TikTok – Trump threatened TikTok’s Chinese owners with a ban years ago if they did not sell the company to US investors.
While the company escaped a similar calamity, a similar issue approaches it in 2023.
TikTok CEO Shou Zi Chew will speak before US lawmakers on Thursday, some of whom have started demanding for the app to be banned in the nation.
They reasoned that TikTok posed a national security risk, forcing a sale possibility to rise once more.
Analysts and specialists, on the other hand, believe that a complete divestiture is no longer a possible option.
They allege that the Chinese government deems TikTok technology to be critical.
Since 2020, they have also worked to ensure that the corporation can refuse potential transactions from its Beijing-based owner, ByteDance.
Another concern is the possession of TikTok’s algorithms and the massive data obtained from its 150 million American clients.
For example, content recommendation algorithms are crucial to the Chinese government’s national interests.
In December, officials suggested tighter restrictions on the sale of the technology to overseas bidders.
Kaiyuan Capital’s chief investment officer, Brock Silvers, remarked on Beijing and the TikTok acquisition.
“Beijing will have no say in the US decision to mandate the sale of TikTok, but it will retain the ultimate approval authority over such a sale.”
“It also seems extremely unlikely that Beijing will accept any deal that removes TikTok’s algorithm[s] from its direct control and regulatory authority.”
TikTok’s algorithms are critical to the app’s success since they keep users intrigued.
The system recommends films based on the user’s interests and activity, recommending movies they enjoy viewing.
In August 2020, Chinese officials put the algorithms on the prohibited list of technology.
The Trump administration was already planning to ban TikTok unless it was sold.
Notwithstanding this, a remark from a trade professor at the University of International Business and Economics was published in official Chinese media.
According to Cui Fan, the scholar, the increased limits meant that ByteDance would require a Beijing authorization to monetise the technology.
“Some cutting-edge technologies might impact national security and public welfare, and need to be included in [export control] management,” said Cui Fan.
TikTok’s proposed 2020 sale to Oracle and Walmart was halted when Beijing put the algorithm to its export restriction list.
The Trump-era rule targeting TikTok was ultimately rescinded by the Biden administration.
Instead, they substituted a wide mandate for researching foreign rivals’ technologies.
The spotlight again
While they were pleased to be out of the political limelight, the corporation became entangled in the geopolitical conflict between China and the US.
The Hinrich Foundation’s Alex Capri noted:
“The TikTok hearings in the United States mark the beginnings of a regulatory meat-grinder facing all [Chinese] tech companies.”
A senior Chinese regulator of digital and traditional media made a visit to the ByteDance office last week.
According to the regulator’s website, he pushed the corporation to enhance recommendation algorithms in order to disseminate outstanding energy and improve online content review.
The visit was based on Beijing’s aim to keep its most powerful internet corporations close.
According to the corporate data website Qichacha, a Chinese government body purchased a 1% golden share in ByteDance’s Beijing subsidiary in April 2021.
The company owns Douyin, the Chinese counterpart of TikTok, as well as Toutiao, a news aggregation app.
“TikTok’s algorithms make it truly unique in terms of data harvesting and strategic analytics,” said Capri.
“Therefore, I don’t see Beijing allowing it to fall into the hands of US interests.”
“Unless they can somehow still access TikTok’s data through other means and methods, including ongoing cyber intrusion and other forms of back-door access.”
A tighter grip on the technology
Chinese rulers have recently tightened their hold and control over algorithm technology.
In March 2022, laws requiring corporations to register recommendation algorithms with the Cyberspace Administration went into effect.
The administration is an internet regulator that reports to President Xi Jinping.
Moreover, rules governing deep synthesis algorithms took effect in early 2023, limiting the use of AI-powered image, audio, and text-generation software.
The legal changes, according to adjunct New York University School of Law professor Winston ma, signal that the company’s recommendation algorithms may be vulnerable to China’s export laws.
TikTok has taken the initiative to implement technological and organizational safeguards to protect user data from unauthorized access.
The Project Texas suggestions would provide the US government and third-party corporations some control over the company’s data activities.
The company is working on Project Clover, a similar plan for the European Union.
Yet, US authorities are concerned that China may have influence over TikTok’s Chinese owners.
Capri claimed that if TikTok was purchased by an American, the difficulties would continue.
“A change of TikTok’s ownership solves nothing,” he said.
“The real issue is general data security and who ultimately has access to that data, by whatever means, regardless of legal ownership.”
Capri believes that the actual test is whether user data can be effectively ring-fenced and whether privacy and security can be achieved by data segmentation, encryption, and other means.
Brock Silvers believes the two parties will achieve a deal that addresses American concerns while retaining ownership of TikTok.
He believes Beijing would prefer TikTok abandon the American market rather than give up the algorithm.
“If any Chinese company is to have a chance of surviving increased scrutiny from Western governments, they have to entrust their data to third party security firms and endure rigorous third party audits and government intrusion, in addition to transferring ownership,” said Capri.
“This is really an existential crisis for Chinese firms operating in the west.