As TikTok's popularity surges, the Chinese-owned karaoke app is facing rapidly rising headwinds from critics who paint it as a threat to individual users' privacy as well as a geopolitical stalking horse for Chinese interests.

The big picture: As my Axios colleague Sara Fischer reports, TikTok has now hit a milestone — among 13–16 year olds, it's more popular than Facebook.

Driving the news: Success has brought the app into a harsher spotlight.

1. Sen. Josh Hawley (R-Mo.), who has been highly critical of U.S. tech companies' relationships with China, asked TikTok to appear on Capitol Hill at a subcommittee hearing on Tuesday, and then left an empty chair when the company failed to show.

• Hawley raised the possibility of a subpoena to TikTok in a scrum with reporters following the hearing.

2. Sen. Marsha Blackburn (R-Tenn.) called TikTok "China's best detective" and pressed the company on children’s privacy and in-app purchases in a letter Tuesday.

• Blackburn accused TikTok of "manipulating children's online purchases" through the sale of virtual gift emojis.

3. CFIUS: The U.S. agency charged with overseeing foreign investments is reportedly probing TikTok parent Bytedance's 2018 acquisition of Muscal.ly, a similar app that Bytedance purchased and renamed.

4. The Federal Trade Commission: Musical.ly agreed to a $5.7 million settlement earlier this year to resolve an FTC investigation into whether it had illegally collected children’s personal information.

Yes, but: TikTok's success with young creators and audiences is also winning it broader support from other tech companies.

• Adobe, for example, announced this week it is adding the ability to directly export to TikTok as a new feature in the latest version of its Premiere Rush social video app.
• "We see it as a leading platform for short-form video and there's a ton of creativity happening there," Adobe product chief Scott Belsky said in an interview.

What they're saying: In a blog post, TikTok said it has taken steps to assure independent decision-making, including basing its content moderation team in the U.S. and storing all U.S. user data outside of China.

• Former TikTok employees, though, told the Washington Post that key decisions were still being made in China as recently as this spring.

"They want to be a global company, and numbers-wise, they've had that success. But the purse is still in China: The money always comes from there, and the decisions all come from there."

Details: Denver-based Special Counsel performed a data storage and security audit commissioned by TikTok.

• Doug Brush, the firm's VP of cybersecurity services, told Axios' Kim Hart that TikTok encrypts all data when it's stored and transmitted, and that U.S. residents' data was found to only hit U.S. servers.
• "I would characterize them as an organization that does take security seriously and they have the right processes in place," Brush said.

The bottom line, from former Facebook security chief Alex Stamos: "It's trendy to pretend that concerns about Chinese tech domination are just a smoke screen by U.S. executives, but if you actually care about privacy, safety and content moderation then you need to pay attention to TikTok."

A proposal for $100 billion in new funding for fundamental AI research is circulating in Congress, Axios' Kaveh Waddell reports. The proposal has bipartisan support, Senate Minority Leader Chuck Schumer said Tuesday.

Why it matters: Without a big increase in money for AI research, experts say, the U.S. is liable to fall behind fast-moving adversaries like China on critical emerging tech.

The big picture: The White House has emphasized the need to stay ahead of competitors. But researchers say doing so will require far more funding than the roughly $1 billion currently earmarked for non-defense AI development annually.

• By contrast, Shanghai's city government alone plans to invest $15 billion in AI over the next 10 years. (Total Chinese government funding numbers are hard to come by.)

What's happening: Speaking at a conference arranged by the National Security Commission on AI, Schumer announced a "discussion draft" circulating in Congress and among companies.

• According to Schumer, the proposal would put $100 billion toward AI over the course of five years.
• It would also create a new agency under the National Science Foundation focused on emerging technology, which would work closely with DARPA, an agency that funds defense-related research.
• The new money would go toward universities, companies and defense agencies.

What they're saying: "We will do better dollar-for-dollar than the Chinese government in investing in AI," Schumer said. "But if they outspend us three, four, five to one — which they're doing now — we'll fall behind in five years or 10 years and we will rue the day."

• Despite wide support, he said the proposal does not have the "full-throated support" of President Trump and Senate Majority Leader Mitch McConnell.

A pair of California Democrats want to create a new federal agency to protect U.S. consumers' privacy as part of an online privacy bill unveiled Tuesday, Axios' Margaret Harding McGill reports.

The big picture: Reps. Anna Eshoo and Zoe Lofgren said their Online Privacy Act would create a "Digital Privacy Agency," give users the right to correct and delete information, and impose new restrictions on companies' use of data.

• In the Senate, Sen. Ron Wyden (D-Ore.) introduced privacy legislation last month.

Details: The lawmakers contend the Federal Trade Commission is not up to policing privacy, and argue the sector needs its own regulator, much like the Federal Aviation Administration or the Food and Drug Administration.

• "While some are calling for the FTC to enforce privacy, we believe the agency is toothless and has issued the equivalent of parking tickets to companies," Eshoo said in a call with reporters.
• The proposed Digital Privacy Agency would be an independent body run by a presidential appointee with up to 1,600 employees.

The bill also would prohibit companies from using private communications — including email — to target ads, and it would allow consumers to decide how long companies keep their data.

What's next: The lawmakers said the bill is a starting point, but one they believe sets a standard for what a digital privacy law should include.

• "[We] thought that if the representatives from Silicon Valley took a strong stand for privacy rights, that it would be meaningful to the rest of Congress," Lofgren said. "That's why this bill is as bold as it is."

Yes, but: Republicans are opposed.

• "This legislation is dead on arrival," said Reps. Greg Walden and Cathy McMorris Rodgers, the ranking members of the House Energy & Commerce Committee and E&C's consumer protection subcommittee, respectively.
• They said they believe a new federal agency is unnecessary and want to strengthen the FTC instead.

Facebook said in a blog post Tuesday that "roughly 100" software developers may have improperly accessed users' data, including the names and profile photos of people in specific groups on the social network, Rebecca Falconer reports.

Why it matters: It's been clear for a while that the company's issues with third parties go beyond Cambridge Analytica. This disclosure gives some indication just how far.

"Although we've seen no evidence of abuse, we will ask them to delete any member data they may have retained and we will conduct audits to confirm that it has been deleted."

The big picture: Cambridge Analytica announced in May it had filed for bankruptcy protection and that it would close its operations following revelations that it misused Facebook data to build a system to predict and influence elections

• Following the Cambridge Analytica scandal, Facebook "locked down the Groups application programming interface (API)," introduced rules requiring developers to obtain Facebook's consent before using the platform and included new security features in a July system relaunch, the Verge notes.
• Facebook said it found in a review that "some apps retained access to group member information ... in connection with group activity, from the Groups API."

Go deeper: Facebook drowning in controversy ahead of mega-hearings

On Tap

• Earnings reports include Qualcomm, Square, IAC and Roku.
• Web Summit continues in London, Microsoft Ignite continues in Orlando and Adobe Max wraps up in L.A.

Trading Places

• Former Facebook PR head Caryn Marooney is joining VC firm Coatue Ventures as a general partner.
• OneLogin has hired Vanessa Pegueros, former chief information security officer at DocuSign and Expedia, to be its chief trust and security officer.

ICYMI

• AT&T will pay $60 million to settle an FTC complaint that it misled unlimited data plan customers when it slowed their speeds. (Axios)
• Xerox Holdings is planning a cash-and-stock offer for HP. (CNBC)
• The FCC formally approved the T-Mobile-Sprint deal, though it still faces a lawsuit from several states. (Engadget)
• Broadcom closed its acquisition of Symantec's enterprise business, with the remaining company being renamed NortonLifeLock. (BusinessWire)

Full disclosure before this one: I love listening to John Bercow, the longtime speaker of the British House of Commons, as he calls for "Orrrrddddeeerrrrr." But this puppet-laden video, setting Bercow's commentary to dance music, is a must-watch.

For those of you who need some context, here is the real Bercow in action. Sadly, Bercow just stepped down.