TikTok CEO set to face a grilling in House hearing

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TikTok CEO Shou Zi Chew: No evidence that Chinese government has access to data

TikTok CEO Shou Zi Chew will face a tough crowd Thursday when he testifies before the House Energy and Commerce Committee while his company is on the brink of a potential ban in the U.S.

Although TikTok is in the hot seat, the hearing will also raise existential questions for the U.S. government regarding how it regulates technology. Lawmakers recognize that the concerns over broad data collection and the ability to influence what information consumers see extend far beyond TikTok alone. U.S. tech platforms including Meta’s Facebook and Instagram, Google’s YouTube, Twitter and Snap’s Snapchat have raised similar fears for lawmakers and users.

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That means that while trying to understand whether TikTok can effectively protect U.S. consumers under a Chinese owner, lawmakers will also have to grapple with how best to address consumer harms across the industry.

Conversations with lawmakers, congressional aides and outside experts ahead of the hearing reveal the difficult line the government needs to walk to protect U.S. national security while avoiding excessive action against a single app and violating First Amendment rights.

Evaluating a potential ban

There’s little appetite in Washington to accept the potential risks that TikTok’s ownership by Chinese company ByteDance poses to U.S. national security. Congress has already banned the app on government devices and some states have made similar moves.

The interagency panel tasked with reviewing national security risks stemming from ByteDance’s ownership has threatened a ban if the company won’t sell its stake in the app.

Still, an outright ban raises its own concerns, potentially missing the forest for the trees.

“If members focus solely on the prospect of a ban or a forced sale without addressing some of the more pervasive issues, particularly those facing children and younger users, shared by TikTok and U.S.-based social media companies, I think that would be a mistake,” Rep. Lori Trahan, D-Mass., a committee member, told CNBC in an interview Tuesday. Trahan said members should ask about national security risks of the app, but those questions should be substantive.

A TikTok advertisement at Union Station in Washington, DC, US, on Wednesday, March 22, 2023. 

Nathan Howard | Bloomberg | Getty Images

Rep. Gus Bilirakis, R-Fla., who chairs the Energy and Commerce subcommittee on innovation, data and commerce, said he and many of his colleagues are going into the hearing open to solutions.

“We have to be open-minded and deliberate,” Bilirakis told CNBC in an interview Wednesday. “But at the same time, time is of the essence.”

If the government moves for a ban where the concerns could reasonably be mitigated with a less restrictive measure, it could pose First Amendment issues, according to Jameel Jaffer, executive director of the Knight First Amendment Institute at Columbia University.

“A ban here is in some ways under-inclusive because it would be focused just on TikTok or a small number of platforms, when in fact many other platforms are collecting this kind of information as well,” Jaffer said. “And in other ways, it would be over-broad because there are less restrictive ways that the government could achieve its ends.”

While some might wonder if cutting off Americans’ access to TikTok is really such a violation of rights, Jaffer said the public should consider it in terms of the U.S. government’s authority to decide which media Americans can access.

“It’s a good thing that if the government wants to ban Americans from accessing foreign media, including foreign social media … it has to carry a heavy burden in court,” Jaffer said.

Many lawmakers agree that the government should make its case more clearly to the American public for why a ban is necessary, should it go that route. The bipartisan RESTRICT Act recently introduced in the Senate, for example, would require such an explanation, to the extent possible, when the government wants to limit foreign-owned technology for national security reasons.

Trahan said she could support legislation similar to the RESTRICT Act in the House, which would create a process to mitigate national security risks of technologies from foreign adversary countries, but passing such a bill would still not be enough.

“The message that I want folks to hear is that we cannot afford to pass this legislation or something like it, watch the administration ban or force the sale of TikTok and declare victory in the fight to rein in the abuses of dominant Big Tech companies,” Trahan said. “I think the conversation right now about a ban certainly threatens to let Big Tech companies off the hook, and it’s on Congress not to fall into that trap.”

Even if the U.S. successfully bans TikTok or forces it to spin off from ByteDance, there’s no way to know for sure that any data collected earlier is out of reach of the Chinese government.

“If that divestment would occur, how do you segregate the code bases between ByteDance and TikTok?” asked John Lash, who advises clients on risk mitigation agreements with the Committee on Foreign Investment in the U.S., or CFIUS, but hasn’t worked for TikTok or ByteDance. “And how is the U.S. government going to get comfortable that the asset, TikTok, which is hypothetically sold, is free of any type of backdoor that was either maliciously inserted or just weaknesses in code, errors that occur regularly in how code is structured?”

“I think the concern is valid. My big issue is that genie’s sort of out of the bottle,” Eric Cole, a cybersecurity consultant and advisor to Theon Technology who began his career as a hacker for the Central Intelligence Agency, said of the data security fears. “At this point, it’s so embedded that even if they were successful in banning Tiktok altogether, that the damage is done.”

Addressing industrywide concerns

Thursday’s hearing will feature several lawmakers on both sides of the aisle calling for comprehensive privacy reform, like the kind the panel passed last year but which never made it to the floor for a vote.

Those calls serve as recognition that many of the concerns about TikTok, apart from its ownership by a Chinese company, are shared by other prominent tech platforms headquartered in the U.S.

Both Trahan and Bilirakis mentioned the need for privacy reform as a more systemic solution to the issues raised by TikTok. Both are especially concerned about the social media company’s potentially harmful effects on children and said they would drill down on TikTok’s protections in the hearing.

