TikTok says Biden administration pressuring it to sell

GEOFF BENNETT: The Chinese parent company of TikTok says the Biden White House is pressuring it to sell to an American firm, or face a national ban.

Nick Schifrin reports on the national security concerns of the hugely popular video app.

WOMAN: How to eat a dandelion.

NICK SCHIFRIN: 21st century flower power.

WOMAN: It doesn't taste bad.

I would not lie.

NICK SCHIFRIN: Communicative cappuccinos.

A nursing home rendition of Rihanna.

TikTok's diverse viral sensations have combined access to music with editing tricks made easy to create a social media monster.

MAN: I see it as a piece of cake.

NICK SCHIFRIN: TikTok has a billion-and-a-half users, and its single most popular video has been watched 2.1 billion times.

But the U.S. government says TikTok's sleight of hand isn't like this American magician... MAN: How are you doing that?

NICK SCHIFRIN: ... but by the app's Chinese parent company, ByteDance, and is a national security threat to users and their data.

SEN. MARCO RUBIO (R-FL): But they use TikTok to control data on millions of users.

NICK SCHIFRIN: Last week, Senate Intelligence Committee Vice Chairman Marco Rubio asked FBI Director Chris Wray about Beijing's control of TikTok.

SEN. MARCO RUBIO: Could they use it to drive narratives, like to divide Americans against each other?

CHRISTOPHER WRAY, FBI Director: Yes.

This is a tool that is ultimately within the control of the Chinese government.

And it -- to me, it screams out with national security concerns.

NICK SCHIFRIN: The primary concern is that Chinese law forces ByteDance to collaborate with the Chinese government, and there's no independent judiciary for appeal.

DONALD TRUMP, Former President of the United States: A very American company buy it.

NICK SCHIFRIN: The pressure on ByteDance to sell is three years old and crosses two administrations led by the Committee on Foreign Investment in the U.S., or CFIUS.

TikTok says it has already answered U.S. concerns in a process known as Project Texas by creating a new company whose board reports to the U.S. government and whose employees are subject to U.S. approval and allowing U.S. technology company Oracle to control all user data and review the app's algorithm and content.

Today, TikTok said in a statement: "Divestment doesn't solve the problem.

A change in ownership would not impose any new restrictions on data flows or access."

SEN. MARK WARNER (D-VA): Before there was TikTok, there was Huawei and ZTE.

NICK SCHIFRIN: On the Hill, a new build that the administration supports would allow the Commerce Department to ban TikTok.

SEN. JOHN THUNE (R-SD): It's important to establish a holistic and methodical approach to the challenges that are posed by technology from foreign adversaries.

MAN: Why the sudden moved to ban TikTok?

NICK SCHIFRIN: On TikTok today, users have responded to the possible ban with criticism and more content.

WOMAN: TikTok is getting banned.

VOICES: Oh, no.

WOMAN: Never mind.

No, it's not.

VOICES: Hooray.

WOMAN: Wait.

No, it's only being banned like a little bit.

Just kidding.

It's being banned a lot.

VOICE: What?

DEEMA ZEIN: How about you and me merge?

OK?

NICK SCHIFRIN: The "NewsHour" has its own TikTok and its own TikTok star, Deema Zein.

Why do you think TikTok has become so popular?

DEEMA ZEIN: They get to kind of enter somebody else's world or they feel more closely connected.

And it's almost become like this community, right, where it's so unfiltered and so authentic, that it's just very real.

Whether it's your second job or your full-time job, yes, I think the risk of TikTok being banned is a huge concern for these people and where they will go after that.

NICK SCHIFRIN: Well TikTok is the relative new kid on the block, its creators and users are loyal.

But the national security community looked for threats and found them in the app and because of its Chinese parent company.

And so TikTok might not have nine lives, despite being the single most downloaded app in the world.

For the "PBS NewsHour," I'm Nick Schifrin.

AMNA NAWAZ: So, could this be the beginning of the end for TikTok in the U.S.?

And can the U.S. government's concerns about the app be mitigated?

Matt Perault was a public policy official at Facebook before becoming a professor at the University of North Carolina, Chapel Hill, and the director of its Center on Technology Policy.

And a quick note: The center is funded by foundations and tech companies such as Google, Apple and our subject now, TikTok.

But, Matt Perault, welcome to the "NewsHour."

Let's just start with what Nick was just reporting there.

TikTok had been negotiating with the U.S. government for years, already agreed to a number of requests laid out by the U.S. government.

