March 21, 2024 • 19 mins
The US House of Representatives has passed a bill with an ultimatum for TikTok’s parent company, ByteDance: sell the app, or be banned in the US.
Today on The Big Take DC podcast, Bloomberg’s Dan Flatley and Alex Barinka cover the national security concerns behind this bill and the potential geopolitical and tech industry consequences.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. The US House of
Representatives passed a bill last week that would ban TikTok
unless it's Chinese owners sell the platform, and many of
the apps one hundred and seventy million American users are
not happy about it.
Speaker 2 (00:20):
Oh, US Government of America, You've made a big mistake.
Speaker 3 (00:25):
When it comes to banning the renegade app.
Speaker 4 (00:29):
Is the one time that they decide to unite forces
and come together.
Speaker 1 (00:32):
They look like bas Scooby Doo villains that need to retire,
and I wish they would. It's not the first time
lawmakers have gone up against this super popular app. Former
President Donald Trump signed an executive order to ban it
back in twenty twenty, but it was blocked in court,
and last year Congress took up the idea of regulating it,
but attempts to ban it outright have failed. Now renewed
(00:56):
concerns have it back on the top of lawmakers' desks
today on the show It's the US Government Versus TikTok.
Why is Washington picking this fight again? And now does
it really stand a chance of addressing the China related
national security concerns? They're worried about and could any version
of that proposal actually work? From Bloomberg's Washington bureau, This
(01:20):
is the Big Take DC podcast. I'm David Gerra. Seleiah
Mosen is promoting her new book out this week called
Paper Soldiers, How the weaponization of the Dollar changed the
world order.
Speaker 4 (01:36):
Depending on who you ask, the TikTok algorithm is either
this hugely sophisticated, unique, powerful tech tool that is able
to discern what you're interested in, with the inside joke
on the app being it knows me better than I
know myself, or, as some lawmakers see it, it is
an incredibly sophisticated spy device for espionage to collect an
(02:00):
information that I didn't even know about myself.
Speaker 1 (02:02):
Alex Birinka is a tech reporter at Bloomberg, and she says,
the very thing that makes TikTok users rabid for the
app is what the government is so concerned about. Its stickiness.
Users love the app because it feeds them content that
seems perfectly tailored to their interests, whether that's a viral
fetapasta recipe or a puppy video.
Speaker 4 (02:23):
They spend upwards of an hour on the app every
single day. It is absolutely an enviable asset to.
Speaker 1 (02:31):
Have that asset, The captive eyeballs and data of millions
of American users ultimately belongs to a Chinese tech company
called Byteedance, which owns TikTok, which makes many US lawmakers uneasy.
We've seen politicians coming out of briefings with the FBI
and the Justice Department saying, essentially, trust us, this app
(02:52):
is a problem, but we can't share the details.
Speaker 4 (02:56):
Lawmakers and officials largely have thrown out a lot of
hype patheticals, not a lot of specific evidence.
Speaker 1 (03:03):
So I turned to Dan Flatley, a national security reporter
at Bloomberg. Dan, I want to ask you about the
chorus of criticism or the concern that we're hearing from lawmakers.
What are they saying about the specific risks they think
this poses to national security?
Speaker 2 (03:16):
Well, the number one risk is data security. So TikTok's
parent company, Byteedance, is based in China, has ties to
the Chinese government, and there is a concern that the
Chinese government could at some future date compelled byte Dance
to turn over whatever data it has from TikTok to
the government, and then that data can be used with
(03:38):
other types of data that China has collected either through
hacks or other forms of cyber attack, or just data
that they've bought on the open market to profile people,
or to blackmail people, or for some other purpose that
we don't know about now. TikTok, it should be noted,
has has always disputed this and has basically said TikTok
Incorporated is a US incorporated company. The data is walled
(04:01):
off from any government, but that has done very little
to assuage the concerns of members of Congress who just
see a real threat there. And then, of course, the
secondary threat, or maybe the primary threat, depending on how
you look at this, is whether the app could be
used in some sort of influence operation.
Speaker 1 (04:21):
The thinking goes a foreign government or some other entity
could use the app to push certain perspectives to US users,
to promote propaganda or misinformation talking.
Speaker 2 (04:31):
To folks on the hill. One of the developments that
really sort of galvanized a lot of support for this
push was the aftermath of the October seventh attacks in Israel.
