Jul 30, 2020 - Technology

TikTok trolls its rivals as Washington pressure mounts

Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images

Congress' antitrust hearing featuring TikTok's biggest rivals didn't stop the Chinese-owned karaoke app from grabbing some of the spotlight Wednesday.

Driving the news: TikTok debuted its biggest Washington offensive yet, releasing its new CEO's first public statement and sending letters to the Hill from the new head of its policy office. Meanwhile, Treasury Secretary Steve Mnuchin confirmed TikTok was under national security review, and President Trump said he's looking at banning the app.

Be smart: TikTok's quick ascent to the top of the social media popularity chain has Washington spooked. The company chose to launch its biggest charm offensive while its bigger rivals took the stand to defend their dominance.

Details: In a letter to House Judiciary Committee leaders Wednesday, Michael Beckerman, TikTok's head of public policy, tried to distance the app from its owners in China.

  • "We have never provided any U.S. user data to the Chinese government, nor would we do so if asked," he wrote.

Earlier that day, TikTok's CEO Kevin Mayer took a swipe at Facebook for trying to copy its product and for pretending to do so in the name of patriotism.

  • "But let's focus our energies on fair and open competition in service of our consumers, rather than maligning attacks by our competitor — namely Facebook — disguised as patriotism and designed to put an end to our very presence in the U.S."
  • He also said TikTok would be releasing the code that drives its content algorithms, and called on his peers to do the same ahead of the hearing.

Yes, but: TikTok's Chinese ties have raised concerns for policymakers on both sides of the aisle. And more recently, the Trump administration has started to focus on the app.

  • On Wednesday, Treasury Secretary Steven Mnuchin confirmed that TikTok is under review by the Committee for Foreign Investment (CFIUS) for an acquisition its parent company ByteDance made in 2017 of Musical.ly, a rival app that was based in the U.S. The review was prompted by data security concerns.
  • President Trump, who had already suggested his administration was looking into a TikTok ban, reiterated Wednesday that he's considering such a move.

Sources say the review will include looking at how the company is structured and who has access to the data — ByteDance or TikTok, which technically isn't based in China.

  • Whatever conditions CFIUS imposes would have to be tied to a national security risk. Some possible scenarios, according to Stewart Baker, a CFIUS lawyer at Steptoe and former Bush administrational official: TikTok could be forced to divest Musical.ly, since TikTok didn’t seek CFIUS approval.
  • "That would be a nightmare, since I’m sure it’s been fully integrated, and there would be endless arguments over what should be divested and how," he told Axios.

The big picture: At the antitrust hearing, TIkTok's rivals pointed to its success as proof that they aren't boxing out competition.

  • "The fastest-growing app is TikTok," Facebook CEO Mark Zuckerberg said.

Between the lines: TikTok is proving a bigger political headache for its parent company, ByteDance, than it may have anticipated. Reports have suggested that ByteDance’s U.S. investors are in talks about buying a majority stake in the app, per The Information.

  • A report out Wednesday from Reuters suggested that the app is worth $50 billion, a value 50x its expected revenue this year.
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