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David Brown
Wondery plus subscribers can binge all episodes of Business Wars. TikTok versus the USA early and ad free right now. Join Wondery plus in the Wondery app or on Apple Podcasts. It's August 2022 in Washington, D.C. brendan Carr marches down the hallway in a huff. Lobbyists from TikTok are meeting with his staff, and while he knows he should let them handle the meeting, he can't help himself. Carr is a Federal Communications Commission appointee, and he's been railing against the dangers posed by the app for months. He wants to meet with TikTok CEO Shozhi Chu, but the company has refused to make Chu available. He'll have to settle for these lobbyists for now. As the door swings open, everyone in the room turns to look at him. Brendan, hi. Sorry I'm late. Car wastes no time getting down to business. First question. Your boss, Michael Beckerman, was on CNN recently, and he said that it was simply false that Tick Tock collects biometric data, including face prints. Well, I didn't see that specific appearance, but I believe you. But it says in your terms of service that Tick Tock can collect face prints. So why would he say that if it's false? I can't speak to exactly why Michael says one thing or another. So you admit that TikTok does collect biometric data? I mean, I think it depends on what you mean by collect and how you define biometric data. But it's not how I define it. It's how you define it in your terms of service. Well, now, it's my understanding that we need face prints if our users want to apply filters to their videos, if they want to make themselves look like a puppy or whatever. But those face prints are stored on the individual's device and deleted. So then you do collect it. Look, as Michael testified in front of the Senate last year, outside researchers have looked into TikTok's data collection policies and said that TikTok collects less data than other companies. Okay, we'll set that aside for the moment. TikTok continues to insist that American user data cannot be accessed by employees in China. TikTok takes data access control very seriously. Okay, but a member of your trust and safety team was reported on tape saying that everything is seen in China. So how do you explain that? TikTok has been working diligently on a data security plan that they recently submitted to the US Government that ensures American user data is secure. But you've been saying that American user data is secure, and now we have tapes that say that they aren't. Like I said, we have submitted a comprehensive data security plan that should address all concerns from the United States government. We'll see about that. Car pushes his chair out and leaves the room. His staff follows him. It feels like TikTok representatives never give a straight answer, and he doesn't like it. Technically, the FCC does not have jurisdiction over TikTok, but he's going to do everything he can to push the Biden administration to ban TikTok, regardless of whatever whatever security plan it's come up with. TikTok may be working overtime to make friends in Washington, but Car still sees tick tock as enemy number one 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. No insurance needed, no scheduling hassles, just straightforward, affordable health care when you want it. Start a virtual visit anytime 24 7. Their providers will create a personalized treatment plan and if medication is right for you, get fast free delivery through Amazon Pharmacy prime. Members can even save up to 92% on ED medications compared to competitors. Quality care shouldn't be complicated or expensive. That's why they offer transparent pricing with a simple flat fee per visit. This is the kind of new thinking many folks have been hoping for. And with health care costs spiraling well, bottom line here you can get care and meds for less with Amazon. Head to Amazon.com bwom to learn more. A provider determines eligibility. Prices may vary. We spend a lot of our lives at work. It's time to find ways to enjoy it. Canva makes work more visual, more productive, and, dare we say it, more fun. With Canva, you can design captivating presentations, docs, whiteboards and videos. Wow your audience and achieve your goals. Whatever department you work in, Canva makes you and your work look great. No design experience needed. You'll love what you can easily design with Canva, and so will everyone else. Love your work. @canva.com from wondering, I'm David Brown, and this is business scores. In 2017, Chinese company ByteDance entered the US market with an app called TikTok. By 2020, it was one of the hottest apps on the market, but lawmakers became concerned that it gave the Chinese government access to American user Data. In summer 2020, President Donald Trump issued an executive order giving ByteDance 45 days to sell TikTok to an American company or the app would be banned. ByteDance earned a reprieve when a court blocked the order and Joe Biden was elected president. A Few months later, Biden rescinded Trump's executive order, and TikTok started developing a robust data security plan in hopes of assuring the Biden administration that American user data was safe. But leaked recordings in the summer of 2022 cast doubts on TikTok's honesty with the US government, and once again, politicians started aggressively calling for TikTok to be banned. Backed into a corner, TikTok only has a few cards left to play. This is episode three Too Big to Fail. Do you swear that the testimony that you will give before this it's September 14, 2022, in Washington, DC. TikTok's chief operating officer, Vanessa Pappas, holds her hand up in a Senate committee room and swears to tell the truth, the whole truth, and nothing but the truth. After she's finished, she straightens