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Doug Leone
Wondery subscribers can binge all episodes of Business War's TikTok versus the USA early and ad free right now. Join Wondere in the Wondery app or on Apple podcasts. It's summer 2020 in San Francisco, California. Venture capitalist Doug Leone opens WhatsApp and hits the phone number of ByteDance CEO and founder Zhang Yiming. Zhang picks up after two rings. He sounds tired. Leon's not surprised President Donald Trump is threatening to ban TikTok in the United States. TikTok is Zhang's baby, and he's been working around the clock figuring out how to save it. Hey, Yiming, good morning. Night. Not sure what time it is there. How you doing? Yeah, hi. Good morning. Well, how I am depends on what info you were able to get me. Were you able to reach the White House? I was. I have some clarity on the situation, but I'm not sure you're going to like it. Leon is a partner at Sequoia Capital, which is a major investor in TikTok, and he's also a high dollar donor to Trump's reelection campaign. So Leon offered to reach out to the White House to understand what they need to see in order to approve a potential sale of TikTok. Bottom line, the administration is looking for a full sale. They don't want Bytedance to have any ownership in TikTok. I know we had hoped Bytedance could stay on as a minority partner, but my source was adamant that the White House won't find that acceptable. Zhang sighs, frustrated. This is ridiculous. In China, I get accused of being an American stooge, and in America, they see me as an agent of the Chinese government. You're definitely between a rock and a hard place, but this is the reality of geopolitics at the moment. I think at this point, we pivot to trying to make the best deal possible in finding a buyer. If someone is going to buy TikTok, they're going to need to pay real money. We built a hugely valuable asset. Absolutely. There are probably only four companies that have deep enough pockets to make a serious offer though, right? Facebook, Google, Amazon. Michael, that would be them. And the US Government would be okay with these giant tech companies becoming even more powerful? Honestly, probably not. Three of them, Facebook, Google and Amazon, are under antitrust investigations at the moment. It's going to be tough for them to get approval to buy another major social media platform. So Microsoft, it could be a good fit. They have over $100 billion in cash reserves, plus they have a pretty good relationship with the government. Well, I spent a year working for Microsoft when I was in my 20s, so I guess it's fitting. I'll reach out to Leon hangs up the phone. It's definitely not the best case scenario, but nothing about the government's attitude towards TikTok is a best case scenario right now. Need care for ed, hair loss, skin care, or other common health concerns? Amazon one Medical pay per visit lets you quickly connect with a provider right from home. 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All you have to do is answer a few questions and in just minutes you'll get matched up with recommendations tailored to to you. Some of these cards weren't even on my radar, but they look like a perfect fit. I'm always looking out for top cashbacks and introductory offers. And the best part? Nerd Wallet's done all the work for me. No research needed. Nerds already took care of all the heavy lifting on that front. So if you, like me, want to easily and quickly find the right card for you, well, don't waste time. Go to nerdwallet.com and get matched up today. Terms and conditions apply. Credit products subject to lender approval. See nerdwallet.com for details. From Wondering I'm David Brown, and this is business wars. In 2017, Chinese tech company ByteDance entered the US market by buying an app called Musical Ly. They renamed the app TikTok and invested heavily in promoting it across rival platforms. Its user base steadily grew over the next three years, and in 2020, during the COVID 19 lockdowns, its popularity exploded. The app became a cultural force, spreading memes and launching pop stars, but it increasingly came under the scrutiny of US Lawmakers. Politicians on both sides of the aisle had concerns that American user data could be turned over to the Chinese government and that the app could be manipulated to spread Chinese values in the United States. In the summer of 2020, President Donald Trump announced he was going to sign an executive order that gave TikTok 45 days to sell to a US based company or it would be banned in the country. And as TikTok scrambled to deal with that ultimatum, its business rivals saw an opportunity to pounce. This is episode two reeling it's summer 2020 in San