Scott Gurvey's Public Offerings

As of February 2023, the social video app TikTok said it had approximately 150 active monthly million users in the United States. This number is projected to increase by over five percent year-over-year, reaching 170 million users in 2024. Extremely popular with younger digital audiences, TikTok is one of the fastest-growing social media apps in the United States. The United States has the largest TikTok audience of any country. And that scares the hell out of many, including the members of Congress.

The concerns stem from TikTok’s Chinese owner, a company named ByteDance, and a 2017 Chinese law that requires companies to share data with the ruling Communist Party if requested. The fear is that this could allow user information like locations, private messages, and biometric data to potentially be handed over to Chinese authorities. There are some cases where social media information has been used to pressure or even blackmail. TikTok has already faced several lawsuits related to data privacy violations. In one, a class-action lawsuit alleges the app collects biometric data from users without proper consent and shares it with third-party companies.

“TikTok is essentially a tool for China’s totalitarian surveillance state, putting our kids’ private data at risk,” argued Brendan Carr, a Republican commissioner at the Federal Communications Commission who wants to ban TikTok from the U.S. Congress has now agreed. In April, Congress approved a bill known as the “Protecting Americans from Foreign Adversary Controlled Applications Act” that gives ByteDance two options, sell TikTok to an approved buyer or face a ban in the United States. The bill passed on a 352-65 vote. President Joe Biden signed this legislation into law.

TikTok swiftly filed a lawsuit in the U.S. Circuit Court of Appeals for Washington, D.C. The company arguing the bill violates constitutional protections of free speech. TikTok says the law represents an “unprecedented violation of the First Amendment. This dispute presents a series of novel issues. I would hesitate to predict the eventual outcome, which might take several years to materialize. TikTok contends that banning the app infringes upon users’ right to free speech. By preventing Americans from accessing TikTok, the lawsuit states, the law restricts their ability to express themselves on the platform.

TikTok also asserts that it has taken steps to protect American users’ data. The company emphasizes its commitment to safeguarding user privacy and argues that the ban is unnecessary. But TikTok in some ways undermines its argument by supplementing its legal efforts with a massive public relations push, appealing directly to its American members to lobby their legislators on the company’s behalf. It has aggressively recruited small-business owners and influencers to advocate for preserving TikTok as a vital part of their lives. Members of Congress reported they had been inundated by these appeals.

Strictly on First Amendment grounds I would be inclined to side with TikTok, even though the Chinese would never permit an American company to operate in China the way TikTok operates in the United States. But this issue goes well beyond the First Amendment. Going back to FCC Commissioner Carr, he referred to TikTok as a “clear and present danger to America’s national security”. Carr says the new legislation is based on TicToc’s “malign conduct, not its content.” Carr argues that TikTok’s content acts as a “sheep’s clothing” concealing a “sophisticated surveillance app” underneath. According to him, TikTok gives the Chinese government a major tool for influencing American public opinion.

I am also disturbed that Chinese children see at home a different TikTok than the freewheeling unedited forum American children see. To me that is an admission by the Chinese that they use TikTok to influence opinion in the United States, particularly among its youngest and most vulnerable citizens. Over and above ByteDance’s Chinese ownership and China’s track record of alleged data theft and espionage in recent years, I have concerns TikTok’s recommendation algorithm could be manipulated to promote disinformation or propaganda. Americans already have enough disinformation.

As a matter of law, the fusion of economic and national security considerations has led to increased scrutiny of cross-border investments. The phenomenon of “national security creep” has expanded the scope of review and regulation in such transactions, emphasizing the delicate balance between economic interests and safeguarding national security.

This will be an interesting case to watch.

#####