are the barriers to enter such a market so high as to forestall new competitors?
Barring the manifestation of such initiatives, one can now only expect two outcomes: (i) there will be a series of court cases in the U.S. focused on how a banning mandate violates Americans’ freedom of speech and (ii) the Chinese will be amused by the fact that we are becoming more like them rather than the other way around.
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