Francisco, California. Reuters reporter Elizabeth Culliford unmutes herself and leans in towards her laptop camera. She's attending a daily meeting where reporters pitch the stories they're working on to their section editors. Culliford pitches a story about how over the weekend the Trump campaign started running ads on Facebook that told users TikTok was spying on them. The ads are drawing on reports from a month earlier that showed TikTok could access users clipboards via Apple's latest iOS release. TikTok responded it was the result of an anti spam feature which they have disabled. The editor prods the story's hook. Culliford explains that it's another escalation in the hostilities between the Trump administration and TikTok. There's also a business angle because of the rivalry between Facebook and TikTok. The editor asks her to tell him more about that. Culliford says that Facebook is prepping to launch a new short form video feature that will compete directly with TikTok within the next few months. So it's striking that they're accepting money for political ads that attack their rival. Meanwhile, TikTok can claim the moral high ground since they don't accept political ads at all. Hereditary is sold, Culliford beams, and the way the Trump administration and TikTok have locked horns, it doesn't seem like the intriguing stories are letting up anytime soon. And Culliverd really can't predict who's going to come out on top. Not Much later, in July 2020, Microsoft CEO Satya Nadella holds a meeting with his top advisors to discuss acquiring TikTok. Nadella kicks off the meeting. He says he wants to evaluate the pros and cons of acquiring TikTok. An executive with purple glasses says he thinks this could be a good addition to Microsoft's portfolio. As a company, Microsoft doesn't have much of a social media presence. The closest they have is LinkedIn, which they bought in 2016. Microsoft is a major player when it comes to workplace software and games, but social media remains a big hole. Acquiring TikTok would go a long way to making up ground in that sphere, another executive interjects. She agrees that social media is a hole for the company, but maybe that's not a bad thing. They've seen how Facebook and Twitter have been raked over the coals by Congress for how they moderate content. Maybe it's not worth the headache, but. The executive in glasses shakes his head. The amount of data Microsoft would glean from TikTok is too big to ignore. It would help grow Microsoft's advertising business. The two executives turn to Nadella, who's been sitting quietly at the head of the table, his chin in his hand. He's still a moment, and then he nods. In his view, the pros outweigh the cons. He says they should move forward with the deal. But before anything can be finalized, word leaks to the press that Microsoft is pursuing an acquisition of TikTok. And shortly thereafter, Nadella receives a phone call from President Donald Trump. He tells Nadella that the deal will have to be closed within 45 days and that any deal Microsoft makes should help the US Government. He leaves open how that should happen, but he suggests perhaps Microsoft could create some kind of jobs program or otherwise make some kind of offering to the United States Treasury. TikTok and Microsoft executives are caught off guard by both demands. 45 days is an incredibly short time to complete a deal scale, and they're not quite sure what to make of Trump's implication that they need to give a percentage of the deal back to the government. Microsoft releases a statement that they're still moving forward with the deal, including a vague sentence about making sure that there are proper benefits to the United States, including the government. But other companies also express interest in buying TikTok, including Oracle. Founded in 1977, Oracle sells database software and cloud computing and is now worth over 150 million doll billion. TikTok continues to pursue deals with both Microsoft and Oracle, hoping to start a bidding war that will garner them the best offer. But they also file a lawsuit against the US Government, arguing that Trump's executive orders are illegal. Those orders require TikTok to stop new downloads of their app in September, sell the company in 45 days, or face a nationwide band. But all the uncertainty from the executive orders is hurting TikTok's business, as users question the future of the app. Yeah, if you want to continue seeing this sunburnt face, go ahead and follow all my other socials because I post there a lot. Yeah, this might sound silly for people.
Zhang Yiming
That don't understand, but for minorities losing.
Doug Leone
TikTok is really worrisome.
Zhang Yiming
If you have a favorite content creator.
