It has been a bumpy week for China’s beleaguered technology giants. They are under increasing scrutiny overseas, and the communist party continues to tighten the screws on them at home. In many ways they are also their own worst enemies.The UK has become the latest government to ban the Chinese-owned TikTok from government devices over security concerns. Parliament has also banned the app from its network. This follows similar bans from the European Union and 11 countries, including France, New Zealand, Denmark and the US. Western lawmakers are unconvinced by TikTok’s often cack-handed attempts to distance itself from its Chinese parent, ByteDance, and that company’s obligations to the Chinese communist party.
TikTok called Parliament’s move ‘misguided,’ and said it was ‘based on fundamental misconceptions about our company’.
But for Alicia Kearns, chair of the Foreign Affairs Committee, it was just a start. ‘It was a relief to see it happen,’ she told me. ‘It should have been a wider ban, and the reality is we are still not acting effectively enough on tech-authoritarianism.’ TikTok has spent lavishly on expensive lobbyists and lawyers to press its case and pounce on any criticism in western capitals. But on the evidence so far, it has not been money well spent.
In Washington, TikTok’s lacklustre CEO, Shou Zi Chew, faced hostile questioning from US lawmakers. ‘Let me state this unequivocally, ByteDance is not an agent of China or any other country,’ he claimed to widespread scepticism.
The company also claimed implausibly that its incorporation in the Cayman Islands shields it from Chinese legal obligations to help CCP security agencies, and that even if asked to hand over data it would not do so. That certainly didn’t convince Rob Joyce, the head of the US National Security Agency’s cybersecurity arm. He labelled the app a ‘Trojan horse’. ‘Why would you bring that capability into the US when the Chinese could manipulate the data we see to either include the things they want to present to our population – divisive material – or remove the things that paint them in a bad light?’ he asked.
And TikTok’s efforts to distance itself from the CCP have been damaged by the Chinese government itself. The Ministry of Commerce in Beijing said it would ‘strongly oppose’ any attempt to force the sale of TikTok from ByteDance and warned that the company’s secretive recommendation algorithm is subject to Chinese export tech controls – effectively making it an issue of national security.
That algorithm – the secret sauce at the heart of app – is highly contentious. Whereas on Twitter or Facebook users are mostly served content from accounts they subscribe to, on TikTok the videos can come from anywhere. The precise recipe of the algorithm is not known, but the app’s data collection is particularly zealous, and ranges from the type of videos watched, the duration, likes, comments and sharing, to user data, such as age, gender and location, as well as browsing habits. While ByteDance does employ engineers abroad, control is firmly in the hands of secretive China-based teams, who have been experimenting with advanced inputs including facial and voice recognition and sentiment analysis.
Douyin, TikTok’s sister app in China, deploys this tech to censor content and promote Communist Party propaganda. ByteDance claims that it does not censor its international version and TikTok has offered to allow third-party inspections of the recommendation algorithm. The fear is that while it might not be massaged as blatantly as in China, there is ample room for more subtle manipulation.
The company’s track record is not particularly encouraging. In 2021, it agreed to pay $92 million to settle a class-action lawsuit alleging it illegally tracked users and shared biometric data from photos and videos, without their consent. The data, which included face scans, was allegedly shared with third parties, some in China. The company denied any wrongdoing. Late last year, ByteDance admitted that the TikTok app had been used to spy on journalists as part of an internal leak investigation.
TikTok claims that its data on western users is ringfenced, kept on servers in Singapore and the US. However, its terms and conditions explicitly state that entities located in China are allowed ‘limited remote access to information described… to provide important functions’.
TikTok’s next move appears to be to appeal over the heads of governments to the massed ranks of users of the app – around 23 million a month in the UK, and 150 million in the US. This is one reason Alicia Kearns wants the parliament ban to turn into a national conversation about data. She told me with some satisfaction about a visit to Uppingham School in her Rutland and Melton constituency.
‘They asked me: “Are you mad, why are you trying to block TikTok?”. There were 40 or 50 students in the room, but the end of the night 10 of them said, “I’m coming off”. They were horrified by what I told them, and it was fascinating to watch.’
TikTok is not the only Chinese tech firm to face headwinds over recent days. Security researchers identified potential malware in the Chinese shopping app Pinduoduo, giving it unauthorised access to user data, days after Google suspended it from its Android app store. Pinduoduo rejected the claims. While Binance, now the world’s largest crypto exchange, was accused of hiding substantial links to China. The company had claimed to have left the country after a 2017 ban on cryptocurrencies, and repeatedly denied it was a Chinese company, but the Financial Times alleged that it maintained significant links. The precise nature of Binance’s link to the Chinese state is not clear, and the company claims the report was ‘dramatically mischaracterising events’.
At a Summit for Democracy in Washington this week the US announced international guidelines for curbing exports of technology that could be used by authoritarian nations to violate human rights.
Most western social media companies are banned from China, and the CCP has been progressively tightening its grip over Chinese tech companies, making it very difficult for them to deny links to the party. The crackdown has been heavy handed; entrepreneurs have been arrested or forced from their jobs at the helm of companies they started. Laws and regulations have been introduced to tighten control over data.
The government has started taking ‘golden shares’ in its tech giants. The CCP already has a ‘golden share’ in ByteDance and is reportedly taking a similar stake in Alibaba and Tencent. The stakes are typically small – perhaps one per cent – but gives the party a significant say over day to day management – particularly the content they provide to millions of Chinese people.
There are signs that the crackdown may be easing. Rumours abound that Jack Ma, the founder of Alibaba, China’s biggest e-commerce platform, who all but disappeared in 2020 after he criticised the country’s regulators, may be rehabilitated. While Chen Datong, once one of China’s top chip investors, was abruptly released last month after eight months in detention, for alleged financial irregularities. He too may well be welcomed back to the fold as the party tries to boost China’s battered economy. It is a strange way of fostering innovation and Chinese techies may well conclude that public scrutiny by western law makers is vastly preference to the sinister capriciousness of the CCP.
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