Speaker 1 (04:40):
Since October seventh, lawmakers have expressed concern that TikTok's algorithm
has been favoring pro Palestinian content on the platform.
Speaker 2 (04:48):
On top of that, it's an election year, so there's
a lot of focus on the voters that TikTok is reaching.
This is a very coveted demographic, a lot of potential
young voters, a lot of young people, and politicians are
interested in reaching those kinds of voters.
Speaker 1 (05:04):
It's sort of a perfect storm and one that brought
lawmakers together across the aisle in this rare moment of bipartisanship.
Speaker 2 (05:12):
What you have, at least according to the folks that
I've talked to, was a moment in which all parties
are sort of worried about China. Some parties want to
take a really hard line. There's potentially more of a
concern from Republicans on kind of traditional national security issues
with regard to China. There is a concern more from
(05:34):
Democrats about misinformation and disinformation. TikTok sort of found itself
right in the middle of that than diagram.
Speaker 1 (05:42):
This led lawmakers to hit the gas on passing legislation
to rein in TikTok. But unlike most previous TikTok bills,
this time around, lawmakers didn't immediately jump to a ban.
Could you walk us through this bill? I gather It's
about a dozen pages long. But what does it spell
out exactly?
Speaker 2 (06:00):
Essentially, it spells out a process by which TikTok would
be forced to sell itself to a US company or
a company that's located in a what we would call
a quote unquote friendly country, so anybody but China essentially,
but also you don't want to be sold to Russia
or Iran. It would require TikTok to do this sale
(06:22):
within six months, otherwise it would face a band in
the US, so it would be blocked from app stores,
it would be blocked from internet service providers. You wouldn't
be able to get any updates to it, and essentially
it would just sort of die of starvation because you know,
the back end stuff would no longer be able to happen.
Speaker 1 (06:39):
In other words, this is an ultimatum to Bite Dance.
Congress is saying, sell off TikTok to a new owner,
or the US is going to ban the app.
Speaker 4 (06:47):
This film moved incredibly fast.
Speaker 1 (06:50):
Tech reporter Alex Birinka again, from.
Speaker 4 (06:52):
Its introduction to its vote. It moved it to speed
that we haven't really seen before or not in recent years.
With the make up of Congress as it is right now.
Speaker 1 (07:02):
TikTok saw this happening, and it tried hard to slow
this down. As lawmakers prepared to vote on the bill,
the app sent out alerts urging millions of users to
call their representatives and stop the TikTok shut down. TikTok
users made videos of their own, too, and that campaign
went viral.
Speaker 2 (07:21):
Do you want to save TikTok, Let me tell you
a couple of things that you can do.
Speaker 4 (07:26):
We had lawmakers coming out to the steps of Capitol
Hill the week this bill was voted on, complaining about
just the vast number of phone calls they were getting.
Speaker 1 (07:34):
These people will listen to us because they want to
keep their jobs, so let's make sure to spam their inboxes.
Speaker 4 (07:40):
But lawmakers also, particularly the ones who are critical of TikTok,
saw this as kind of just another way that TikTok
has a hold over the minds and hearts of users.
Speaker 1 (07:51):
Lawmakers like Republican Congresswoman Kathy mac Morris Rogers. She's the
chair of the House committee that advanced the bill this morning.
Speaker 3 (07:58):
Prior to our hearing, TikTok used as influence and power
to force users to contact their representatives if they wanted
to continue using TikTok.
Speaker 1 (08:07):
She basically cites that call in campaign as evidence that
TikTok needs to be stopped and implicated the Chinese Communist
Party or the CCP.
Speaker 4 (08:17):
This is just a small.
Speaker 3 (08:18):
Taste of how the CCP weaponizes applications it controls to
manipulate tens of millions of people to further their agenda.
Speaker 1 (08:27):
TikTok has done a few things to reassure lawmakers that
American user data is safe. The company works with Oracle,
a US based tech company, to protect American user data
from bad actors and foreign governments. They're also taking another approach,
lobbying lawmakers directly.
Speaker 4 (08:44):
I got to review one of the pamphlets they're passing
out to lawmakers defending themselves against some of the Department
of Justice's claims. They say things like, you think we
share all this information, well, that's just what every social
media company shares, like name, email, address, phone number. And
by the way, TikTok doesn't ask you for your real name,
(09:05):
or your employment status or your relationship status like some
other apps do.
Speaker 1 (09:09):
It's a lobbying pushed that actually aligns with what many
tech critics and privacy advocates are saying they've been trying
to press the issue even further.