Doug Leone
That'S part of a minority group, please go follow them on Instagram and YouTube and rival platforms. Sense an opportunity In August 2020, TikTok CEO Kevin Mayer walks into the company's American headquarters in Los Angeles, California. An executive waits for him outside his office. Mayor can tell from the executive's face that he's there to share bad news. Mayor sighs. He only became CEO of TikTok two months ago after working for Disney for 15 years. He was part of an effort to bolster TikTok's American executive ranks to distance the app from its Chinese parent company. Mayer was excited about the opportunity to lead the hottest app in the country, but it's been one problem after another since he became CEO. Mayer beckons the executive into his office and asks him what's going on. The executive pulls out his phone and opens up Instagram. He clicks a button and tells Mayer to look at what Instagram is now offering, a way to record and share short videos. They're calling it Reels. Mayer shakes his head and Riley comments that it sure does look familiar. The executive agrees, saying that Facebook has basically created TikTok within Instagram. The only major differences are that the videos max out at 15 seconds, unlike TikTok, which allows users to create videos up to a minute, but other than that, pretty much identical. Mayer points out that they shouldn't be surprised. This is what Facebook, Instagram's parent company, does. They copy other app's features. Facebook tried to launch an app called Lasso that was another video sharing app a couple of years ago, and earlier this year they launched another app called Hobby, which was basically a Pinterest knockoff. They've since shut both of them down for underperformance. But the executive brings up Instagram Stories, which Facebook launched in 2016 as a direct challenge to Snapchat. Within two years, Stories had double the users as Snap. Mayer acknowledges the point. The truth is, they don't know how Reels is going to play out for Instagram or TikTok, but they can put out a statement observing that it does seem like almost a direct copy of TikTok. That will highlight a vulnerability for Facebook. Just last week, Facebook founder and CEO Mark Zuckerberg was questioned by Congress. Lawmakers grilled him over Facebook's habit of creating clones of its competitors. The executive says he'll get a statement put together for Mayor to approve. As the executive leaves, Mayor shakes his head. It feels like TikTok is under attack from every direction. He's starting to wonder if leaving Disney was a mistake. He thought he was joining an app on the rise, but now it's feeling like he's aboard a sinking ship. What separates the true leaders from the rest? It's not just vision and ambition. It's the courage to take the road less traveled. For those with a palpable passion for life who lead by example, there's the Range Rover Sport. 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Love your work@canva.com as the summer of 2020 continues, the turmoil surrounding TikTok builds. Near the end of August, TikTok CEO Kevin Mayer steps down after fewer than three months on the job. He cites the pressure the company is under from the Trump administration as the reason for his resignation. TikTok names its general manager, Vanessa Pappas, as the interim global head to replace him while they search for a new permanent CEO. Then, two days after Meijer announces his departure, TikTok is dealt another blow, this time by the Chinese government. Officials in Beijing update the laws around exports. Under the new guidance, TikTok's recommendation algorithm qualifies as sensitive technology. That means that the Chinese government would have to approve of the sale of the algorithm to an American company, and it's unclear if they would. Much of TikTok's success comes from its powerful algorithm that feeds users a steady stream of videos based on their preferences. TikTok without that algorithm, will be much less appealing to any buyer, including Microsoft and Oracle, TikTok's two biggest suitors that would jeopardize a sale. And despite TikTok's accusations that Instagram Committed plagiarism when it invented Reels. Content creators and brands don't seem to care. Within two months of launch, Reels is reportedly seeing higher engagement than other forms of content on Instagram. With TikTok under attack from all sides, their best chance at survival comes down to the courts. First up, a hearing over the legality of a Trump order that would ban any new downloads of the app. The ban is set to go into effect in September. To help TikTok win its argument against the download ban, Pappas reaches out to some unlikely allies in summer 2020. Papa sits in her office reading through email. The sun beats in through the windows. The way the light reflects on her desk reminds her of Australia, where she's from. Her intercom dings and her assistant says that a representative from NetChoice is on the line. Pappas sits up. NetChoice is a trade group that represents the biggest tech companies, including Amazon, Facebook and Google. She makes her pitch.
