TikTok Train Wreck: Current Deal Solves Nothing and Won't Hold
Tweets of the Week on China + HBO's The Wire, The Onion on Xi, and a Cpop BLACKPINK Cover
The current deal does not solve any of the concerns I initially had about TikTok’s US operations.
TikTok’s sort of sale to Oracle + Walmart doesn’t do anything to address algorithmic manipulation of political content, access to American’s data, or content moderation. As this recent ASPI report laid out in painstaking detail, Bytedance isn’t a company that can be trusted to live up to the expectations America should have for its social media giants, much less reject demands the Chinese government may put on it. My favorite recent example of this came when, after filing a lawsuit to challenge the CFIUS ruling, Bytedance promised that it would “strictly follow" (严格遵守 ) Beijing’s new export controls, even though their implementation could have potentially have cost them a $50bn payout. [Full disclosure, I received a small honorarium for reviewing the ASPI report prior to its publication.]
There’s a real chance the current deal is going to blow up again once the right-wing media ecosystem gets a sense of how big a cave this is.
Of course, Trump has caved on China-related issues in the past. He gave ZTE a reprieve on account of “too many jobs in China lost,” but no-one outside of China tech nerd circles has heard of ZTE. “Caving” on phase one of the trade deal also got a pass because there was a broad political constituency who wanted tariffs lifted. But on TikTok, the fundamental problem with Bytedance’s political position is that there isn’t a congealed constituency in favor of continued Chinese ownership and operations. On one side, you have US tech giants and China hawk Congresspeople hungry for new issues to ‘get tough’ on. While Oracle’s connection with Trump may have been enough to win his approval for a few days, their lobbyists won’t be able to keep Congress quiet. What’s more, TikTok can’t really pull the hard line shenanigans Uber did to politically mobilize its user-base (see: De-Blasio Mode) because its users don’t care if Microsoft operates its app or not.
Senators across the aisle aren’t going to roll over, as in this environment there is no incentive to be ‘soft on China.’ Once the media narrative starts to portraying Trump as ‘weak,’ the one thing he can’t stand being called, he’ll blow this deal up. I’d give the Oracle + Wal-Mart deal only a one in two chance of getting through, more likely now though than late last week as the Supreme Court fight will increasingly take up the news cycle.
If Trump says no deal, I’d say there’s a 40% chance it actually sells its business + data + algorithm to someone like Microsoft, and a 60% chance it just ceases operating in the US thanks to Beijing vetoing the type of sale that would make Congress happy.
America’s the real loser here. Up until TikTok, CFIUS reviews hadn’t really faced presidents willing to overrule national security concerns of foreign acquisitions thanks to corporate lobbying. But now, on top of everything else Trump has done, we get a last-minute sullying of yet another US national security institution.
The TikTok situation could have served as a forcing function to create credible standards for social media companies, both foreign and domestic, to secure their users’ data and provide transparency into their algorithms. If the current deal stands, we’re just supposed to trust that Oracle will do internal checks on TikTok’s source code which they A. have a financial incentive not to question and B. won’t understand in the slightest as Bytedance has committed to not transfer its technology.
It used to be nice to think that in the 21st century, American crony capitalism was limited to small-time stuff like the occasional hundred grand in a Congressman’s freezer. But even in 2013, Secretary Kerry found it hard to credibly cajole overseas in light of a government shutdown.
Thanks to the Trump administration’s behavior, US diplomats trying to preach clean government won’t face “quizzical looks,” they’ll face belly laughs. It will take years of spotless governance before we’re able to hold our heads up again on these issues.
Lastly, with all the talk of Trump getting a likely non-existent $5bn payoff, I wonder what Chinese regulators would demand from Bytedance in exchange for letting them sell the source code. Double secret party control? 10,000 more party member hires?
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China Twitter Tweets of the Week
Thread. Anuj weaves in the legendary ‘JESUS TOK’ tweet.
Vanessa Pappas @v_ness
@mosseri We agree that this type of ban would be bad for the industry. We invite Facebook and Instagram to publicly join our challenge and support our litigation. This is a moment to put aside our competition and focus on core principles like freedom of expression and due process of law.Even if you don’t quite have freedom of expression on Douyin, you still get dope content:
Lastly, in researching the article above, I came across this colorized snapshot from 1920 of Teapot Rock, the namesake of the oil field that President Harding’s Secretary of the Interior loaned out to Sinclair Oil in return for kickbacks. Gorgeous!
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