Speaker 4 (09:18):
To blow this up and actually say, hey, this shouldn't
just be about TikTok, this should be about comprehensive data
privacy policy. TikTok behind the scenes has been fanning those flames, saying, yes,
we would love industrywide policy, don't single us out.
Speaker 1 (09:33):
According to Alex, privacy experts think this is a fair point.
She spoke to one named Callie Schroeder, who works at
a privacy advocacy organization called Epic.
Speaker 4 (09:43):
She said, Look, if the Internet is a calender, then
banning TikTok from the US is like plugging one of
those tiny holes, and you're leaving all the rest open
for data to kind of seep out, not only from
rivals who have had a litany of data breaches and
kind of bad situations come up, but also from things
like data brokers, these third parties that vacuum up hordes
(10:05):
of information from the Internet and sell it to the
highest bidder.
Speaker 2 (10:08):
It's very unusual to see a specific company named in
legislation like this, and that actually has some members of
Congress concern. You know, does this actually address the problem
or is this just kind of a band aid. Okay,
today it's TikTok, Tomorrow it may be something else. Do
we need to pass a piece of legislation every time this.
Speaker 1 (10:27):
Happens, Whether it's a problem with TikTok alone or with
the entire social media environment, lawmakers have decided there is
cause for concern. But now that the House has passed
this bill, it goes to the Senate, and if it
manages to become a law, which again is a long shot,
there are still huge questions about how to actually implement
(10:48):
it that's coming up. The US House of Representatives has
given TikTok's parent company, Byte Dance a warning, we want
the app out of Chinese control, and we're not afraid
to force your hand. But that bill still faces some hurdles.
It's already slowed down since landing on the Senate's plate,
(11:11):
and even if it does pass the Senate, which is
again a long shot, and the President were to sign it,
there is no indication that Byte Dance or the Chinese
government would give this up without a fight. Here's my colleague,
Alex Barinka.
Speaker 4 (11:23):
TikTok right now is valuable for China, probably because it's
valuable for byte Dance. We know according to our sources
that they aim to sell almost eighteen billion dollars worth
of goods on the app in the US in its
first year of operating TikTok Shop. So when it comes
to just like economic lift and having a parent company
(11:43):
and byte Dance that owns some of the biggest apps
in the world, it becomes really, really, really important.
Speaker 1 (11:50):
The Chinese government has made it clear that it would
have to be involved in any potential sale of TikTok,
but it's unclear who the US expects has that kind
of cash lying around.
Speaker 4 (12:00):
The bill itself doesn't specify what kind of sale or
divestiture would make lawmakers happy. So I kind of tapped
my old deals reporting hat I used to cover M
and A for US at Bloomberg, particularly in tech, and
I think there are three specific options that I really see.
Speaker 1 (12:16):
The first option is ByteDance would sell TikTok to a
US company or one that's more friendly to the United States.
Speaker 4 (12:23):
The problem with that is under the current administration, the
Anti Trust regulator has been very, very tough on big tech.
So when you think of the names that could afford
a check of thirty five to forty billion dollars, which
is what Bloomberg Intelligence values TikTok's US business at the
list is short, it's Meta, it's alphabet, it's Apple, it's Amazon,
it's all the names that the anti trust regulator would
(12:46):
be hard pressed to not get involved and block that
kind of deal.
Speaker 1 (12:50):
So that leaves two other options. One is a sale
to private investors, so a group of venture capitalists investors
who would keep it in private control. The other is
investors buy it then take it public on the market.
Steven Manuchin, the former Treasury Secretary, has already said he'd
be interested in rounding up a group of investors to
(13:10):
buy the app. No matter who buys it, the bill
specifies that the President would have to sign off on
the sale. Of course, to get to that point, the
bill would have to become law.
Speaker 4 (13:20):
Now as we are recording this it is March. The bill,
if pass would give basically six months for TikTok to
be sold or blocked. If this passes, say in May,
which would be pretty quick for this bill to get
through the Senate, that would put that deadline in November,
and this November is election season, so this timeline will
(13:40):
be really important. As legislators look at this bill and
potentially continue to hear from users who are staring at
their ballots, thinking about who they're going to vote for,
and thinking about who might try to snatch this app
that they love from.
Speaker 1 (13:55):
Their hands, which would make things tricky for President Joe Biden,
whose campaign and joined TikTok for the first time this year.