Zhang Yiming
So, as you know, we have brought a suit against the government objecting to this ban against TikTok. And while I know that many of your members might think that banning TikTok will help their bottom line, I'd like to argue that they should join us in fighting this ban.
Doug Leone
You're looking for our support?
Zhang Yiming
Yes. If a government is allowed to target one company, they can target another. Today it might be TikTok. Another day it might be one of your members. Maybe Facebook, maybe Snap.
Doug Leone
With all due respect, the case against TikTok is unique. The companies we represent are American owned.
Zhang Yiming
The government has no evidence that the Chinese government has ever acquired any data on American based users. So they're talking about a hypothetical concern. And if they ban TikTok for a hypothetical concern about the Chinese government, they can come with a hypothetical concern about any of the big tech companies, I suppose. Do you really want the American government to feel emboldened to ban an app that a quarter of the US population relies on for information? And look, other countries could use these as a precedent to ban American companies from accessing their markets.
Doug Leone
Well, you make some good points. I'll bring it to my members, but I can't make any promises.
Zhang Yiming
I appreciate you trying, I really do.
Doug Leone
Papas hangs up and gets back to work. She really hopes that the tech industry can unite on this on behalf of its members. NetChoice does file a brief in support of TikTok with the court. And on Sunday, September 27, the day before Trump's ban is set to go into effect, a judge hears arguments. TikTok's lawyers argue that the ban is punitive and overly broad, that there are other ways, aside from an outright ban, to ensure that American data is not accessible by the Chinese government. The government's lawyers state that the step is necessary to protect national security. They file evidence that shows a high level of interaction between American data and IP addresses located in China, which the government argues is highly concerning. At the end of the arguments, the judge sides with TikTok. He blocks the Trump administration's ban on downloads of the app. It's the first in a string of victories for TikTok. In November, Joe Biden beats Donald Trump in the presidential election. And in December, another judge rules against Trump's executive order to ban TikTok. He says that Trump overstepped his power and that the ban was arbitrary and capricious. When Biden assumes power in January 2021, he rescinds Trump's order and asks for a new investigation into the national security threats posed by Chinese owned apps. With the reprieve from the new administration, ByteDance decides it's not going to sell TikTok after all. Not to Microsoft and not to Oracle. But they are going to be proactive to prevent the Biden administration from implementing its own ban. So TikTok continues to expand their lobbying team, and TikTok's general counsel, Eric Anderson, starts conversations with the Committee on Foreign investment about how TikTok can manage American user data in a way that will be acceptable to the US government. To that end, TikTok begins working on a data strategy plan that they codename Project Texas. TikTok's idea is that they will partner with Oracle and have that company store all of American users sensitive data, including phone numbers and birth, at one of their centers in Texas. This data would only be accessible to TikTok employees based in the United States. This protection, TikTok argues, will keep American data inaccessible to the Chinese government. They want to have a comprehensive plan they can present to the committee, one they are confident the committee will approve. ByteDance takes other steps to try to play nice with the US government. In May 2021, ByteDance names Shozi Chu as the new permanent CEO of TIKT. Interim global chief Vanessa Pappas is named COO of the company. A Singaporean national, Chu went to the University of London for his undergraduate education and earned an MBA from Harvard Business School. The hope is that Chu can bridge the cultural divide between China and the United states. And while TikTok makes moves to secure its ability to operate in the United States, it continues to grow. In 2021, teens are spending two to three times as many minutes on TikTok as on Instagram, and Facebook is rapidly losing popularity with younger users. So in fall of 2021, Facebook executives decide that their detente with TikTok is over. They may have been willing to collaborate to stop a worrying legal precedent when Trump tried to ban it, but now it's time to aggressively beat back the threat from TikTok, and they look for outside help. It's 2021 in Arlington, Virginia. A partner with a lobbying firm, Targeted Victory, stands in front of a whiteboard in a conference room at the company headquarters. He uncaps a marker and writes the real threat on the board and