Cyber Scene #78 - U.S. on China’s TikTok: Tempus Fugit

Cyber Scene #78 -

U.S. on China’s TikTok: Tempus Fugit

Up against a strong competing background of cybersecurity issues--the Ukrainian-Russo war, global realignments, and tech’s ramming speed entrance into new domains--the possible departure of TikTok from U.S. soil took first place in Congress. On 23 March 2023. U.S. lawmakers took TikTok CEO Shou Zi Chew, in his first appearance, to task for over five heated hours of his attempting to answer searing questions before the House Committee on Energy and Commerce hearing.

As the hearing documents, TikTok is used by nearly half of the 320 million Americans and two-thirds of all children: one underlying issue is the safety of the children who have been harmed by TikTok’s content.

Of note is fact that 1) China’s TikTok is likely to be a candidate for banning from the U.S. and that 2) there is very significant U.S. bipartisan element in doing so that transcends both bicameral Congressional organizations, panels, and committees. “TikTok: How Congress Can Safeguard American Data Privacy and Protect Children from Online Harms" may have surprised CEO Chew, whose first appearance in a U.S. hearing was clearly a baptism by fire. Having both partisan guns blazing, similarly and simultaneously, is uncommon. The Committee has not in recent times been so united, and is the oldest standing legislative committee. The committee is chaired by Cathy McMorris Rodgers (R-WA) with #2 as Ranking Member Frank Pallone (D-NJ). Their opening comments were, unusually in an age of divisiveness, mutually supportive.

As for guns aimed AT the committee members, The Hill reports a TikTok video posted 41 days earlier was viewed during the hearing with the voice of the author of the video saying that he had brought his gun with him to the hearing. Rep. Kat Cammack (R-FL) was infuriated, adding that taking aim at the Chair and Ranking Members of the Committee was the very sort of violence and deadly influence that TikTok had, and cannot, regulate. This followed the CEO’s attempt to explain that offshore TikTok offices, such as the Caymans (a country noted for money laundering) or Project Texas (stay tuned) working with Oracle and Byte Dance, TikTok’s owner, would prevent these issues. In comments captured by The Hill, Ranking Member, Rep. Frank Pallone wasn’t convinced since Chinese laws on handing over U.S. user data would likely overrule U.S. laws. One might ask: who do you really work for? Moreover, as reported by The Washington Post, Rep. August Pfluger (R-TX) doesn’t want TikTok in his state: “We stand for freedom and transparency and we don’t want your project.” Another Texan, Randy Weber (R-TX), also reneging on any Texan hospitality, accuses TikTok of “indoctrinating” American kids with pro-CCP propaganda, among other grievances.

There is no shortage of complaints against TikTok. Following the closure of the hearing, the Wall Street Journal’s (WSJ) team of Ryan Tracy, John D. McKinnon, and Georgia Wells addressed trade blacklists that “…have swept up China-based telecommunications companies Huawei Technologies Co. and ZTE Corp., as well as U.S. defense contractors Lockheed Martin Corp. and Raytheon Technologies Corp,” underscoring past transgressions.

The House Permanent Select Intelligence Committee (HPSCI) Chairman, Mike Turner (R-OH), as reported by CBS on 23 March, confirmed what those watching the hearing expected: that U.S.-based TikTok must be banned or sold. The simple reason that this event reigns as #1 on the cyber hit parade is because of the incredible cyber fallout that may derive from this closure or sale. Control over data is an issue that transcends all aspects of cybersecurity.

Capitol Hill is not alone in this endeavor. The week prior to the hearing, (WSJ’s) Sadie Gurman discusses how the Biden administration’s somewhat new active role is playing out in the Department of Justice (DOJ). It is directing a federal investigation regarding China’s tracking of U.S. journalists through a Texas-based location connected to ByteDance, the parent of TikTok. Federal prosecutors in Virginia and the FBI are also engaged.