Speaker 4 (14:02):
They have been posting dozens of videos and clearly trying
to reach an audience there. For the Democratic Party, young
people have been incredibly important in Biden's first election. Young
people turned out at record levels in the last midterm election.
Some experts say that young Democrats blocked the prophesized red wave,
(14:24):
So when you look at what Biden has to lose,
it is those voters.
Speaker 1 (14:30):
White House officials have said they want to see some
changes to the bill, but President Biden has said he
would sign it into law, which could alienate some young voters.
There's already been backlash against lawmakers who have targeted TikTok,
particularly those who have used the app in the past,
like one North Carolina Congressman.
Speaker 4 (14:47):
Jeff Jackson, is currently in the US House of Representatives,
but he is running for attorney general in his state.
He has been one of the most successful examples of
a politician on TikTok, and he also voted for this bill.
And after that happened, he has been just blasted on
the app. He's lost over one hundred thousand followers of
(15:08):
his two point five million, and he's had to come
out with a few response videos basically trying to justify
his decision.
Speaker 5 (15:15):
I apologize I did not handle this situation well from
top to bottom, and that is why I have been
completely roasted on this app over the last forty eight hours.
Speaker 1 (15:26):
TikTok users they did not accept Jackson's apology.
Speaker 4 (15:29):
Congratulations, Jeffrey Jackson.
Speaker 2 (15:31):
I'm officially giving you this award for the single dumbus
video I have ever seen on the Internet.
Speaker 1 (15:37):
All this is to say lawmakers are in a tough spot,
not just Democrats who are scared of alienating young voters
in an election year, Republicans two. Former President Trump has
come out and said he's against the bill, even though
he once tried to ban TikTok by executive order. Now
he says this bill would give meta too much power.
Speaker 4 (15:57):
You'll remember, after the January sixth insurrection, Facebook removed Donald
Trump from the platform. He was off the platform for
two years. So perhaps there's a little bit of animosity
there with Trump and Meta, which owns Facebook. But it
is incredibly fascinating and honestly put a lot of Republicans
in a bind.
Speaker 1 (16:17):
And that brings us to the very last wrinkle in
this very complicated legislative picture. If byte Dance and the
Chinese government refused to sell TikTok, the US government would
ask American tech companies like Apple and Google to ban
it from their app stores. That sort of ban might
run into trouble with the Supreme Court.
Speaker 4 (16:37):
There is a really interesting legal argument that's come to
the forefront. In nineteen sixty five, there was a US
Supreme Court case where the justices voted unanimously that the
First Amendment protects American's right to see and view communist propaganda.
(16:57):
There was a moment where the Post Office was looking
to block the sending of Chinese communist propaganda through the
postal service, and that was protected by the First Amendment.
Speaker 1 (17:11):
Alex points out this kind of censorship of free speech
would be pretty draconian. It's worth noting TikTok's main competitor
is Instagram. Reels a video product owned by Meta, so
a TikTok ban would give Meta a lot of power
over the market, as Trump pointed out. Alex says, there's
also a compelling argument that a TikTok ban would hurt
(17:34):
other American tech companies by making the US look bad.
Speaker 4 (17:38):
The biggest social media companies in the world are American companies.
And if America comes to the table and says we're
going to pluck this gem, this global gem in TikTok
and force it to be owned by another American company,
how does that look on the world stage.
Speaker 1 (17:56):
All this is pretty unprecedented. Congress has never forced an
international company to sell off part of its business, and
my colleague Dan says they might not manage to do
that this time around. Either. The Senate famously slows down
the legislative process.
Speaker 2 (18:12):
I don't have a crystal ball, and I've gotten in
trouble before trying to predict what Congress is going to do.
But unless the Senate moves quickly on this, which there's
no indication that they are at the moment, this is
going to get bogged down in months and months of
negotiations and nothing may ever happen with it.
Speaker 1 (18:28):
That's a safe ben. As far as congressional clairvoyance, I
think that's pretty good. Thanks for listening to The Big
Take DC podcast from Bloomberg News. I'm David Gera. This
episode was produced by Julia Press. It was mixed by
Ben O'Brien. It was fact checked by Naomi Ing. Naomi
Shaven is our senior producer. It was edited by Caitlin Kenny,
(18:50):
Aaron Edwards, and Michael Shepherd, who also provides editorial direction.
With Wendy Benjaminson and Elizabeth Ponceaux. The Cole Beamster Boar
is our executive producer. Sage is Bloomberg's head of Podcasts.