underlines it. He turns to the eager young staff members seated around the conference table. He says that Facebook, recently renamed Meta, has asked them to put together a pitch campaign that paints TikTok as the real threat to teenagers well being to try to turn users away from TikTok and back to Meta products. They're not sure yet which threat will gain the most traction, so they're brainstorming. This could be a big contract, so he wants to make sure they put together the strongest presentation possible. One young man with the buzz cut raises his hand. He argues they shouldn't spend too much time on the national security issue. TikTok's connection to the Chinese government has been well covered, and he's not sure that many Americans care. A woman in glasses sitting next to him nods. She says she's especially not sure teenagers care about where their data is stored and who is accessing it. The partner writes national security on the board, but agrees that focusing on that as a threat shouldn't be their main point of attack. So what should they do? A man in a checkered shirt says they could go back to a strategy that's been used against tech companies for decades. It's dangerous for the children. Almost everyone nods. The partner nods and writes, dangerous to kids on the board. He turns back to the group and asks how they would accomplish that. The woman in glasses says that they could work with PR firms around the country to get op eds and letters to editors about any trends in their area that seem dangerous. The man in the checkered shirt nods. He points out that the dream headline would be something like From Dances to danger how TikTok has become the most harmful Social Media space for kids. Everyone around the room laughs. That would be the perfect headline. The partner says he wants to start building a database of what he calls bad TikTok clips. He wants links to any local news story that blames some trend on TikTok for disruptive or dangerous behavior that they can push into other markets. The man with the buzz cut offers to start that database. The partner looks back at the whiteboard now covered with writing. He says he thinks they have the outlines of a plan. He'll write up the proposal, and hopefully Meadow will put this plan into action soon. The lobbying group Targeted Victory launches its campaign against TikTok in 2021, and within months, parents around the country are seeing stories in their feeds about dangerous trends that reporters are claiming started on TikTok this morning. In a new TikTok trend is inspiring students to see steal items from school and even vandalize bathrooms. It's called the Devious Lick Challenge. But in reality, rumors about devious licks started on Facebook, not TikTok. Then targeted victory spreads another rumor, which again first appeared on Facebook. Now another TikTok challenge getting a lot of attention tonight, and it's a violent one. It encourages students to actually slap their teachers. Targeted Victory spreads the rumor of the Slap a Teacher TikTok challenge among local news stations, which jump on it over the next few months, op EDS orchestrated by Targeted Victory hit local newspapers in Denver, Des Moines, and other cities, but senators have already taken note of the bad Press. Soon, TikTok is back in the hot seat yet again. You sign up for something, forget about it after the trial period ends. Then you're charged month after month after month. The subscriptions are there, but you're not using them. In fact, 85% of people have at least one paid subscription going unused each month. Thanks to Rocket Money, you can see all your subscriptions in one place and cancel the ones you're not using anymore. Now, boom, you're saving more money. Rocket Money is a personal finance app that helps find and cancel your unwanted subscriptions, monitors your spending, and helps lower your bills so you can grow your savings. 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Check out Add on subscriptions on Prime Video from Americans with the Chinese Communist Party October 2021 Washington, D.C. tikTok Vice President Michael Beckerman sits at a table in a committee hearing room in the Russell Senate Office Building. He works to keep his face neutral as Senator Ted Cruz reads from TikTok's privacy policy. He's waiting for Cruz to get to his question, but it's important that he does not look annoyed. This is the first time any executive from TikTok has answered questions from Congress, so Beckerman is under pressure to make a good impression. The hearing is to discuss what steps these apps are taking to protect kids online. Executives from Snapchat and YouTube are also testifying. Beckerman has already testified about TikTok's content moderation and community standards and other steps they take to protect their younger users. And he's emphasized over and over that TikTok is an entertainment platform. Its goal is to bring joy. But senators are holding his feet to the fire, accusing him of being