her black suit jacket and runs a hand through her blonde bob before clasping her hands in front of her. She's ready for battle. Three months ago, BuzzFeed published an article based on leaked audio recordings from 80 internal TikTok meetings. The recordings provided evidence that American user data was accessible to employees based in China, something TikTok executives had repeatedly denied. The report caused significant blowback, and now Pappas is in the hot seat. She's here for a Senate hearing on social media and national security, appearing alongside executives from Meta, YouTube and Twitter. But Pappas knows that most of the press attention will be on her, and soon. It's clear that Pappas is facing a hostile crowd. Can you make the commitment, though, that I just asked you to make, that he will commit to cutting off all data and metadata flows to China, Chinese based TikTok employees, ByteDance employees, or any other party located in China. What I can commit to is that our final agreement with the US Government will satisfy all national security concerns. Yes, but you won't make a commitment to agree to what I have now twice asked you about. In response to a letter from some of my colleagues, TikTok claimed earlier this year that the company has never shared data, never with the Chinese government. Is that correct? That is correct, yes. And has never shared data with the Chinese Communist Party. Is that correct? We will never share data. Period. My question was in the past tense. Pappas keeps her cool and sticks to her talking points. She emphasizes that they are working with the Committee on Foreign Investment in the United States to ensure the safety of American user data. Again, we take this incredibly seriously in terms of upholding trust with US Citizens and ensuring the safety of US User data as it relates to access and controls. We are going to be going above and beyond in leading initiative efforts with our partner Oracle, and also to the satisfaction of the US Government through our work with cfius. But as the hearing wraps up, it's clear from senators comments that Papa's testimony has failed to assuage the fears of US lawmakers. TikTok submitted Project Texas, their data storage and security proposal to the committee in August. TikTok execs expected to hear regular updates from the committee and for there to be an ongoing conversation. But instead the committee has gone radio silent, ceasing to engage with TikTok. TikTok realizes that to push the negotiations along, it needs leverage. In fall 2022, TikTok implements a new strategy to ensure it can stay in the US Aggressive growth While other tech companies, including Meta and Twitter, start laying people off in response to a post pandemic economic slump, TikTok commits to doubling the number of engineers it employs the Bay Area. TikTok also posts job listings for people to help build its warehouse infrastructure. In certain markets, TikTok offers what it calls TikTok Shop, which allows creators to sell products through their accounts. The move shows that not only is TikTok preparing to bring e commerce to the United States, it's looking to become a major shopping platform. As TikTok brings jobs to the United States, it continues to serve as an integral social media platform to American users. In the run up to the 2022 midterm elections, a significant number of candidates join the app. Media organizations also create accounts. As the end of 2022 nears, there's a sense that TikTok has become too big to fail. Too many Americans are attached to the app, and a significant number of creators are making a living on it. Creators and users complain that the US Government will have to come to terms with the social media app if they don't want to upset their constituents. But in December, the app suffers another blow. In Washington, D.C. fCC Commissioner Brendan Carr receives a phone call. Brendan Carr speaking. Mr. Carr, this is Emily Baker White from Forbes. Ms. Baker White, I thought you were with Buzzfeed. Good memory. I was. I recently switched jobs and I'm actually calling you regarding a story I'm working on. Okay. I've recently seen evidence that Chinese based ByteDance employees use TikTok to track the physical location of a few journalists, including myself, who have written negative stories about the app. Carr leans forward in his chair. I knew it. You did. Not literally, but I've been saying for months that tick tock is dangerous and our current administration has been slow walking the response while TikTok gets more and more enmeshed in American life. He takes a deep breath. Sorry, I'm ranting. Have you spoken to anyone at ByteDance? What's their response? Yeah, TikTok's general counsel Eric Anderson says it was misconduct by misguided individuals and not representative of the company's policies. Yeah, right. They fired one employee over the breach and that employee supervisor has resigned. I was calling to see if you had a statement about this incident. Yeah, I do. This should be the final nail in the coffin for the idea that U.S. officials can trust TikTok. Baker White thanks him and hangs up. Carr hopes that Congress and the Biden administration will finally take action. And on December 29, 2022, one week after Baker White publishes her story, Carr gets his wish. Missouri Senator Josh Hawley spearheaded an effort to ban the app from all US Government devices. And on Thursday, President Joe Biden signed legislation making the ban law. It's not the total ban that Carr wants, but it's a start. And some state legislatures are banning the app on their government devices as well. Inside, TikTok CEO Shou Zi Chu realizes that pinning all of TikTok's hopes on negotiations with the Committee on Foreign Investment in the United States is not working. The aggressive growth strategy doesn't seem to be changing lawmakers minds either. TikTok needs to change tactics and they need to do so fast. What makes a leader? It's a tough question, but one thing's for sure, a true leader leads by example. And a true leader takes risks too. They plunge into life with determination. For those who lead by example and approach life with a palpable passion, there's the Range Rover Sport. 