Thanks for listening. We'll be back next week.
Speaker 3 (19:09):
M HM
Bloomberg Audio Studios, podcasts, radio news. The US House of
Representatives passed a bill last week that would ban TikTok
unless it's Chinese owners sell the platform, and many of
the apps one hundred and seventy million American users are
not happy about it.
Speaker 2 (00:20):
Oh, US Government of America, You've made a big mistake.
Speaker 3 (00:25):
When it comes to banning the renegade app.
Speaker 4 (00:29):
Is the one time that they decide to unite forces
and come together.
Speaker 1 (00:32):
They look like bas Scooby Doo villains that need to retire,
and I wish they would. It's not the first time
lawmakers have gone up against this super popular app. Former
President Donald Trump signed an executive order to ban it
back in twenty twenty, but it was blocked in court,
and last year Congress took up the idea of regulating it,
but attempts to ban it outright have failed. Now renewed
(00:56):
concerns have it back on the top of lawmakers' desks
today on the show It's the US Government Versus TikTok.
Why is Washington picking this fight again? And now does
it really stand a chance of addressing the China related
national security concerns? They're worried about and could any version
of that proposal actually work? From Bloomberg's Washington bureau, This
(01:20):
is the Big Take DC podcast. I'm David Gerra. Seleiah
Mosen is promoting her new book out this week called
Paper Soldiers, How the weaponization of the Dollar changed the
world order.
Speaker 4 (01:36):
Depending on who you ask, the TikTok algorithm is either
this hugely sophisticated, unique, powerful tech tool that is able
to discern what you're interested in, with the inside joke
on the app being it knows me better than I
know myself, or, as some lawmakers see it, it is
an incredibly sophisticated spy device for espionage to collect an
(02:00):
information that I didn't even know about myself.
Speaker 1 (02:02):
Alex Birinka is a tech reporter at Bloomberg, and she says,
the very thing that makes TikTok users rabid for the
app is what the government is so concerned about. Its stickiness.
Users love the app because it feeds them content that
seems perfectly tailored to their interests, whether that's a viral
fetapasta recipe or a puppy video.
Speaker 4 (02:23):
They spend upwards of an hour on the app every
single day. It is absolutely an enviable asset to.
Speaker 1 (02:31):
Have that asset, The captive eyeballs and data of millions
of American users ultimately belongs to a Chinese tech company
called Byteedance, which owns TikTok, which makes many US lawmakers uneasy.
We've seen politicians coming out of briefings with the FBI
and the Justice Department saying, essentially, trust us, this app
(02:52):
is a problem, but we can't share the details.
Speaker 4 (02:56):
Lawmakers and officials largely have thrown out a lot of
hype patheticals, not a lot of specific evidence.
Speaker 1 (03:03):
So I turned to Dan Flatley, a national security reporter
at Bloomberg. Dan, I want to ask you about the
chorus of criticism or the concern that we're hearing from lawmakers.
What are they saying about the specific risks they think
this poses to national security?
Speaker 2 (03:16):
Well, the number one risk is data security. So TikTok's
parent company, Byteedance, is based in China, has ties to
the Chinese government, and there is a concern that the
Chinese government could at some future date compelled byte Dance
to turn over whatever data it has from TikTok to
the government, and then that data can be used with
(03:38):
other types of data that China has collected either through
hacks or other forms of cyber attack, or just data
that they've bought on the open market to profile people,
or to blackmail people, or for some other purpose that
we don't know about now. TikTok, it should be noted,
has has always disputed this and has basically said TikTok
Incorporated is a US incorporated company. The data is walled
(04:01):
off from any government, but that has done very little
to assuage the concerns of members of Congress who just
see a real threat there. And then, of course, the
secondary threat, or maybe the primary threat, depending on how
you look at this, is whether the app could be
used in some sort of influence operation.
Speaker 1 (04:21):
The thinking goes a foreign government or some other entity
could use the app to push certain perspectives to US users,
to promote propaganda or misinformation talking.
Speaker 2 (04:31):
To folks on the hill. One of the developments that
really sort of galvanized a lot of support for this
push was the aftermath of the October seventh attacks in Israel.
Speaker 1 (04:40):
Since October seventh, lawmakers have expressed concern that TikTok's algorithm
has been favoring pro Palestinian content on the platform.
Speaker 2 (04:48):
On top of that, it's an election year, so there's
a lot of focus on the voters that TikTok is reaching.