vague and avoiding answering questions. Cruz is using his time to focus on the question that perpetually hangs over TikTok's head. What kind of access does ByteDance, the Chinese parent company of TikTok, have to American user data? Cruise finally finishes reading aloud from TikTok's privacy policy and asks if ByteDance, headquartered in Beijing, is part of TikTok's corporate group, which, according to TikTok's privacy policy, TikTok can share data with. Beckerman starts to answer, but he only gets a few words in before Cruise cuts him off and asks the question again. He says it's a yes or no answer. Beckerman bites his lip. Senator, access controls for our data is done by our US Teams and as independent researchers. Independent experts have pointed out the data that TikTok has on the app is not of a national security importance and is of low sensitivity. But again, we do hold that to a high standard and we have access control. Mr. Beckman, we're going to try a third time. Cruz cuts him off again, insisting that he has not answered the question. Finally, Beckerman answers that yes, ByteDance is part of the corporate structure and according to their privacy policy, TikTok can share their data with them. He tries again to reiterate that TikTok has access controls that prevent it. But Cruz has made his point. Despite their efforts, TikTok is still viewed with suspicion by American lawmakers. TikTok needs to figure out a way to assuage lawmakers concerns. It's early 2022, and a senior member of the US policy team who oversees the company's lobbyists fidgets in his chair. He's waiting to start a Zoom with TikTok general counsel Eric Anderson, and he's not looking forward to it. The policy team member runs through his notes. Anderson logs on. The US Policy executive takes a deep breath and launches in. I think we should go public with Project Texas right now. We're keeping the whole plan under wraps, but I think it would be smart to make public what our plan is. How so? I think it would show the public and lawmakers the significant steps we're willing to make to keep US user data private. Well, I'm not sure it's a good idea to go public with something that's still in flux. We haven't even reached agreement on what constitutes sensitive data or who exactly will be allowed to access that data. I understand that, but it seems highly likely that news of Project Texas is going to leak. If we announce it first, we'll get to shape the narrative around it. I'm sorry, I just don't think it's worth the risk. Okay, well, there's something else. What? And to be honest, there's a limit to what we, as lobbyists, can do. Lawmakers have a lot of concerns, and it's not just about data sharing. They're concerned that the 4U algorithm could be used to benefit Chinese interests. We've had lawmakers tell us that they view TikTok as a Trojan horse the Chinese Communist Party can use to influence young Americans. Okay, well, it's your job to convince them that's not the case. I understand that, but they want to hear it from top leadership. I really think that you and Shu need to get involved with our efforts. Look, I understand your concerns, but we're this close to reaching a final deal with a committee on foreign investment. This isn't the time to rock the boat. The boat is rocking. I'm asking you to help stabilize it. We're on track to submit our final plan for Q3 2022. Obviously, it'll take time for the committee to review and approve it, but there's no reason to believe there will be any surprises. We just need to stay the course. And you need to keep elected at bay for just a little longer. And this will all be behind us soon enough. Okay, we'll do our best. The two men log off and the policy executive lets out a frustrated sigh. He worries that TikTok is putting all of its eggs in one basket with Project Texas and this could all go sideways. But he's made his case, and the leadership has made their decision. There's nothing more than he can do. As 2021 turns to 2022, the negotiations between the Committee on Foreign Investment and TikTok continue, and the details of Project Texas continue to be ironed out. And there are signs that the administration is warming up to TikTok. In spring 2022, following Russia's invasion of Ukraine, the White House holds a press briefing for 30 top TikTokers. The main reason White House officials told me that they hosted this briefing was to make sure the TikTokers were promoting correct information and accurate information rather than misinformation, as we've seen, which is rampant on this app. And the app's popularity continues to grow. By 2022, there are an estimated 94.1 million million users in the US that's bringing in around $6 billion in revenue in the country, more than Twitter or Snapchat. But in June 2022, BuzzFeed reporter Emily Baker White sits at her desk in San Francisco, California. She has a pair of headphones on over her ears and a legal pad next to her with a series of hash marks. She makes another one, shaking