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It's no secret that things haven't been going well for TikTok the past several months. The President just signed a law banning the app on federal devices, and some senators are calling for further bans. The lobbyist doesn't think it's their fault. Their leader, General Counsel Eric Anderson, has been worried that too much direct lobbying might hurt their negotiations with a committee on foreign investment in the United States. He's discouraged the lobbyist and his co workers from proactively lobbying members of Congress. The lobbyist has found the stance baffling since building relationships with representatives and promoting TikTok's interest is ostensibly why he was hired. He crosses his arms, preparing for bad news as Chu begins his address. Going forward, Eric Anderson will no longer be heading up the public policy team. The lobbyist's eyes go wide and he has to stop himself from letting out a relieved sigh. Anderson will still oversee the negotiations with the Committee on Foreign Investment in the United States, but I will be in charge of lobbying, and I want to run a much more aggressive operation. The lobbyist grins. This is exactly what he wants to hear. He looks around the conference room and the vibe has definitely shifted. TikTok's lobbyists have been let out of their cages, and they are ready to change minds in Washington a few weeks later, in January 2020, 3. Chu travels to DC from Singapore and embarks on a whirlwind tour. He meets with think tanks and other public interest groups that hold sway in the capital. He walks them through TikTok's data storage plant, answering questions, and their lobbyists are unleashed to meet with lawmakers on the Hill. TikTok also invites journalists to visit what they call their Transparency center in Los Angeles to see how they handle content moderation. And they expand the number of lobbyists on staff. It's the multi pronged, aggressive approach that many on TikTok's public policy team thought they should have been pursuing all along. But before they can even assess if it's work, a new wrench is thrown into the gears. In February 2023 residents of Billings, Montana see a strange object hovering in the sky. The white sphere looks like a small moon. Civilians are baffled, but soon the truth comes out. But to the US Military, it's a pretty clear case of foreign espionage. That strange object is a balloon, officials say, launched by China. The Chinese government insists it's a weather balloon, but US Intelligence examines the balloon and determines it's designed to conduct surveillance. The US Military springs into action, especially once they learn that it's on a trajectory that will take it over Malmstrom Air Force Base, which houses some of the country's intercontinental ballistic missiles. The Defense Department makes plans to shoot the balloon down in an area where it won't cause harm to civilians. It's another point of escalating tension between the United States and China, and once again TikTok finds itself caught between the two hostile nations. Utah Senator Mitt Romney tweets a post saying, a big Chinese balloon in the sky and millions of Chinese TikTok balloons on our phones. Let's shut them all down. Iowa Representative Ashley Henson posts a video on Instagram calling for a ban of TikTok with the caption, TikTok is like a Chinese spy balloon on your phone. And Montana enacts a law that bans the app completely within the state. Six weeks after the balloon is shot down, Congress calls for Chu to testify in front of the House Committee on Energy and Commerce. While a few other TikTok executives have gone before Congress, this will be the first time its CEO has appeared. It's rare for the CEO of a foreign owned company to appear before American lawmakers. The last time it happened was 13 years earlier in 2010, when the CEO of Toyota answered questions about a series of recalls on one of Toyota's cars. In the past, TikTok's other executives have faced criticism for being vague and dodging questions. But this time, TikTok and Shoe are prepared to go on the offensive. TikTok buys ads in publications that lawmakers read, including the Washington Post, the New York Times, and Politico, that tout the money and effort TikTok has put into securing US user data. And they also bring their secret weapon to Washington. The users themselves. It's March 2023 in Washington, DC. A TikTok executive moves through a throng of people on the steps of the Capitol building. They're mostly young and all dressed to impress. Some are pacing, practicing speeches, while others are practicing dances. Almost all of them have their phones in their hands. A few feet away, workers set up a podium while press starts to gather. Another TikTok employee distributes signs to the gathered crowd. They read, my small business thrives on TikTok and keep TikTok, and I am one of 170 million American TikTok users. The TikTok executive takes attendance. Almost everyone's present, but there's someone missing. The executive asks one of the creators if she's seen Naomi. The creator says no. The TikTok executive takes a deep breath. TikTok has flown 30 creators to D.C. to help advocate for the app, including Naomi Hartz, a popular Tiktoker who makes content about plus size, fashion and trans rights. It's been a successful trip. The creators have met with the offices of various politicians, explaining