This is a very coveted demographic, a lot of potential
young voters, a lot of young people, and politicians are
interested in reaching those kinds of voters.
Speaker 1 (05:04):
It's sort of a perfect storm and one that brought
lawmakers together across the aisle in this rare moment of bipartisanship.
Speaker 2 (05:12):
What you have, at least according to the folks that
I've talked to, was a moment in which all parties
are sort of worried about China. Some parties want to
take a really hard line. There's potentially more of a
concern from Republicans on kind of traditional national security issues
with regard to China. There is a concern more from
(05:34):
Democrats about misinformation and disinformation. TikTok sort of found itself
right in the middle of that than diagram.
Speaker 1 (05:42):
This led lawmakers to hit the gas on passing legislation
to rein in TikTok. But unlike most previous TikTok bills,
this time around, lawmakers didn't immediately jump to a ban.
Could you walk us through this bill? I gather It's
about a dozen pages long. But what does it spell
out exactly?
Speaker 2 (06:00):
Essentially, it spells out a process by which TikTok would
be forced to sell itself to a US company or
a company that's located in a what we would call
a quote unquote friendly country, so anybody but China essentially,
but also you don't want to be sold to Russia
or Iran. It would require TikTok to do this sale
(06:22):
within six months, otherwise it would face a band in
the US, so it would be blocked from app stores,
it would be blocked from internet service providers. You wouldn't
be able to get any updates to it, and essentially
it would just sort of die of starvation because you know,
the back end stuff would no longer be able to happen.
Speaker 1 (06:39):
In other words, this is an ultimatum to Bite Dance.
Congress is saying, sell off TikTok to a new owner,
or the US is going to ban the app.
Speaker 4 (06:47):
This film moved incredibly fast.
Speaker 1 (06:50):
Tech reporter Alex Birinka again, from.
Speaker 4 (06:52):
Its introduction to its vote. It moved it to speed
that we haven't really seen before or not in recent years.
With the make up of Congress as it is right now.
Speaker 1 (07:02):
TikTok saw this happening, and it tried hard to slow
this down. As lawmakers prepared to vote on the bill,
the app sent out alerts urging millions of users to
call their representatives and stop the TikTok shut down. TikTok
users made videos of their own, too, and that campaign
went viral.
Speaker 2 (07:21):
Do you want to save TikTok, Let me tell you
a couple of things that you can do.
Speaker 4 (07:26):
We had lawmakers coming out to the steps of Capitol
Hill the week this bill was voted on, complaining about
just the vast number of phone calls they were getting.
Speaker 1 (07:34):
These people will listen to us because they want to
keep their jobs, so let's make sure to spam their inboxes.
Speaker 4 (07:40):
But lawmakers also, particularly the ones who are critical of TikTok,
saw this as kind of just another way that TikTok
has a hold over the minds and hearts of users.
Speaker 1 (07:51):
Lawmakers like Republican Congresswoman Kathy mac Morris Rogers. She's the
chair of the House committee that advanced the bill this morning.
Speaker 3 (07:58):
Prior to our hearing, TikTok used as influence and power
to force users to contact their representatives if they wanted
to continue using TikTok.
Speaker 1 (08:07):
She basically cites that call in campaign as evidence that
TikTok needs to be stopped and implicated the Chinese Communist
Party or the CCP.
Speaker 4 (08:17):
This is just a small.
Speaker 3 (08:18):
Taste of how the CCP weaponizes applications it controls to
manipulate tens of millions of people to further their agenda.
Speaker 1 (08:27):
TikTok has done a few things to reassure lawmakers that
American user data is safe. The company works with Oracle,
a US based tech company, to protect American user data
from bad actors and foreign governments. They're also taking another approach,
lobbying lawmakers directly.
Speaker 4 (08:44):
I got to review one of the pamphlets they're passing
out to lawmakers defending themselves against some of the Department
of Justice's claims. They say things like, you think we
share all this information, well, that's just what every social
media company shares, like name, email, address, phone number. And
by the way, TikTok doesn't ask you for your real name,
(09:05):
or your employment status or your relationship status like some
other apps do.
Speaker 1 (09:09):
It's a lobbying pushed that actually aligns with what many
tech critics and privacy advocates are saying they've been trying
to press the issue even further.