her head. Baker White has been covering TikTok, and recently one of her sources inside the company gave her a trove of material, audio recordings from more than 80 meetings inside the company. And from what she's hearing, Baker White realizes she's sitting on a bombshell. Baker White hits play again and listens carefully to a member of TikTok's Trust and Safety team. Everything is seen in China, she hears, meaning even sensitive American user data can be seen there. For years, TikTok has been insisting that Chinese based employees did not have access to American user data. TikTok executive Michael Beckerman even testified to that effect under oath in front of the Senate in October 2021. But the more Baker White listens to these meetings, the more it seems like that is not the case. So far, she's counted 14 statements from nine different employees that indicate that American data is accessible to at least some TikTok employees in China. And if it's accessible to employees in China, it could be handed over to the Chinese government if the government asked for it. Baker White leans back in her chair and removes her headphones. She feels amped up, unable to sit still. TikTok has been working hard to hammer out a deal with the US Government to be able to continue operating in the United States, and Baker White knows that as soon as she hits publish, she will be blowing all of that up. If you like Business wars, you can binge all episodes early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondery.com survey from Wondery. This is episode two of TikTok versus the USA for Business Wars. A quick note about recreations you've been hearing in most cases, we can't know exactly what was said. Those scenes are dramatization, but they are based on historical research. If you'd like to read more, we recommend how TikTok's talks with Microsoft Turned into a Soap Opera by Mike Isaac and Andrew Ross Sorkin, originally published in the New York times. Also how TikTok became a diplomatic Crisis by Alex W. Palmer, originally published in the New York times magazine and TikTok spent years developing a data Security plan Washington Ignored it by Juro Osawa, Jin Yang and Erin Wu, originally published on the Information. I'm your host David Brown. Austin Rachlis wrote this story. Our producer is Grant Rutter. Sound design by Josh Morales. Voice acting by Chloe Elmore and Theodore Chen. Fact checking by Gabrielle Joliet. Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louie for wondering and now a next level moment from ATT Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident. But the vendor isn't responding and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease so the pillows will get delivered and everyone can sleep soundly, especially you. ATT 5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
Business Wars: Episode 2 - TikTok vs the U.S.A. | Reeling | 2
Introduction
In the gripping second episode of Business Wars titled "TikTok vs the U.S.A.," Wondery host David Brown delves into the tumultuous battle between the Chinese-owned social media giant TikTok and the United States government. Released on February 12, 2025, this episode chronicles the strategic maneuvers, political tensions, and business rivalries that have shaped TikTok's journey in the American market.
1. The Trump Administration's Ultimatum
The saga begins in the summer of 2020, amid escalating tensions between TikTok's parent company, ByteDance, and the U.S. government. Venture capitalist Doug Leone, a significant investor in TikTok and a high-profile donor to President Donald Trump's re-election campaign, initiates a critical conversation with ByteDance CEO Zhang Yiming.
Leone reveals that the Trump administration demands a full sale of TikTok to a U.S.-based company, severing ByteDance's ownership. Zhang expresses his frustration, stating, “In China, I get accused of being an American stooge, and in America, they see me as an agent of the Chinese government” (02:15).
2. Microsoft's Acquisition Attempt
As TikTok scrambles to find a buyer, Microsoft emerges as a potential suitor. Microsoft's CEO Satya Nadella convenes with top advisors to evaluate the pros and cons of acquiring TikTok, considering its vast user base and the strategic advantage it could provide.
Despite initial optimism, the negotiations are abruptly complicated when President Trump personally contacts Nadella, imposing a 45-day deadline and hinting at government involvement in the deal. This pressure leads Microsoft to publicly commit to the acquisition while grappling with the administration's ambiguous demands (06:30).
3. Rising Rival Platforms and TikTok's Leadership Challenges
Around the same time, TikTok faces intensified competition from established platforms like Instagram, which launches "Reels" to mimic TikTok's short-form video success. Concurrently, TikTok undergoes internal upheaval as CEO Kevin Mayer resigns after only three months, citing the unbearable pressure from political forces.