how the app helped them find their voices, build community, and make a living. But the executive feels like a chaperone on a class trip to DC. For the past 24 hours, she's been chasing after the creators, keeping them on schedule, getting them into Ubers, guiding them through the Capitol building. And now they're just minutes away from holding a press conference alongside New York Representative Jamaal Bowman, one of the few members of Congress who openly supports TikTok. And one of her star creators is missing. And TikTok needs this press conference to go perfectly. It needs everything to go perfectly if they're going to convince Congress that TikTok is safe for American users. The executive spots hearts near the stairs, directing a friend on what angle to shoot her from. When the press conference finally kicks off, a moment of hope washes over the executive. Each speaker articulates a powerful reason why TikTok is so important to millions of Americans. TikTok has really been a game changer for me. It's allowed me to reach new audiences, millions of people, unlock new ways to generate income to support my advocacy and empower an entire group of disability advocates to find their voice and build their careers. I can tell you without question that the next generation of black business owners are going to come from the TikTok platform. If you ban TikTok, then you put at risk putting a cap on the ambitions of a whole generation of wealth creators. TikTok's community has become an important part of my life and has helped me connect with people from all walks of life, learning from them and growing together both online and also offline, where I've been able to build support networks and genuine friendships. The Executive has heard all of these creators stories before, but she still finds herself moved and she hopes their message gets through to Congress. But so much of that will come down to how Shou Zi Chu does in his testimony the next day. She's done her job. Now Chu needs to do his part and convince Congress that TikTok poses no national security threat. The Executive hopes he's up to it. You sign up for something, forget about it. 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As they reach the table where Chu is to sit, Anderson reminds him that his number one job is to assure the lawmakers that TikTok is independent from the Chinese government and doesn't do the bidding of the Chinese Communist Party. Chu nods. He's ready. He takes his seat at a table facing the lawmakers. Anderson settles into the bench behind him. The hearing kicks off as Chu and Anderson expected. The representatives are combative and their questions aggressive. But I want to be absolutely sure of this answer. Are employees of ByteDance subject to Chinese law, including the 2017 National Intelligence Law, which requires any organization or citizen to support, assist and cooperate? Was state intelligent work in accordance with the law? So today in the Wall Street Journal, China's Commerce minister said that China opposes the sale of TikTok because it would involve exporting China's technology and would. And this is the important part. And would need to be approved. Approved by the Chinese government. Would need to be approved by the Chinese government. So all of what you've been saying about the distance between TikTok and China has been said to be not true in the paper today, and I would like to see what you have to say in response. Xu is prepared and he fires back, bringing up the hypocrisy behind some of the representative's questions. Now, that's a collaborative global effort, including built by engineers in China, just like many other companies. By the way, the phone you use, the car you drive is a global collaborative effort. Later on, he fires back about data collection. Congressman, thank you. I'm glad you asked this question because like you pointed out, we actually do not believe we collect more data than any other social media company out there. A lot of these reports, and we can talk about which specific one you're talking about, a lot of them are not that accurate. And then Qiu takes a direct hit at Facebook. I don't think ownership is the issue here. With a lot of respect, American social companies don't have a good track record with data privacy and user security. I mean, look at Facebook and Cambridge Analytica. Anderson suppresses a grin. He feels like Chu landed a blow with that answer. Following the 2016 election, it was revealed that a British political consulting firm called Cambridge Analytica had collected user data from over an estimated 87 million Facebook users. Without their consent, Facebook faced $5 billion in fines for its role in that privacy breakdown. The hearing stretches on for over five hours, but Chu stays calm and level headed throughout. And as the hearing wraps up, Anderson is ecstatic. This went exactly as planned. A few days after the hearing, Anderson tells an acquaintance that Chu knocked his testimony out of the park. And Anderson is optimistic about TikTok's future. Chu clearly articulated how their data security plan would put a strong firewall between American user data and the Chinese government. And there are signs that TikTok's optimism is warranted. Some lawmakers began wondering if they've been too focused focused on TikTok specifically and not social media companies more generally. TikTok's not going to let up its campaign. Now the company hires even more lobbyists and heavy hitters on both sides of the aisle. Past consultants to Bernie Sanders and Barack Obama join TikTok's roster, as do former Senators Trent Lott and John Breaux. They advise politicians on how essential TikTok is to winning campaign campaigns and compare banning it to legislation prohibiting alcohol. In the 1920s. When bills are introduced that could lead to TikTok being banned, the lobbyists are able to stall them. More than 30 different tools, resources, and features that parents can set time limits for their teens. At the end of January 2024, Chu testifies in front of the Senate. But this time he testifies alongside Mark Zuckerberg, who faces the brunt of the lawmaker's wrath. And it's the senators who get heat in the press for their inappropriate questions. In particular, Arkansas Senator Tom Cotton. Have you ever been a member of the Chinese Communist Party? Senator, I'm Singaporean. No. Have you ever been associated or affiliated with the Chinese Communist Party? No, Senator. Again, I'm Singaporean. Observers in Asian American advocacy groups call Cotton out for what they call a racist line of questioning. And just a couple of weeks after Chu's Senate testimony on Super Bowl Sunday, TikTok gets a powerful and surprising new user. Game or commercials? Game. Game or halftime show? Game. Trump or Biden? Are you kidding Biden? The Biden administration argues that the campaign's decision to join the app doesn't mean its view on TikTok has changed. They remind the public that the app is still banned on federal devices, and they still have concerns about data security. This is just a necessary move to reach younger voters in an increasingly fragmented media environment. But it seems like proof that TikTok's drive to become too enmeshed In American society to ban has worked. But behind the scenes, a few lawmakers haven't given up their quest to ban TikTok. In early March 2024, the leaders of the House China Committee, Republican Mike Gallagher and Democrat Raja Krishnamurthy, author a bill that would ban TikTok in the United States if ByteDance doesn't sell it. They keep the bill under wraps so TikTok lobbyists wouldn't have time to rally members to vote against it. Their tactics work, and the bill is quickly moved out of committee on March 7, and a full House vote is scheduled for less than a week later. Caught flat footed, TikTok has little room to fight the bill. But Tick Tock has one more trick up its sleeve. That same day, a congressman strides into his office. The phones are ringing off the hook, and his support staff looks overwhelmed trying to answer them. One of his aides rushes over to him. Congressman, I'm so glad you're here. We have a situation. What's going on? It's TikTok. From what we can tell, they pushed a notification to their US Based users urging them to call their representatives to demand they vote no on the bill to ban it. Are all these calls from TikTok users? Yeah, more or less. And it's not just us. I've talked with offices of several other reps. They're all being flooded with calls. Doesn't exactly help their case though, right? I mean, one of the fears is that the Chinese government could influence American behavior. It sure does show just how powerful this app is. You don't know the half of it. We've had more than one message from callers saying that they'll die by suicide if we ban the app. The representative blanches. This is out of control. Well, do you know how you'll vote yet? I know you're on the fence and constituents are calling back to see if you've made a decision. If we could just tell them something one way or the other, that that might stop some of the calls. I mean, I. I was leaning against the bill. Seems a little shaky on first amendment grounds and a little too targeted to one company. But this display, all these calls, it's making me think twice. Well, for what it's worth, that's the vibe I'm getting from other staffers about their reps. Really? Yeah, they don't like this show of force. They say their bosses feel like it shows arrogance from TikTok that they're too big to be regulated. Huh. I agree with that. Even that stuff. Stunt with their press conference a couple of months ago before their CEO testified. It's like they keep trying to prove how popular they are. I get it. That's not the issue. The issue is how safe are American users, particularly American teens. I'm not disagreeing with you sir, but it's my job to point out that this could have ramifications with younger voters. Just saying. The Rep nods. I think we're just gonna have to risk it. Well, you can tell the callers I'm voting for the bill and I'm not going to be bullied by a Chinese owned app. The aide nods and rushes to tell the staff answering the phones what the update is. A few days later, the bill to ban TikTok unless ByteDance sells it to a US based company passes the House by a wide margin. Roughly a month later, Bill passes the Senate and is sent to Biden's desk for signing. TikTok's lobbying efforts failed. They now have until January 2025 to sell or be banned in the United States. 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 three 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 dramatizations, but they're based on historical research. If you'd like to read More, we recommend TikTok spent years developing a data security plan. Washington Ignored it by Juro Osawa, Jing Yang and Aaron Wu Originally published on the Information TikTok's New Defense in Washington Going on the Offense by Cecilia Kang, Sapna Maheshwari and David McCabe Originally published in the New York Times and TikTok stars go on a DC field trip by Madison Malone Kircher Originally published in the New York Times I'm your host, David Brown. Austin Rackless wrote this story. Our producers are Tristan Donovan and Grant Rutter. Sound design by Josh Morales. Fact checking by Gabrielle Drollet. Voice acting by Chloe Elmore and Theodore Chin. Our managing producer is Desi Blalike. Our senior managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Shelley. 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&T5G 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.