Speaker 4 (09:18):
To blow this up and actually say, hey, this shouldn't
just be about TikTok, this should be about comprehensive data
privacy policy. TikTok behind the scenes has been fanning those flames, saying, yes,
we would love industrywide policy, don't single us out.
Speaker 1 (09:33):
According to Alex, privacy experts think this is a fair point.
She spoke to one named Callie Schroeder, who works at
a privacy advocacy organization called Epic.
Speaker 4 (09:43):
She said, Look, if the Internet is a calender, then
banning TikTok from the US is like plugging one of
those tiny holes, and you're leaving all the rest open
for data to kind of seep out, not only from
rivals who have had a litany of data breaches and
kind of bad situations come up, but also from things
like data brokers, these third parties that vacuum up hordes
(10:05):
of information from the Internet and sell it to the
highest bidder.
Speaker 2 (10:08):
It's very unusual to see a specific company named in
legislation like this, and that actually has some members of
Congress concern. You know, does this actually address the problem
or is this just kind of a band aid. Okay,
today it's TikTok, Tomorrow it may be something else. Do
we need to pass a piece of legislation every time this.
Speaker 1 (10:27):
Happens, Whether it's a problem with TikTok alone or with
the entire social media environment, lawmakers have decided there is
cause for concern. But now that the House has passed
this bill, it goes to the Senate, and if it
manages to become a law, which again is a long shot,
there are still huge questions about how to actually implement
(10:48):
it that's coming up. The US House of Representatives has
given TikTok's parent company, Byte Dance a warning, we want
the app out of Chinese control, and we're not afraid
to force your hand. But that bill still faces some hurdles.
It's already slowed down since landing on the Senate's plate,
(11:11):
and even if it does pass the Senate, which is
again a long shot, and the President were to sign it,
there is no indication that Byte Dance or the Chinese
government would give this up without a fight. Here's my colleague,
Alex Barinka.
Speaker 4 (11:23):
TikTok right now is valuable for China, probably because it's
valuable for byte Dance. We know according to our sources
that they aim to sell almost eighteen billion dollars worth
of goods on the app in the US in its
first year of operating TikTok Shop. So when it comes
to just like economic lift and having a parent company
(11:43):
and byte Dance that owns some of the biggest apps
in the world, it becomes really, really, really important.
Speaker 1 (11:50):
The Chinese government has made it clear that it would
have to be involved in any potential sale of TikTok,
but it's unclear who the US expects has that kind
of cash lying around.
Speaker 4 (12:00):
The bill itself doesn't specify what kind of sale or
divestiture would make lawmakers happy. So I kind of tapped
my old deals reporting hat I used to cover M
and A for US at Bloomberg, particularly in tech, and
I think there are three specific options that I really see.
Speaker 1 (12:16):
The first option is ByteDance would sell TikTok to a
US company or one that's more friendly to the United States.
Speaker 4 (12:23):
The problem with that is under the current administration, the
Anti Trust regulator has been very, very tough on big tech.
So when you think of the names that could afford
a check of thirty five to forty billion dollars, which
is what Bloomberg Intelligence values TikTok's US business at the
list is short, it's Meta, it's alphabet, it's Apple, it's Amazon,
it's all the names that the anti trust regulator would
(12:46):
be hard pressed to not get involved and block that
kind of deal.
Speaker 1 (12:50):
So that leaves two other options. One is a sale
to private investors, so a group of venture capitalists investors
who would keep it in private control. The other is
investors buy it then take it public on the market.
Steven Manuchin, the former Treasury Secretary, has already said he'd
be interested in rounding up a group of investors to
(13:10):
buy the app. No matter who buys it, the bill
specifies that the President would have to sign off on
the sale. Of course, to get to that point, the
bill would have to become law.
Speaker 4 (13:20):
Now as we are recording this it is March. The bill,
if pass would give basically six months for TikTok to
be sold or blocked. If this passes, say in May,
which would be pretty quick for this bill to get
through the Senate, that would put that deadline in November,
and this November is election season, so this timeline will
(13:40):
be really important. As legislators look at this bill and
potentially continue to hear from users who are staring at
their ballots, thinking about who they're going to vote for,
and thinking about who might try to snatch this app
that they love from.
Speaker 1 (13:55):
Their hands, which would make things tricky for President Joe Biden,
whose campaign and joined TikTok for the first time this year.
Speaker 4 (14:02):
They have been posting dozens of videos and clearly trying
to reach an audience there. For the Democratic Party, young
people have been incredibly important in Biden's first election. Young
people turned out at record levels in the last midterm election.