This is one aspect of a “…major shift in policy on the part of the Biden administration.” The Committee on Foreign Investment in the U.S. (CFIUS), had demanded that TikTok in the U.S. must be sold, according to WSJ sources. TikTok’s CEO, to the contrary, has been trying to sell his plan to join partners with Oracle under ByteDance in Texas. The WSJ notes that “TikTok’s chief executive Shou Zi Chew has said that divesting the company from its Chinese owners doesn’t offer any more protection than a multibillion-dollar plan the company has already proposed.” The article also confirmed that the federal probe resulted from the Biden administration demanding that “…TikTok’s Chinese owners sell their stakes in the app or face a possible U.S. ban of the social media service.”

In addition to contributions from CFIUS, the DOJ itself had initiated the creation of a Disruptive Technology Strike Force, announced on 16 February 2023, in joint collaboration with the Department of Commerce (DOC). Under tandem leader of the DOJ’s National Security Division (NSD) and the DOC’s Bureau of Industry and Security (BIS), the strike force includes the FBI, Homeland Security Investigations and 14 U.S. Attorneys’ Offices in 12 U.S. metropolitan regions across the country. Deputy Attorney General Lisa O. Monaco explains that “Using real-time intelligence and 21st century data analytics, the Disruptive Technology Strike Force will bring together the Justice and Commerce Departments’ expertise to strike back against adversaries trying to siphon off our most advanced technology, and to attack tomorrow’s national security threats today.” The leads for DOJ and DOC are, respectively, DOJ/NSD’s Assistant Attorney General Matthew G. Olson and DOC/BIS’s Assistant Secretary for Export Enforcement Matthew Axelrod. The nearly “whole of government” and at least all three branches of government have been pre-positioned for dealing with China.

Immediately following the hearing, the Post’s 6-person team again added that requiring TikTok/Byte-Dance to be sold would be “strongly opposed” by the Chinese government as well as the U.S. dealing with legal and constitutional issues. The Post also pointed out that of the 1 billion TikTok users globally, 150 million are in the U.S. and spend on average 95 minutes per day on the TikTok app, according to an analytics firm Sensor Tower.

The Economist’s senior correspondent Alexandra Suich Bass sums up on 24 March that “Of pressing concern are TikTok’s risks to national security and democratic interference, as a recent Australian report lays out. But TikTok is also charged with spreading misinformation, addicting children, fueling mental-health issues, violating users’ privacy, and profiting from unethically obtained data. In other words, TikTok faces all the toxic charges levied at America’s big tech companies, alongside national-security risk.” She added that unlike so many hearings she has witnessed before, this one is extraordinary for the likelihood of serious follow-on action taking place.

So how does China deal with the increasingly vitriolic affronts? In a false flag gesture, let us see this from China’s perspective in the Economist’s “China Inc in the West; Seizing the moment.” On 11 March, just prior to the infamous hearing, the Economist sits in China’s seat, or CEO Chew’s future hot seat, to strategize on the following rules:

First, do not “flaunt Chineseness,” such as resorting to English-sounding brands and obscure the country of origin;

Second, “use technology to beat Western rivals on service and price, including use of your own websites and mobile apps to deal directly with your clients; and

Third, “…use technology and supply chains to allow them to limit Chineseness.”

This article goes on to explain how TikTok moved its headquarters to Singapore to separate from ByteDance’s in Beijing. But now the latter claims to be domiciled in the Caymans. Many Chinese, according to the Economist, were looking to TikTok on 11 March and planning to seal a deal in Europe, as it hoped to do in the U.S., to establish, a data center in the U.S. (and Europe) to share access to its algorithms. On 11 March the article projected that the bills moving through Congress would permit President Biden to ban the app. This seems to be spot on at this post-hearing time.

Meanwhile, WSJ’s Ian Talley, Asa Fitch, and Clarence Leong reported the day after the hearing that there was a loophole in the DOC’s Entity List which bars U.S. companies from exporting to firms on this list. However, this intent can by circumvented by working with subsidiaries that aren’t on the Entity List. “That ability to sidestep export controls undermines the primary purpose of the policy, those people say, which is to prevent adversaries such as China, Russia and Iran from empowering their military, intelligence and economic capabilities with advanced Western technology.”

This is a story of a tech war that has no end date. As this readership knows, in our world of the Internet of Things, the fallout from the TikTok hearing impacts countless other domestic and international cyber-related technologies with global impact.