Vanessa Pappas steps in as interim CEO, striving to stabilize the company's American operations amidst mounting external threats and internal uncertainties (12:45).
4. Facebook's Aggressive Campaign Against TikTok
In response to TikTok's growing influence, Facebook (now Meta) initiates a strategic campaign to undermine TikTok's popularity. Partnered with lobbying firm Targeted Victory, Facebook aims to portray TikTok as a threat to teenagers' well-being, leveraging misinformation about dangerous trends purportedly originating from TikTok.
This coordinated effort floods local news outlets with sensational headlines, such as "From Dances to Danger: How TikTok Has Become the Most Harmful Social Media Space for Kids," aiming to erode TikTok's user base and attract regulatory scrutiny (16:10).
5. Congressional Hearings and Continued Scrutiny
TikTok executives, including Vice President Michael Beckerman, face intense questioning in congressional hearings focused on data privacy and national security. Senator Ted Cruz zeroes in on ByteDance's access to American user data, challenging TikTok's assurances of data protection.
Despite attempts to reassure lawmakers, TikTok's defenses are beleaguered when internal communications reveal that American data might indeed be accessible to employees in China, casting doubt on TikTok's claims of strict data segregation (19:58).
6. Project Texas and Negotiations Under the Biden Administration
With the election of President Joe Biden in November 2020, the approach toward TikTok shifts. ByteDance halts plans to sell TikTok and instead focuses on "Project Texas," a comprehensive data security initiative partnering with Oracle to store American user data exclusively within the U.S.
This proactive strategy aims to address national security concerns by ensuring that sensitive data remains inaccessible to the Chinese government. However, the transition faces hurdles as negotiations with the Committee on Foreign Investment proceed slowly, with no guarantee of approval (22:40).
7. Media Bombshell and Ongoing Threats
The fragile détente appears tenuous when BuzzFeed reporter Emily Baker White uncovers alarming evidence from internal TikTok meetings. Recordings reveal that TikTok employees in China could access American user data, contradicting previous statements made under oath by executives like Beckerman.
This revelation threatens to dismantle TikTok's hard-fought agreements and reignite fears about data privacy and foreign influence, leaving TikTok's future in the U.S. increasingly uncertain.
Conclusion
"TikTok vs the U.S.A." encapsulates a high-stakes conflict where geopolitics, business strategy, and social media influence intersect. TikTok's battle to remain a dominant force in the American market underscores the complexities of operating in a landscape fraught with regulatory challenges and fierce competition. As the episode concludes, TikTok's fate hangs in the balance, exemplifying the intricate dance between innovation and national security in the digital age.
Notable Quotes
Doug Leone (02:15): “In China, I get accused of being an American stooge, and in America, they see me as an agent of the Chinese government.”
Satya Nadella (04:50): "The amount of data Microsoft would glean from TikTok is too big to ignore."
Kevin Mayer (10:05): "It feels like I'm aboard a sinking ship."
Lobbying Firm Partner (14:20): "The real threat… is dangerous to kids."
Senator Ted Cruz (18:36): "ByteDance is part of TikTok's corporate structure, correct?"
Zhang Yiming (18:55): "If a government is allowed to target one company, they can target another."
Emily Baker White (25:15): Realization of a "bombshell" as she discovers recordings indicating data accessibility.
Further Reading
For more in-depth analysis, refer to articles such as "How TikTok's Talks with Microsoft Turned into a Soap Opera" by Mike Isaac and Andrew Ross Sorkin and "TikTok Became a Diplomatic Crisis" by Alex W. Palmer. Additionally, "TikTok Spent Years Developing a Data Security Plan Washington Ignored" by Juro Osawa, Jin Yang, and Erin Wu provides comprehensive insights into TikTok's strategic initiatives.
This summary is based on the transcript provided and aims to encapsulate the key elements of the episode while adhering to the guidelines of clarity, engagement, and informativeness.