What changed that led the Biden administration to reportedly harden their stance and issue this ultimatum that the ByteDance CEO says he received?

MATT PERAULT, University of North Carolina at Chapel Hill: It's not exactly clear what changed.

And it's not clear if what changed is more substantive, meaning that it's related to actual harm related to TikTok or risk that TikTok poses to the United States or political, a change in how the parties perceived risk related to being perceived as being soft on China.

I think it's probably more likely that it was political, in that I think it is still unclear, as you suggested, exactly what about Project Texas and the rumored CFIUS agreement with TikTok was insufficient, from the U.S. government's perspective.

AMNA NAWAZ: Tell me briefly about those political concerns, though?

What is the political landscape around TikTok right now?

MATT PERAULT: So I think one thing that Republicans and Democrats both agree on is that it is not good to be perceived as being soft on China.

There's deep concern about how the Chinese government might approach a technology company that has deep ties or deep roots in the U.S. user base.

AMNA NAWAZ: So, I will share with you a Senate intel source has shared what we believe are some of the lingering concerns even after those negotiations.

They're mainly around data and content, specifically that much of the content and the associated metadata could still be accessed outside of the U.S., including by mainland China, and also that the algorithm that determines what Americans can see would be driven and dictated by engineers in China.

So are those valid concerns to you?

And have we seen any evidence of those?

MATT PERAULT: So, the main features of Project Texas are that it would House U.S. user data within the United States, it would locate the algorithm within the United States, and it would locate the content moderation function within the United States.

And it would make each of those three components subject to an audit process, where there would be a number of different auditors and monitors who would try to ensure that the functioning of Project Texas was in line with what how TikTok said it would function.

Now, it is still certainly possible that the project wouldn't function as intended or that there would still be remaining risk.

I think the risk that you alluded to is certainly possible.

TikTok has created an audit system, so that, if that risk were to exist in reality, the idea is that the monitors can catch it.

But I think, in the world of technology and tech policy, it's very hard to assure that there's actually zero risk in the system.

AMNA NAWAZ: What about from ByteDance's perspective here?

Why would they have been and why have they been so willing to negotiate and to acquiesce to so many demands from the U.S. government?

MATT PERAULT: I think that's a really good question.

My guess is that the main thing that ByteDance is interested in is a strong competitor to U.S. tech companies, like Apple and Google and YouTube and Meta, and that the perception is that the best way to make that happen is by having a hands-off relationship between ByteDance and TikTok.

Now, it's unclear, again, if that's happened in practice.

I think what would be useful would be to have the kind of process in place to develop evidence to understand better whether the national security risk and harm that has been alleged is actually there in reality.

AMNA NAWAZ: Are there broader implications here we should consider?

I mean, does this open the door now to other countries, India, for example, taking a similar tack and saying, well, we want to control what Google is able to do here in India?

MATT PERAULT: I started working in the tech industry in 2011.

And at that point, the tech industry was deeply concerned about data localization, the idea that China or India or Brazil or Germany or France or the U.K. would require a U.S. tech company to store data locally.

What Project Texas is, essentially, a very sophisticated data localization model, where TikTok would be localizing certain components of its business within the United States.

That's the sort of thing the tech industry and the U.S. government have feared and advocated against for a long period of time.

I think, if the U.S. government were to require it, or to -- if TikTok were to voluntarily do it within the United States, I think we would then see countries like India, countries like Germany, countries like Brazil reciprocating and asking essentially for Project Texas on their soil.

AMNA NAWAZ: So, given where it seems we are now, either a divestment or a ban, what do you think is the likely outcome?

MATT PERAULT: A ban has often been talked about.

And I think, in the run-up to the hearing next week, it's likely that that will be discussed extensively as well.

But I think a ban is fairly unlikely.

It would be politically very challenging for the U.S. government to achieve a ban.

There are millions of people in the United States who use TikTok and love TikTok.

They would immediately, I think, feel the consequences of that technology being banned and limited access to a tool that they use potentially every day.

Divestment, I think, is trickier, because I think it's unclear if there would be a strong constituency that's opposed to divestment.

I don't think there are that many TikTok users who probably care that much who owns their product.

I think the questions about divestment continue to be whether there is evidence sufficient to support an action of that magnitude.

It is a significant remedy that the U.S. government would be putting into action.

And the question is whether there's evidence there to support it.

AMNA NAWAZ: All right, that is Matt Perault, director of the Center on Technology Policy at the University of North Carolina at Chapel Hill, joining us tonight.

Thank you for your time.

MATT PERAULT: Thanks so much.