Have your say: Agree with Buck? Disagree? We probably aren’t “cool enough” to have a TikTok account, but we do have a Facebook page. Share this article and add your own opinion on Facebook by clicking here.

August 4, 2020

Is TikTok Running Out of Time?

By Buck Sexton

Dear reader,

If you want to learn the “shuffle dance” or listen to 15 seconds of pithy life wisdom set to mood music, there is indeed an app for that… And China owns it.

TikTok is a surprisingly addictive video feed that the “cool kids” use to express themselves and keep up with the latest trends. (“Facebook is for old people,” they say.)

It claims more than 800 million users worldwide, and the company says 100 million of them are in the U.S. It may be the fastest-growing social-media app of all time.

And now it’s at the center of the most consequential power rivalry since the U.S. faced down the Soviets.

While the mega app TikTok has some U.S.-based offices and personnel, it’s owned by ByteDance, a Chinese company. And any corporate entity based in China falls under the direction and control of the Chinese Communist Party (“CCP”).

That means that while millions of young Americans are lip-syncing the latest Taylor Swift track, there is also a lot of data collection going on behind the scenes. At least theoretically, the CCP could exploit that trove of information against U.S. national security interests.

It’s a contentious argument at a time when most of the country and world is much more focused on COVID-19 and the economy. Yes, TikTok is essentially a massive data-collection machine that leverages user information for its own purposes – but so are the major commercial apps from U.S. tech giants like Facebook, Twitter, Google, and others.

So far, the issue is not any especially nefarious technology, it’s the connection to a Chinese government that is increasingly seen around the world as authoritarian, untrustworthy, and aggressive.

That said, the espionage threat of the TikTok app may be overblown…

There is no special functionality that would make TikTok a better social-media platform than many others to send sensitive information. Anyone who wants to transfer America’s commercial or defense secrets to their handlers back in Beijing could just as easily use WhatsApp or a similar encrypted communication platform.

And while there may be some ways to use mass data harvesting of Americans to gain a long-term strategic advantage, it’s not clear how or why TikTok is a unique vulnerability. After all, the Chinese can hack into (and have hacked) much larger, more sensitive U.S. systems.

For example, the theft of millions of personnel records from the Office of Personnel Management – which oversees the U.S. federal employment system – was allegedly the result of a Chinese cyberattack. I even received a terse letter in the mail from the government letting me know that my file was among the millions China ripped out of our systems. Good to know.

Instead of espionage operations, the more realistic threat from TikTok would be influence operations.

We’ve all seen that Russian hackers buying about $100,000 worth of Facebook ads in an election cycle can send America into a maelstrom of political accusations, conspiracies, and delusions. TikTok could be a much more subtle and widespread tool of propaganda for a Chinese regime that is increasingly expert in exerting its influence through the media. Just ask the NBA commissioner what he thinks of China’s human rights record. The long, powerful reach of the CPP will quickly become clear.

TikTok’s management denies any of this is a real threat. They claim that all U.S.-derived information is stored on U.S.-based servers, that the Chinese government has never requested user data, and that TikTok wouldn’t give it to them if they did.

But a similar plea hasn’t worked with other countries… India, the second-largest market in the world, recently banned TikTok along with dozens of other Chinese apps.

The Chinese telecommunications giant Huawei has also been a lightning rod for concerns about spying, Trojan horse programs, and the strategic imperative of the CCP to seek global domination through whatever means necessary. The U.S. and several of its closest allied nations have banned all Huawei infrastructure and products.

The national security imperative is the main public focus of such bans, but there is also an economic fight underway.

America’s most powerful and valuable companies are digital media behemoths… and access to our digital markets is key for any company that would seek to compete with or supplant them. China, for example, doesn’t allow Google, Facebook, and many other online super companies entry into its market. What we are seeing unfold with Huawei, and possibly TikTok, could be the beginning of a digital protectionism with enormous ramifications for the global economy.

The Trump administration isn’t waiting to see how it all plays out. President Trump has mandated that TikTok be sold by September 15 or it faces a U.S. ban. The early indications are that Microsoft may step in to buy it – which could be a win-win for all sides of the transaction.

Still, America has entered a new phase in its relationship with China where even the possibility of some insight or advantage at our expense is intolerable. America doesn’t trust the CCP, and it shouldn’t.

We are in the early stage of a digital Cold War.

Now here are some of the stories we’re reading…

The Pandemic Is a Dress Rehearsal
The pandemic’s legacy will be crisis and chaos – and the trajectory of human civilization has shifted in ways that will test political leaders and economic policy makers more severely than anything since World War II. This is partly because the return of great-power competition introduces new risks and complications into the international system. More fundamentally, it is because the information revolution is beginning to disrupt the world as profoundly and traumatically as the Industrial Revolution disrupted the 19th-century world. 

Gold in secret vault is traced to Hugo Chávez’s former nurse
While as much as $300 billion is estimated to have been raided from Venezuela’s state coffers in two decades of socialist rule, investigators’ understanding of how the dirty money was laundered is still emerging. The physical transfer of heavy gold bars – something previously unseen in court records – underscore the creative lengths to which some Venezuelans have gone to hide their stolen wealth. 

NYC Murders Up 50% for Month of July, NYPD Stats Show
Data provided by the department for July shows a 177% increase in shootings from the same month in 2019. That’s a total of 244 shootings up from 88 the year before. 

Dollar Sends Warning That U.S. Is Losing Its Grip on the Virus
After hitting an all-time high in March, a gauge of the greenback lost 10% of its value, with declines accelerating in recent weeks as infections spread seemingly unchecked across the nation. Much of the sell-off has come during New York trading hours, suggesting domestic investors are closing out bets on U.S. strength and spurring renewed questions about the supremacy of the dollar. Meanwhile, a popular model that’s guided dollar traders for the past two decades has warped. 

Read our latest issues of American Consequences by clicking here.

And let us know what you’re reading at [email protected]s.com.

Regards,

Buck Sexton
Executive Editor, American Consequences
With P.J. O’Rourke and the Editorial Staff
August 5, 2020