Some experts say that young Democrats blocked the prophesized red wave,
(14:24):
So when you look at what Biden has to lose,
it is those voters.
Speaker 1 (14:30):
White House officials have said they want to see some
changes to the bill, but President Biden has said he
would sign it into law, which could alienate some young voters.
There's already been backlash against lawmakers who have targeted TikTok,
particularly those who have used the app in the past,
like one North Carolina Congressman.
Speaker 4 (14:47):
Jeff Jackson, is currently in the US House of Representatives,
but he is running for attorney general in his state.
He has been one of the most successful examples of
a politician on TikTok, and he also voted for this bill.
And after that happened, he has been just blasted on
the app. He's lost over one hundred thousand followers of
(15:08):
his two point five million, and he's had to come
out with a few response videos basically trying to justify
his decision.
Speaker 5 (15:15):
I apologize I did not handle this situation well from
top to bottom, and that is why I have been
completely roasted on this app over the last forty eight hours.
Speaker 1 (15:26):
TikTok users they did not accept Jackson's apology.
Speaker 4 (15:29):
Congratulations, Jeffrey Jackson.
Speaker 2 (15:31):
I'm officially giving you this award for the single dumbus
video I have ever seen on the Internet.
Speaker 1 (15:37):
All this is to say lawmakers are in a tough spot,
not just Democrats who are scared of alienating young voters
in an election year, Republicans two. Former President Trump has
come out and said he's against the bill, even though
he once tried to ban TikTok by executive order. Now
he says this bill would give meta too much power.
Speaker 4 (15:57):
You'll remember, after the January sixth insurrection, Facebook removed Donald
Trump from the platform. He was off the platform for
two years. So perhaps there's a little bit of animosity
there with Trump and Meta, which owns Facebook. But it
is incredibly fascinating and honestly put a lot of Republicans
in a bind.
Speaker 1 (16:17):
And that brings us to the very last wrinkle in
this very complicated legislative picture. If byte Dance and the
Chinese government refused to sell TikTok, the US government would
ask American tech companies like Apple and Google to ban
it from their app stores. That sort of ban might
run into trouble with the Supreme Court.
Speaker 4 (16:37):
There is a really interesting legal argument that's come to
the forefront. In nineteen sixty five, there was a US
Supreme Court case where the justices voted unanimously that the
First Amendment protects American's right to see and view communist propaganda.
(16:57):
There was a moment where the Post Office was looking
to block the sending of Chinese communist propaganda through the
postal service, and that was protected by the First Amendment.
Speaker 1 (17:11):
Alex points out this kind of censorship of free speech
would be pretty draconian. It's worth noting TikTok's main competitor
is Instagram. Reels a video product owned by Meta, so
a TikTok ban would give Meta a lot of power
over the market, as Trump pointed out. Alex says, there's
also a compelling argument that a TikTok ban would hurt
(17:34):
other American tech companies by making the US look bad.
Speaker 4 (17:38):
The biggest social media companies in the world are American companies.
And if America comes to the table and says we're
going to pluck this gem, this global gem in TikTok
and force it to be owned by another American company,
how does that look on the world stage.
Speaker 1 (17:56):
All this is pretty unprecedented. Congress has never forced an
international company to sell off part of its business, and
my colleague Dan says they might not manage to do
that this time around. Either. The Senate famously slows down
the legislative process.
Speaker 2 (18:12):
I don't have a crystal ball, and I've gotten in
trouble before trying to predict what Congress is going to do.
But unless the Senate moves quickly on this, which there's
no indication that they are at the moment, this is
going to get bogged down in months and months of
negotiations and nothing may ever happen with it.
Speaker 1 (18:28):
That's a safe ben. As far as congressional clairvoyance, I
think that's pretty good. Thanks for listening to The Big
Take DC podcast from Bloomberg News. I'm David Gera. This
episode was produced by Julia Press. It was mixed by
Ben O'Brien. It was fact checked by Naomi Ing. Naomi
Shaven is our senior producer. It was edited by Caitlin Kenny,
(18:50):
Aaron Edwards, and Michael Shepherd, who also provides editorial direction.
With Wendy Benjaminson and Elizabeth Ponceaux. The Cole Beamster Boar
is our executive producer. Sage is Bloomberg's head of Podcasts.
Thanks for listening. We'll be back next week.
Speaker 3 (19:09):
M HM
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