TikTok has touted a complex plan known as Project Texas to help ease U.S. concerns over its ownership. Under the plan, it will base its U.S. data operations domestically and allow its code to be reviewed and sent to the app stores by outside parties.

A TikTok advertisement at Union Station in Washington, DC, US, on Wednesday, March 22, 2023. 

Nathan Howard | Bloomberg | Getty Images

Chew plans to tell Congress that he strongly prioritizes the safety of users, and particularly teens; that TikTok will firewall U.S. user data from “unauthorized foreign access”; that it “will not be manipulated by any government,” and it will be transparent and allow independent monitors to assess its compliance.

Experts and even some lawmakers acknowledge that Project Texas offers a step forward on some aspects of consumer protection they’ve pushed for in the tech industry more broadly.

“TikTok is in a really unique position right now to take some positive steps on issues that a lot of top American companies have fallen behind and frankly even regressed on, whether it’s protecting kids or embracing transparency,” Trahan said. While she believes there are still many questions TikTok needs to answer about the adequacy of Project Texas, Trahan said, she is “hopeful” about the company’s professed “openness to stronger transparency mechanisms.”

Lawmakers and aides who spoke with CNBC ahead of the hearing emphasized that comprehensive privacy legislation will be necessary regardless of what action is taken against TikTok in particular. That’s how a similar situation in the future may be prevented, and it’s a way to hold U.S. companies to higher standards as well.

But given that federal digital privacy protections don’t currently exist, Lash said the U.S. should consider what it would mean if Project Texas were to go away.

“In lieu of comprehensive federal data privacy regulation in the United States, which is needed, does Project Texas give the best available option right now to protect national security?” asked Lash, whose firm is one of only a few that have the expertise to advise the company on an agreement should a deal go through. “And does it continue if ByteDance is forced to divest their interests?”

The plan appears to address the issues that lawmakers are concerned about, said Lash, but what it can’t address are “the theoretical risks” about what could possibly happen around the app.

“I would say, based on what I’ve seen out in the public, it does seem to comprehensively address a lot of the real technical risks that may be arising,” he said.

Still, policymakers appear skeptical that Project Texas reaches that bar.

An aide for the House Energy and Commerce Committee who was authorized to speak only on background told reporters earlier this week that TikTok’s risk mitigation plans were “purely marketing.” Another aide for the committee said that even if the U.S. can be assured the data is secure, it’s impossible to comb through all the existing code for vulnerabilities.

Energy and Commerce Chair Cathy McMorris Rodgers, R-Wash., supports a ban to address the immediate risks TikTok poses as well as comprehensive privacy legislation that passed through the committee last Congress to prevent repeat situations, according to committee aides.

TikTok’s strategy

Rep. Jamaal Bowman (D-NY) speaks at a news conference outside the U.S. Capitol Building on February 02, 2023 in Washington, DC.

Anna Moneymaker | Getty Images

On Wednesday, Bowman held a press conference with dozens of creators, opposing the ban and saying rhetoric around the app is a sort of “red scare” pushed primarily by Republicans. He said he supports comprehensive legislation addressing privacy issues across the industry, rather than singling out one platform. Bowman noted lawmakers haven’t received a bipartisan congressional briefing from the administration on national security risks stemming from TikTok.

“Let’s not have a dishonest conversation,” Bowman said. “Let’s not be racist toward China and express our xenophobia when it comes to TikTok. Because American companies have done tremendous harm to American people.”

Reps. Mark Pocan, D-Wisc., and Robert Garcia, D-Calif., joined Bowman and the creators, announcing their opposition to a ban. Garcia, who is openly gay, said it’s important that young queer creators “are able to find themselves in this space, share information and feel comfortable, in some cases come out.”

“Honestly it’s done best on the TikTok platform than any other social media platform that currently exists, certainly in the United States,” Garcia said.

Creators at the event on Wednesday shared opportunities that TikTok has afforded them that they say aren’t available in the same way on other apps. Several creators who spoke with CNBC said they have other social media channels but have far fewer followers on them, due in part to the easy discoverability built into TikTok’s design.

“I’ve been on social media for probably 10 years,” said David Ma, a Brooklyn-based content creator, director and filmmaker on TikTok. But it wasn’t until he joined TikTok that his following grew exponentially, to more than 1 million people. “It’s given me visibility with people that are going to fundamentally change the trajectory of my career.”

Tim Martin, a college football coach in North Dakota who posts about sports on TikTok to a following of 1 million users, estimated 70% of his income comes from the app. Martin credits the TikTok algorithm with getting his videos in front of users who truly care about what he has to share, which he said has helped him grow his following there far more than on Instagram.

But TikTok’s attempt to shift the narrative to positive stories from creators and users may still fall flat for some lawmakers.

Bilirakis said the strategy is “not resonating with our colleagues. Definitely not with me.” That’s because he hears other anecdotes about constituents’ encounters with the app that make him worry for teens’ safety.

“I do think there’s a chance that it may not necessarily have the impact that TikTok is looking for,” said Jasmine Enberg, a social media analyst for Insider Intelligence. “It’s more evidence of how firmly entrenched the app is in the digital lives of Americans, which isn’t necessarily going to help convince U.S. lawmakers that TikTok can’t be used or isn’t being used to influence public opinion.”

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