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Key takeaways
- TikTok CEO Shou Zi Chew will testify before Congress on March 2023 regarding the viral app’s data security measures
- The House Energy and Commerce Committee will also grill Chew on its ties to the Chinese Communist Party through parent company ByteDance
- TikTok has been negotiating with the U.S. government to implement security measures that satisfy regulators’ privacy concerns
- Still, after banning the app on government devices last month, some lawmakers hope to ban the app nationwide
TikTok CEO Shou Zi Chew is slated to testify about the infamous app’s security and privacy practices before Congress on March 23. His solo appearance before the House Energy and Commerce Committee will mark his first Congressional testimony.
Last year, Congress questioned TikTok COO Vanessa Pappas about the app’s security protocols. But since taking the helm as TikTok CEO in April 2021, Chew himself has largely remained in the background.
The House Committee announced intentions to question Chew on TikTok’s consumer privacy and data practices and its relationship with the Chinese government. Also on the docket are concerns regarding TikTok’s impacts on children, including any potential sexual exploitation of minors.
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TikTok’s privacy woes
The House E&C Committee’s announcement comes as TikTok struggles through privacy talks with the U.S. government.
Back in 2020, Committee on Foreign Investment in the United States (CFIUS) ordered TikTok parent ByteDance to divest the popular video app. The national security body cited concerns that U.S. user data could leak to the Chinese government.
Since then, TikTok has been in negotiations with CFIUS to determine if there’s a risk mitigation compromise to be found.
Chinese data laws pose cause for concern
Much of the basis for concern is that Chinese law allows the government to demand data from Chinese-based company. In TikTok’s case, that data would include basic information like user likes, dislikes and certain location and personal data.
The Brookings Institution’s Artificial Intelligence and Emerging Technology Initiative’s Director of Research, Chris Meserole, said that TikTok poses a data privacy risk for all U.S. users.
When American-owned social media companies abuse user data, they’re accountable to the U.S. government, he said. But as a Chinese firm accountable to the Chinese Communist Party, TikTok poses greater cause for concern.
Said Meserole in an NBC News interview, “What happens to your data, if it does leak out of the U.S., is kind of beyond the ability of the U.S. government to control or to influence.”
As to why China would care about U.S. users’ video-watching preferences, Meserole added, “It’s not always clear who would be able to provide useful information to an intelligence service. I think what they’re looking to do is hoover up all the information in case they need to find a needle in a haystack later.”
Calling ByteDance’s data practices into question
TikTok maintains that it collects less data that other major social media apps like Meta. It’s stated that it doesn’t store U.S. data in China and is working to more servers to the U.S., away from China’s sphere of power. TikTok has also attempted to assuage fears that the Communist Party could influence what content U.S. users see.
But a Forbes report in October 2022 has cast doubt on TikTok’s security practices. Citing reviewed materials, the outlet reported that parent company ByteDance planned to monitor at least two U.S. users’ location details through the app.
TikTok denied the allegations, saying it never tracked U.S. users with specific locations.
TikTok CEO’s privacy battles heat up
Talks of TikTok’s data security first emerged during the Trump administration and have continued under the current one.
Reportedly, Biden’s administration neared a deal with TikTok to permit U.S. operations under stricter security measures. However, that deal has reportedly been delayed amid ongoing concerns about TikTok’s China-based ownership.
And the FBI, at least, has some reservations.
In November, FBI Directory Christopher Wray acknowledged that the FBI’s foreign investment unit is working to establish a suitable solution to TikTok’s problems. However, in a hearing before the House Homeland Security Committee, he admitted that he’s “extremely concerned” about U.S. user privacy.
Said Wray, “We do have some national security concerns at least from the FBI’s end about TikTok. They include they possibility that the Chinese government could use it to control data collection on millions of users.”
Other concerns include China possibly “[controlling] the recommendation algorithm” to influence U.S. operations. Or, added Wray, “[controlling] software of millions of [U.S.-based personal] devices.”
Wray also acknowledged that China’s law that requires companies to hand over data on request is “plenty of reason by itself to be extremely concerned.”
At the time, TikTok responded that the company was working with the U.S. government in confidential negotiations. “We are confident that we are on a path to fully satisfy all reasonable U.S. national security concerns,” it added.”
TikTok CEO looks forward to “setting the record straight”
The House E&C hearing is the next logical step after months of increased regulatory scrutiny about TikTok’s data security practices.
E&C Chair Cathy McMorris Rodgers said in a statement, “Big Tech has increasingly become a destructive force in American society. ByteDance-owned TikTok has knowingly allowed the ability for the Chinese Communist Party to access American user data. Americans deserve to know how these actions impact their privacy and data security, as well as what actions TikTok is taking to keep our kids safe from online and offline harms.”
McMorris added that the House has “made [its] concerns clear” regarding TikTok’s data security. The committee intends to “[continue] efforts to hold Big Tech accountable by [requiring TikTok] to provide complete and honest answers” about operations.
In a statement, TikTok spokesperson Brooke Oberwetter responded that TikTok “welcomes the opportunity to set the record straight about TikTok, ByteDance and [its national security commitments.”
Oberwetter also stated that, “The Chinese Communist Party has neither direct nor indirect control of ByteDance or TikTok. Moreover, under the proposal we have devised with our country’s top national security agencies through CFIUS, that kind of data sharing—or any other form of foreign influence over the TikTok platform in the United States—would not be possible.”
TikTok added that it hoped sharing plans with the committee would allow “Congress [to take] a more deliberative approach to the issues at hand.”
TikTok already faces one ban – another could be on the way
Ongoing fears about TikTok’s national security risk recently spurred U.S. lawmakers to pass a ban on downloading TikTok on government devices. The ban was included in the government’s omnibus spending bill. Limited exceptions were made for law enforcement and national security and research purposes.
TikTok derided the bill as a “political gesture” that fails to “advance national security interests.” By contrast, it said, its agreement with CFIUS will “meaningfully address any security concerns that have been raised at both the federal and state level.”
Still, lawmakers concerned about China’s influence over TikTok believe the government ban hasn’t gone far enough.
Recently, several lawmakers have introduced a mix of regulations that would ban TikTok nationwide.
Several states have also banned TikTok on state-issued phones and computers. A handful have even banned anyone who uses campus WiFi at state schools from using TikTok.
So far, the White House has declined to say whether it would support a nationwide ban.
How does TikTok’s CEO deposition impact you?
TikTok’s CEO being called before Congress is the next logical step in the government’s fight to protect U.S. users’ data privacy.
But the implications don’t stop at China’s doorstep.
If the government intends to crack down on privacy violations against American citizens on a broader stage, Big Tech at large could be in trouble.
Facebook’s entire business model is based on helping advertisers use data to target customers.
Amazon gathers loads of data to feed its recommendation algorithms.
And digital marketers of all stripes collect and use data to perfect their marketing algorithms and product design.
All of these uses feed, directly or indirectly, into the profit margins of Big Tech. Whether a company sells data or uses it to enhance their own performance, a regulatory crackdown could have significant financial outcomes.
For investors big on the tech scene, that means it’s time to start watching Big Tech data and security regulations a little closer.
The bottom line
Big Tech has struggled with security concerns and allegations of data abuse for years. While TikTok’s CEO deposition extends the battle internationally, it’s no surprise that an increasingly data-driven world worries about how information is being used.
As regulatory talks ramp up, the potential financial ramifications don’t exclude investor portfolios.
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