In front of a panel of skeptical and hostile U.S. representatives, TikTok CEO Shou Zi Chew tried to make the case for why the popular app is not a security threat to the country -- and why a government ban of the app would be the wrong course of action.
A U.S. ban of the app would hurt the country's economy, reduce competition and "silence the voices of over 150 million Americans," Chew said in testimony submitted to the House Energy and Commerce Committee. The hearing, titled "TikTok: How Congress Can Safeguard American Data Privacy and Protect Children from Online Harms," was held Thursday morning in Washington, D.C.
The Biden administration recently demanded that ByteDance divest its ownership stake in TikTok or potentially be banned in the U.S. over national-security concerns given TikTok's Chinese ownership. Under pending congressional legislation, which has bipartisan support, President Biden would have the authority to ban TikTok under the International Emergency Economic Powers Act.
"ByteDance is not owned or controlled by the Chinese government," Chew said Thursday at the hearing. He declined to provide revenue estimates or financial data for TikTok, saying ByteDance is a privately held company.
In his prepared remarks, Chew argued that there is an alternative to an outright ban for TikTok to address concerns over Chinese influence over the app. "Let me state this unequivocally: ByteDance is not an agent of China or any other country," Chew said in his submitted testimony. He said there is an "inaccurate belief that TikTok's corporate structure makes it beholden to the Chinese government or that it shares information about U.S. users with the Chinese government. This is emphatically untrue."
Chew told committee members, "The bottom line is this: [TikTok's] American data [is] stored on American soil, by an American company overseen by American personnel."
Most of the House committee members were not buying his claims. "Your platform should be banned," committee chair Cathy McMorris Rodgers (R-Wash.) said at the hearing's outset, alleging that the Chinese Communist Party can use TikTok to "spy" on Americans and access their private data. She also claimed TikTok "harm[s] our innocent children" and "promotes death and despair to kids." Rep. Frank Pallone (D-N.J.), the committee's ranking member, raised the specter of the Chinese government using TikTok to spread misinformation and harmful content.
"We do not trust TikTok will ever embrace American values -- values for freedom, human rights and innovation," Rodgers said. "TikTok has repeatedly chosen a path for more control, more surveillance and more manipulation."
Asked by Rodgers if Chew could guarantee that ByteDance and TikTok employees would be unable to engage in "surveillance" of American users, the CEO said he disagreed with the characterization that TikTok has allowed spying on users and said, "We will not be influenced by any government."
Rodgers was referring to the company's disclosure last year that ByteDance employees used TikTok to track American citizens. In December 2022, ByteDance said that four of its employees violated company policy by inappropriately accessing data on U.S. TikTok users, including two journalists, in an attempt to track down the source of information leaks. ByteDance said it fired all four of the employees, two based in the U.S. and two in China. The incident is now reportedly being investigated by the Justice Department and the FBI.
In his submitted testimony, Chew said TikTok made a companywide disclosure when executives learned late last year that the employees had accessed TikTok user data in "an unsuccessful and misguided attempt to trace the source of a leak of confidential TikTok information." He added, "I condemn this misconduct in the strongest possible terms."
According to Chew, TikTok is incorporated in the U.S. and subject to the country's laws. He reiterated the claim that TikTok has never shared, or received a request to share, U.S. user data with the Chinese government (and that TikTok would not honor such a request if one were ever made). About 60% of ByteDance is owned by "global institutional investors" including Blackrock, General Atlantic and Sequoia, with 20% owned by the company's Chinese founders and 20% owned by other employees. ByteDance, Chew asserted, "is not owned or controlled by any government or state entity."
Chew reiterated TikTok's position that forcing ByteDance to divest its ownership stake in the app. "A change in ownership would not impose any new restrictions on data flows or access," he said in his testimony. "All global companies face common challenges that need to be addressed through safeguards and transparency."
Prior to the hearing, a spokesperson for China's commerce ministry on Thursday said the country would "firmly oppose" any forced sale of TikTok because it would "seriously undermine the confidence of investors from various countries, including China, to invest in the United States." ByteDance's sale of its TikTok ownership would represent a technology export and be subject to China's approval, according to the commerce ministry.
Earlier this week, in an appeal to American users to reach out to elected officials to voice their support for the app, TikTok announced that it has more than 150 million monthly active users in the U.S. In addition, it said, it has almost 7,000 employees in the U.S. and hosts nearly 5 million American businesses on the platform. Chew posted a message on TikTok warning that a ban would "take TikTok away from all 150 million of you."
"TikTok has empowered millions of Americans to express their voices in their own authentic way and has provided a global stage for their creativity in a way that cannot be replicated on any other platform or in any other medium," Chew said in the written testimony.
According to Chew, while U.S. users represent 10% of TikTok's global user base, they account for 25% of the total views on the app worldwide. "Although some people may still think of TikTok as a dancing app for teenagers, the reality is that our platform and our community have become so much more for so many," the CEO said.
Chew said TikTok was committed to "transparency" and outlined four areas it's focused on: improving user safety, particularly for teenagers; protecting U.S. users' data from unauthorized foreign access; preventing the app from being "manipulated by any government"; and providing access to third-party independent monitors. TikTok recently opened its first physical Transparency and Accountability Center in Los Angeles, with another center planned for Washington, D.C., he said.
In seeking to address the Biden administration's concerns, TikTok -- under what it has dubbed Project Texas -- says it has invested $1.5 billion over the last two years forming a U.S.-based data security division and has an agreement with Oracle to store user app data in the country.
The subsidiary, TikTok U.S. Data Security Inc. (USDS), has nearly 1,500 full-time employees and "we expect that number to grow significantly over the coming year," Chew said. Currently, "100% of U.S. user traffic is being routed to Oracle and USDS-controlled infrastructure in the United States," and the subsidiary hosts TikTok's recommendation system for U.S. users that populates the For You feed in the Oracle Cloud Infrastructure, Chew said. In addition, Oracle has "already begun inspecting TikTok's source code and will have unprecedented access to the related algorithms and data models. No other social media company, or entertainment platform like TikTok, provides this level of access and transparency."
According to Chew, this month TikTok began the process of deleting historical protected U.S. user data stored in non-Oracle servers, which the company expects to be completed later this year. "When that process is complete, all protected U.S. data will be under the protection of U.S. law and under the control of the U.S.-led security team. Under this structure, there is no way for the Chinese government to access it or compel access to it," Chew said. He noted that there are "some limited exceptions" where non-U.S. employees may be granted access to protected data, for example, for legal and compliance, but "such access must be expressly authorized by USDS pursuant to a robust data access protocol." No employees of China-based Beijing Douyin Information Service have access to any databases that contain any protected U.S. user data, he added.
In the future, TikTok's USDS employees would report into an independent board of directors who would be "approved by and owe a fiduciary duty" to the U.S. government, Chew said.
Chew also addressed TikTok's steps to protect the safety of kids. He noted that TikTok provides a separate experience in the U.S. for users under 13 with additional safeguards and privacy protections and no ads. TikTok earlier this month announced that all accounts used by people under 18 will be set by default to a 60-minute daily screen time limit. "As a father of two, these issues are personal for me," Chew said. "Today's youth are growing up in a digital media world, and TikTok is eager to be part of the conversation about creating more robust protections."
Chew, a former investment banker at Goldman Sachs, was named CEO of TikTok in April 2021. A graduate of University College of London and Harvard Business School, he lives in Singapore.
© 2023 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC