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From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

TikTok CEO Shou Zi Chew joined the illustrious club of Big Tech CEOs paraded before Congress for a public flogging, producing a viral spectacle that has hardened lawmakers' animus toward the Chinese-owned app.

Why it matters: The Singapore-born, Harvard-educated Chew faced a near-impossible task as he was grilled by the House Energy and Commerce Committee on TikTok's ties to the Chinese government, data practices and harmful effects on children.

Some of Chew's answers seemed likely to accelerate a U.S. ban of the immensely popular app, even as the Biden administration prefers to force a sale by TikTok parent ByteDance.

"If this committee gets its way, TikTok's time is up," Rep. Randy Weber (R-Texas) told Chew, a comment that reflected the absence of friendly faces — Democratic or Republican — throughout the hearing.

Zoom in: Some lawmakers used their time to challenge Chew on the same health and safety issues that plague all social media platforms, but questions about the Chinese Communist Party's ability to obtain user data or promote propaganda produced the most striking answers.

"I have seen no evidence that the Chinese government has access to [TikTok user] data. They have never asked us. We have not provided," Chew told Rep. Anna Eshoo (D-Calif.). "I find that actually preposterous," the Democrat shot back.

Asked about a Forbes report that ByteDance planned to use TikTok to spy on individual Americans, Chew told Rep. Neal Dunn (R-Fla.): "I don’t think 'spying' is the right way to describe it."

And when pressed three times by Rep. Debbie Lesko (R-Ariz.) whether the Chinese government is persecuting Uyghur Muslims, Chew declined to answer specifically and said he was there to discuss TikTok.

Context: The House China Select Committee is holding a hearing tonight featuring Uyghur witnesses who spent time in Chinese "re-education camps," which the U.S. government says are central to Beijing's campaign of genocide.

Data: OpenSecrets analysis of federal lobbying disclosures; Chart: Axios Visuals

The big picture: The army of lobbyists and staffers deployed by TikTok — including people close to House Speaker Kevin McCarthy (R-Calif.) and other powerful members of Congress — appear to have done little to swing momentum on Capitol Hill.

McCarthy told reporters he supports Congress moving forward with a TikTok ban, citing the "bipartisan concern" on display at the hearing.

"Nothing we heard from Mr. Chew today assuaged" U.S. national security concerns about TikTok, said Sens. Mark Warner (D-Va.) and John Thune (R-S.D.), co-sponsors of a bill that would give President Biden greater power to regulate and sanction China-affiliated companies.

Sen. Thom Tillis (R-N.C.) issued a statement demanding all members of Congress stop using TikTok, calling it "beyond reckless."

The other side: "Shou came prepared to answer questions from Congress, but, unfortunately, the day was dominated by political grandstanding that failed to acknowledge the real solutions already underway," a TikTok spokesperson said, pointing to the "Project Texas" plan to store American user data on U.S. soil.

The spokesperson also reiterated TikTok's argument that a ban would harm the 150 million Americans and 5 million businesses who use the app.

The bottom line: "You have, in fact, been one of the few people to unite this committee," Rep. Tony Cárdenas (D-Calif.) told Chew, before comparing him — unfavorably — to Facebook CEO Mark Zuckerberg.

TikTok's time in the barrel

"If this committee gets its way, TikTok's time is up."

TikTok CEO Shou Zi Chew arrives to testify before the House Energy and Commerce Committee. Photo: Tasos Katopodis/Getty Images

TikTok

Politics & Policy

The U.S., Canada, and a number of European governments in recent months have stepped up efforts to impose restrictions on TikTok, ratcheting up pressure on the Chinese-owned app even as U.S.-China relations have grown increasingly strained.

The latest: TikTok's CEO Shou Zi Chew defended the company from charges that it poses a national security threat, testifying on March 23 for the first time in front of U.S. lawmakers who advocated for banning the app.

Chew downplayed the app's connections to China and referenced TikTok's "unprecedented" data security practices compared to unnamed social media competitors during a House committee hearing. 

TikTok is owned by the private Chinese company, ByteDance, and much of the scrutiny around it stems from the firm's relationship with the Chinese government.

The big picture: Critics have voiced concern that TikTok could put the data of 150 million U.S. users at risk because Chinese law requires China's companies to share information with the government, Axios Scott Rosenberg and Sara Fischer write.

TikTok has said it operates independently and protects U.S. data through an alliance with Oracle, which firewalls the data from overseas access.

Concerns about the company have also included the firm's previous violations of children's privacy.

A number of recent revelations have challenged TikTok's claims that U.S. user data is secure because it is stored outside of China and that the company does not comply with Chinese government content moderation requirements.

FBI Director Chris Wray warned in December that the Chinese government controls the app's recommendation algorithm, allowing it to potentially manipulate the content or instigate operations to influence users, and that the Chinese government maintains the ability to collect user data.

Already, bans on using the app in government have taken effect at the state level. More than half of U.S. states have banned state employees from using TikTok on government-issued devices and a number of U.S. universities have barred it from their WiFi networks.

Worth noting: TikTok doesn't operate inside China. ByteDance instead offers a similar version of the app, called Douyin, to Chinese customers.

There are currently at least three bills making their way through Congress that, if made law, would curtail the app. 

The DATA Act, which mentions TikTok by name, would give President Biden more authority to ban the app. The House Foreign Affairs Committee has advanced the legislation. The Deterring America’s Technological Adversaries Act (DATA Act), advanced by the House Foreign Affairs Committee, was introduced in February by committee chair Michael McCaul (R-Texas).

The ANTI-SOCIAL CCP Act, backed by lawmakers including Sen. Marco Rubio (R-Fl.) and Rep. Mike Gallagher (R-Wisc.), would allow TikTok to be banned from operating in the U.S. It would also allow the blocking and prohibiting of all transactions from any social media company in China and Russia. It has not yet received a vote from a congressional committee, per the New York Times.

The RESTRICT Act would give the Department of Commerce more power to review, prevent and mitigate information communications and technology transactions that pose "undue" risk. Introduced by Sen. Mark Warner (D-Va.), the chair of the Senate Intelligence Committee, and Senate Minority Whip John Thune (R-S.D.), the bill gives the government greater power to regulate and sanction China-affiliated companies such as TikTok. It doesn't involve a total ban or mention TikTok specifically, but it would give Biden greater power and the White House is supporting this bill.

What legal challenges might preclude a total ban?

The American Civil Liberties Union (ACLU) sent a letter to the House Foreign Affairs Committee in late February urging members to vote against the DATA Act, saying it would effectively ban TikTok in the U.S.

Calling the legislation "vague and overbroad," the letter argued that it would violate Americans' First Amendment rights by infringing on the rights to freedom of expression and association.

"Whether we’re discussing the news of the day, live streaming protests, or ​​even watching cat videos, we have a right to use TikTok and other platforms to exchange our thoughts, ideas, and opinions with people around the country and around the world,” Jenna Leventoff, senior policy counsel at ACLU, said in a press release.

Where is TikTok currently banned globally?

More than a dozen countries around the world have introduced full, partial or public sector bans on TikTok amid heightened national security concerns.

India banned TikTok in 2020 over privacy and security concerns.

In December, Taiwan imposed a public sector ban on the use of Chinese-made software on government devices, which would include TikTok, per AP.

The European Commission, EU Council and Parliament all announced last month that they would prohibit staff from having TikTok on their work devices.

Canada also banned the app from government-issued mobile devices last month.

In Afghanistan, the Taliban ordered a ban on TikTok and the game PUBG last year, claiming it was necessary to keep youth from “being misled."

Even countries that haven't yet taken steps to ban TikTok have taken steps to probe and restrict the app.

Several German ministries prohibit the use of TikTok on official phones, Politico reported.

French data protection watchdog CNIL fined TikTok 5 million euros in January over data protection violations and the French Senate launched an inquiry into the app this month.

Estonia has prohibited defense ministry officials from having TikTok on either their work or personal devices, Politico reported.

The U.K., Australia and New Zealand are allowing individual government agencies to choose whether staff can use the app on work devices, according to the Wall Street Journal.

Go deeper: TikTok drama underscores growing U.S.-China divide

Editor's note: This story has been updated with additional developments and details. Axios' Sareen Habeshian contributed to this report. 

Axios Scott Rosenberg and Sara Fischer write

TikTok drama underscores growing U.S.-China divide

The political realities that make a national TikTok ban tricky

More than 20 U.S. states have banned state employees from using TikTok on government-issued devices and a number of U.S. universities have barred it from their WiFi networks.

A TikTok logo is displayed on an iPhone. Photo: Dan Kitwood/Getty Images

Big Tech

Gaming

Axios Gaming

Wordle usage peaked in March of last year but has remained strong since the game’s purchase by The New York Times last January.

Why it matters: Despite some players' fears that it would, the NYT hasn’t ruined Wordle, according to player stats. Far from it.

Making that case today at the Game Developers Conference in San Francisco was Zoe Bell, a 14-year industry veteran and executive producer at NY Times Games.

The paper’s strategy, she said, was to “preserve Wordle as an internet treasure” and follow a simple ethos of “do no harm,” with admittedly mixed results.

Details: Bell described the Times’ management of Wordle throughout 2022 as a careful process focused on keeping changes to the game minimal, rolling them out slowly and being transparent with players.

The company didn’t rush to monetize Wordle, spent months preparing to change its codebase for better stat-tracking, months to bring it into the Times’ mobile app, all while keeping the user experience as similar to its indie incarnation as possible, Bell said.

The game’s post-acquisition growth was actually a surprise, she said: “We thought people would think that Wordle had peaked and how long can exponential growth go on?”

One positive not usually cited by big game publishers: The addition of an editor to Wordle in late 2022 put a human face to the game. Having that human element is "so important for our brand and the delight of our players," she said, joking that now frustrated Wordle players had someone to blame when they struggled.

Yes, but there was occasional friction with Wordle's users.

There were easily tolerated grumbles over the game’s change in font and the creation of its icon for the Times hub.

Some players were also upset when the paper removed words from the word list because they were deemed too obscure (agora, fibre) or in violation of the Times’ sensitivity guidelines (slave, wench, lynch). That decision was partially reversed due to player feedback, Bell said, letting users input some problematic words. The thinking: doing so wouldn’t harm other players.

The Times’ Wordle team also faced complaints mid-year that the game’s difficulty had been increased, which Bell denies was the case (that said, a September puzzle solution PARER was the year’s top snapper of players' streaks, quadrupling the average daily number of broken streaks).

The company also got some grumbles over offering a themed solution — FEAST — on Thanksgiving. During a post-presentation Q&A, Bell told an Ars Technica reporter that the Times had no plans for more themed Wordle solutions.

Between the lines: Some 35% of the users who subscribe to the Times’ gaming subscription service now cite Wordle as the reason they subscribed, Bell says.

Sign up for the Axios Gaming newsletter here.

New York Times touts continued Wordle success

Despite some players' fears that it would, the NYT hasn’t ruined Wordle.

Image showing two graphs from the New York Times of Wordle player data.

The New York Times' data on Wordle usage (including a brief July outage). Photo: Axios

Video games

Tech Policy

TikTok's CEO Shou Zi Chew defended the company Thursday from charges that it poses a national security threat in a hearing before lawmakers who fiercely advocated for banning the popular short-video app.

Why it matters: The White House and TikTok's critics in Congress say the app, which has 150 million U.S. users, puts their data at risk because TikTok is owned by ByteDance, a Chinese company.

The big picture: The House Committee on Energy and Commerce members made it unequivocally clear they view TikTok as a dangerous social media app and a national security threat. Rep. Tony Cárdenas (D-Ca.) at one point cited "life and death" issues connected to the app.

Chew repeatedly downplayed its connections to China and referenced TikTok's "unprecedented" data security practices compared to unnamed social media competitors. The committee didn't care.

Without much goodwill in Washington, TikTok will have to navigate a tenuous path forward to avoid serious consequences from Congress.

In a statement after the hearing, TikTok spokesperson Brooke Oberwetter said: "Shou came prepared to answer questions from Congress, but, unfortunately, the day was dominated by political grandstanding that failed to acknowledge the real solutions already underway."  

She criticized lawmakers who support a ban for not mentioning the businesses using the app or the First Amendment implications.

Throughout the hearing, members came out in support of a full ban of the app in the U.S. 

Rep. Cathy McMorris Rodgers (R-Wash.), chair of the committee, said at the hearing's outset: "ByteDance is beholden to the CCP, and ByteDance and TikTok are one and the same." 

She accused the platform of lying about ties to the Chinese government.

Chew argued in his opening remarks that Bytedance is a private company, beholden to shareholders and its board, not the Chinese government. He repeatedly categorized TikTok as a global enterprise when asked about whether it's a Chinese company.

Chew said he had not spoken to any representatives of the Chinese Communist Party since taking his leadership role at TikTok.

Rep. Anna Eshoo (D-Calif.) brought up China's National Security Law, which compels companies to share information with the government. "How do you convince the Congress of the United States that there can be a clean break?" she asked.

"Our plan is to move American data to be moved to American soil," Chew said. "I have seen no evidence that the Chinese government has access to [U.S. user] data."

Lawmakers challenged Chew on the same issues that plague all social media platforms, including privacy, impact on children's mental health and addiction.

Chew repeatedly said the app is no threat to Americans, declining to answer questions about his compensation and the company's revenue. 

He often told lawmakers he'd get back soon with specifics and that he "didn't believe" TikTok sells user data. He also said the app doesn't collect any more information on users than any other industry competitor.

Oberwetter emailed reporters to clarify two points brought up in the hearing, saying that TikTok does not sell data and the CEO of ByteDance, Liang Rubo, is not a member of the CCP.

Lawmakers noted dangerous viral trends on TikTok that have been associated with the deaths of younger users, such as the "blackout" choking challenge and content they said could encourage people to commit suicide.

Congress has been wanting to address such issues for years with a national privacy law and another that would boost protections for children and teens online; it has failed to do so.

One high-stakes moment occurred when TikTok took down a video inciting violence down a video in real-time after being flagged by the panel.

On the eve of Chew's first-ever testimony before Congress, the Biden administration indicated it would prefer to see a sale or spin-out of TikTok over a threatened ban of the app.

The Chinese government says it "resolutely opposes" a forced sale.

Catch up quick: TikTok's fate in the U.S. has been clouded since former president Donald Trump tried to force its sale in 2020. 

Negotiations at the Committee on Foreign Investments in the U.S. (CFIUS) have dragged on for years without offering a resolution.

TikTok says its plan to host all U.S. data with Oracle, firewalled from overseas access, will keep the app safe.

But critics, including U.S. intelligence officials, say Chinese law means any company would be required to share data with the government.

This story has been updated with additional developments and background.

Lawmakers blast TikTok in hearing with CEO, citing "life and death" issues

Shou Zi Chew will be grilled by members of Congress as pressure mounts on TikTok's owners.

TikTok CEO Shou Zi Chew testifies before the House Energy and Commerce Committee on Capitol Hill, March 23, 2023, in Washington, DC. Photo by Jim Watson/AFP via Getty Images

It was a near-perfect split screen: As lawmakers ripped TikTok in a congressional hearing with the company's CEO on Thursday, the app’s users took to the platform to defend it.

Driving the news: A hashtag — #tiktokhearing — garnered 2.8 million views as of 3:30 pm.

Users posted videos to the hashtag that mocked the hearing and they slammed the prospect of a potential ban.

"What is currently going down in Congress is straight up fear-mongering," @tegareacts, who has 3.9 million followers, said in a video posted Thursday.

"If you genuinely cared about children and the welfare of Americans, you'd do a lot of things, like health care, funding for teachers, gun control," she added.

"I'm not saying TikTok is perfect by any means ... but this should lead to legislation that affects all consumer apps, not just one specific one," user @frankniu said in a video posted Thursday.

The big picture: TikTok's CEO Shou Zi Chew defended the popular short-video app during a House Committee on Energy and Commerce hearing to  a panel of lawmakers who argued that it should be banned.

Rep. Tony Cárdenas (D-Calif.) at one point said TikTok's issues were a matter of "life and death."

In the lead-up to Chew's testimony, users defended TikTok as a powerful tool to bring people together.

"On TikTok, you will find your community and you will find it quickly!" said one user, @engineer2educator, who is a math teacher. He has 252.8K followers.

Another user, with the username @drue..b, who has 1.2 million followers, said in a video posted this week: "I have made so many friendships, I have met so many new people [through the app]."

Zoom out: The TikTok app has been downloaded more times in the U.S. than any other social app since it merged with U.S. lip-syncing app Musical.ly in August 2018, according to data from Apptopia, Axios' Sara Fischer reports.

The Biden administration has told TikTok that it faces a ban in the U.S. if if its Chinese parent company, ByteDance, does not sell its stake in the U.S. version of the app, Axios' Sara Fischer and Ashley Gold report. 

Between the lines: Some Democrats close to Biden warn that a TikTok ban could be politically risky — fearing it could alienate young Democrats, a voting group that was crucial to Democrats' surprising success in last year's elections, Axios' Hans Nichols reports.

"If they went ahead with banning TikTok, it would feel like a slap in the face to a lot of young Americans," Aidan Kohn-Murphy, who used the app to garner support for President Biden in 2020, told NBC News.

Go deeper ... The political realities that make a national TikTok ban tricky

TikTokers on edge as Congress grills CEO

"What is currently going down in Congress is straight up fear-mongering," one user said.

Illustration of a gavel hovering over a phone with an image on the screen of a gavel hovering over a phone, in a recursive pattern. 

Pro Rata

Axios Pro Rata

Character.ai, a personalized AI chatbot developer, raised $150 million led by Andreessen Horowitz at a $1 billion post-money valuation.

Why it matters: The company seeks to provide "everyone on Earth with their own AI," from everything from entertainment to information to emotional connection. Sure that sounds like science fiction, but so did the idea of everyone having a supercomputer in their pocket.

The eventual monetization plan is direct-to-consumer subscription fees.

Character.ai tells Axios that users already have sent its AI characters  — some of which include real-life celebrities and fictional characters — more than 2 billion messages, including 1 billion in just the last month. 

Other investors include Nat Friedman, Elad Gil, SV Angel and A Capital. The Menlo Park, Calif.-based company previously raised around $40 million, mostly from individual investors.

Quotable: "There are some overlaps, but we're confident Google will never do anything fun. Because we worked there." — Daniel De Freitas, co-founder and president of Character.ai, when asked by Axios about Google's new Bard chatbot 

Look ahead: Don't be surprised to see this funding round get extended soon with strategic investors, perhaps including one that can provide the company with compute power (e.g., Microsoft/OpenAI). 

The FT previously reported the total round size would be between $200 million and $250 million, so this appears to be just the initial, VC portion.

Character.ai raises $150 million to create personalized chatbots

Character.ai co-founder: "We're confident Google will never do anything fun. Because we worked there."

Illustration of a robot emoji inside quotation marks. 

Artificial intelligence

Automation and AI

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Air mobility startup Archer Aviation and United Airlines are working to bring air taxi service to Chicago, the companies announced Thursday.

The planned service will run between O'Hare International Airport (a vital United hub) and Vertiport Chicago, a helicopter facility about three miles west of the city's South Loop.

Details: The plan is for United passengers to be able to hop aboard an Archer eVTOL (electric vertical takeoff and landing) aircraft for a 10-minute cruise to O'Hare — a trip that can take 45 minutes or longer, depending on traffic.

Once at O'Hare, they can connect to their departing flight.

Catch up quick: Archer and United, an investor, previously announced a planned route between downtown Manhattan and Newark Liberty International Airport — also a major United hub.

The big picture: Archer and United are just two of several companies that hope to use eVTOLs to whisk passengers between urban cores and airports, which often lie on the outskirts of the cities they serve.

eVTOLS are cleaner and quieter than traditional helicopters, making them more feasible for this kind of service.

Yes, but: Archer and other developers of the newfangled aircraft still need to clear various regulatory hurdles with the Federal Aviation Administration.

Chicago

Chicago Alerts

Alert

A daily look at the most significant and interesting stories affecting Chicago. Written by Monica Eng and Justin Kaufmann.

Axios Chicago

Standard

A daily look at the most significant and interesting stories affecting Chicago. Written by Monica Eng and Justin Kauffman.

Axios Chicago Thought Bubble

Thought Bubble

blue

A guide to fun things to do in Chicago this weekend.

Axios Chicago Weekender

Weekender

Chicago Members

Membership

Air taxis are coming to Chicago

The planned service will run between O'Hare International Airport and downtown Chicago.

A rendering of Archer Aviation's "Midnight" eVTOL aircraft.

A rendering of Archer Aviation's "Midnight" eVTOL aircraft. Courtesy Archer Aviation

Aviation

China would “resolutely oppose” the U.S. forcing ByteDance to sell its stake in the U.S. version of TikTok, a spokesperson for Beijing's Ministry of Commerce said Thursday.

Driving the news: Such a sale “would seriously damage investors from multiple countries including China” and harm “confidence to invest in the United States,” said Shu Jueting, the spokeswoman.

Catch up quick: The Biden Administration, citing national security concerns, warned TikTok earlier this month that it faces a ban in the U.S. if ByteDance doesn't sell its stake in the U.S. version of the app.

FBI director Chris Wray told a Senate Committee that the Chinese Communist Party has the ability to control the software on millions of devices because of its ties to ByteDance.

As the U.S., the EU, Canada and other countries have moved to impose bans and other restrictions on the app on official government devices, China's ruling Communist Party has said there's no evidence that TikTok threatens national security.

In response to the Biden administration’s ultimatum, TikTok CEO Shou Zi Chew has said forcing a sale would not address national security concerns.

The company has said that U.S. user data is accessible only by Oracle Cloud and by TikTok U.S. data security team. 

Our thought bubble via Axios’ Sara Fischer: China reportedly opposed a sale of TikTok’s algorithm when TikTok was in talks with a U.S. company in 2020, arguing that doing so would violate export control laws China passed that year. 

There’s no reason to believe that position has changed.

What to watch: TikTok CEO Shou Zi Chew is scheduled to testify before the House Energy and Commerce Committee Thursday.

Axios' Han Chen contributed reporting to this story.

China would "resolutely oppose" forced sale of TikTok

A forced sale would harm “confidence to invest in the United States," the spokeswoman said.

The TikTok logo is seen on a mobile with China's cyber code displayed on the screen. Photo Illustration: Jonathan Raa/NurPhoto via Getty Images.

The Federal Trade Commission is proposing amending a federal rule so consumers can more easily cancel recurring subscriptions, the agency announced Thursday. 

Why it matters: The proposal, which the agency says aims to cover "everything from cosmetics to newspapers to gym memberships," is another move by FTC chair Lina Khan to try to protect consumers in a digital economy.

Stricter rules from the FTC around subscriptions may draw the ire of the business community, who is already battling with the agency over what they think are unfair and overreaching policies.

FTC wants to make it easier to cancel subscriptions

The agency says the proposal covers "everything from cosmetics to newspapers to gym memberships."

Thursday's technology stories