The Trump administration never really made a compelling case as to why TikTok, the music video app, was a national security risk. TikTok had moved U.S. users’ personal information out of China to the United States and Singapore, closing one avenue of risk. TikTok could be compelled by the Chinese government to use its update process to gain access to users’ devices and networks (we have all learned the "infected updater" trick after the SolarWinds hack), but that would have been a cumbersome process. Banning TikTok made no sense.
That has changed with the announcement that TikTok plans to use its network to provide e-commerce services to U.S. consumers. There are two objections to this update. First, why should TikTok be able to operate in the United States when U.S. e-commerce providers and social networks lack the same privileges in China? The habit of making unilateral concessions to China (which it demanded as a condition for market access) in the past is one reason that we find ourselves in a messy trade dispute with it. The disparity in the treatment of Chinese and U.S. companies is part of a larger Chinese strategy to gain technological and commercial advantage—as when Chinese companies could do business in the United States, but U.S. companies were forced to take a Chinese partner or provide access to technology. This is beginning to slowly change with agreements like the European Union’s Comprehensive Agreement on Investment (CAI) with China, although it is too early to tell if Beijing will fully live up to these commitments. Reciprocal treatment should be the cornerstone of policy.
Second, e-commerce provides a much greater stream of useful data than amateur music videos. This commercial data can be analyzed and correlated with other data that China has acquired (often illicitly) in ways that could put U.S. consumers at risk. China has made improvements to its privacy laws, but they take second place to its national security laws that require cooperation from Chinese companies when the central government makes a request without any right of appeal or without any transparency. There is no expectation of privacy in China. Intelligence agencies are as hungry for big data as are private companies. Data analytics and artificial intelligence have transformed intelligence collection. Access to data by a Chinese company should not be taken lightly, since it could also lead to access to data by the Chinese government.
Washington’s action in blocking the acquisition of the U.S. financial service company MoneyGram by China’s Ant Financial is a precedent. The acquisition would have given Ant access to U.S. citizens’ sensitive personal data and the Chinese government could, if it chose to, also have gained access. The recent unhappy experiences of Ant and Jack Ma show the power of the Chinese state over its companies. While TikTok's personal video service should continue to be allowed, its move into e-commerce deserves more scrutiny.
A concession to TikTok on e-commerce without similar concessions by China for U.S. companies would be a mistake. That does not mean TikTok should never be allowed to provide e-commerce service in the United States. It means that a concession on TikTok should be made as part of reciprocal concessions for U.S. e-commerce and social media companies. Second, allowing TikTok to do business should be accompanied by meaningful and verifiable commitments to privacy by the Chinese company that are at least the equivalent of what would be expected from U.S. firms. This is admittedly a low bar, given the weakness of privacy law in the United States, but one that Chinese companies still have difficulty meeting.
This ban need not be permanent if China is willing to negotiate. Reciprocity and common understanding on privacy point to TikTok e-commerce access as an agenda item in some larger negotiation on the bilateral relationship. Any negotiation will be caught up in larger debates over trade, technology, and economic espionage. These debates are necessary to reshape the nature of trade with China in ways that protect the United States and its allies.
China may not be willing to negotiate. Even if it does, it may prevaricate over reciprocal concessions, but reciprocity in the trade relationship with China is crucial to the bilateral relationship. TikTok’s decision to enter e-ecommerce changed the terms of the debate. Before, there was very little reason for concern. Now, absent agreement with China, or significant and verifiable concessions on privacy and the treatment of data by TikTok, any move into e-commerce in the United States should be stopped.
James Andrew Lewis is a senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
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