Is TikTok’s honeymoon over?

Last month, Brendan Carr, the senior Republican on the Federal Communications Commission (FCC), published a letter addressed to both Apple and Google requesting that those companies remove TikTok from their respective app stores. And just last week, members of the Senate Intelligence Committee sent a letter to FTC Chair Lina Khan, requesting that the FTC “immediately initiate a Section 5 investigation on the basis of apparent deception by TikTok.” Both of these letters were catalyzed by reporting from Buzzfeed last month that alleges that China-based employees of ByteDance, the Chinese company that owns TikTok, regularly accessed non-public data about US-based TikTok users through at least January 2022. These allegations run counter to TikTok’s claims that all data emitted by US-based users is stored in the US and not accessible by ByteDance’s employees in China.

From Commissioner Carr’s letter to Apple and Google:

Statistics show that TikTok has been downloaded in the U.S. from the Apple App Store and the Google Play Store nearly 19 million times in the first quarter of this year alone. It is clear that TikTok poses an unacceptable national security risk due to its extensive data harvesting being combined with Beijing’s apparently unchecked access to that sensitive data. But it is also clear that TikTok’s pattern of conduct and misrepresentations regarding the unfettered access that persons in Beijing have to sensitive U.S. user data- just some of which is detailed below- puts it out of compliance with the policies that both of your companies require every app to adhere to as a condition of remaining available on your app stores. Therefore, I am requesting that you apply the plain text of your app store policies to TikTok and remove it from your app stores for failure to abide by those terms.

This isn’t the first time that TikTok has faced being banned in the US. In September 2020, after President Trump issued an executive order threatening TikTok with a ban if its US business didn’t find new domestic ownership within 45 days, the US Department of Commerce banned TikTok from US app stores. That ban was blocked by a federal judge in December 2020, and the Biden administration subsequently issued an executive order that reversed Trump’s ban while instigating a broad review of the data practice of foreign-owned apps. This Wikipedia page provides a helpful chronology of the events in the saga.

TikTok represents a thorny dilemma to US regulators as result of that misadventure, but for other reasons, as well. In August of last year, the FTC re-filed an antitrust suit against Meta (then Facebook) after its original suit was thrown out by the presiding judge because, in the words of the judge, it “failed to plausibly establish…that Facebook has monopoly power in the market for Personal Social Networking” (I cover the original suit in this article). The re-filed suit goes to great lengths to characterize TikTok as a “content broadcasting and consumption service,” which it deems to be separate and distinct enough from the category of service to which Facebook belongs, the Personal Social Network (PSN), such that TikTok’s meteoric growth cannot be used to question Meta’s alleged monopoly power there.

But the Facebook app of 2022 is markedly distinct from the Facebook app of 2021 — now, it looks much more like TikTok, as I cover in this piece on Meta’s pivot to an open graph (what it terms a “discovery engine”). If it ever did, the logical legerdemain deployed by the FTC to distinguish the market in which the Facebook app operates from the market in which TikTok operates no longer applies: Meta has very decidedly migrated to TikTok’s operational territory.

As the TikTok ban spectacle simmered in September 2020, in The right thing for the wrong reasons, I wrote:

Either way, it’s reckless. If these rules are to be conjured and these boundaries are to be delimited, then those things should be done systematically and with a sober sense of import. The dizzying volatility and capriciousness that has animated this entire episode is a scandal. The outcome of this moment will define the American commercial environment, especially as it concerns the technology sector, going forward: it needs to be constructed thoughtfully and with a sense of seriousness, without the dark shadow of venality and inside dealing that the Oracle deal casts.

The entire clumsy history of government scrutiny of TikTok’s US operations emits a tinge of the previous administration, which is potentially the reason that it has escaped serious review since Trump left office. But that may have to change: while the FCC doesn’t have authority to compel Apple and Google to ban the TikTok app, closer analysis may be inevitable given the allegations leveled in the Buzzfeed article and subsequent responses from members of Congress. It’s worth noting: TikTok states that all data for US users will be moved to domestic Oracle systems at some point, preventing access from China-based ByteDance employees.

The US is hardly alone in questioning TikTok’s practices: India banned the app last year, claiming that it and other Chinese-owned properties are “prejudicial to sovereignty and integrity of India, defence of India, security of state and public order.” And just this week, following warnings from several European privacy regulators, TikTok announced that it would not introduce a planned privacy policy change in Europe that would forego the collection of user consent for targeted advertising.

Given the demographic composition of TikTok’s user base — according to eMarketer, just over 44% of TikTok’s US users are under the age of 25, compared to just 16% for Facebook — and considering the speed at which it is growing revenue, which is projected to reach $12BN this year, it’s possible that TikTok’s honeymoon, from a regulatory scrutiny standpoint, is coming to an end.

Photo by Franck on Unsplash