TikTok’s CEO Isn’t The Boss

In a hearing, TikTok CEO Shou Chew came off like an underling. Now we’ll see if anything comes of it.

TikTok CEO Shou Chew had one mission as he appeared before Congress on Thursday: Convince U.S. lawmakers that TikTok had some separation from its China-based parent company, Bytedance. 

He was there because worries over China’s ability to access TikTok user data, or influence its content filtering, had U.S. lawmakers, regulators, and the White House considering a ban or forced sale. Sound testimony from Chew could’ve cooled the situation. Instead, he inflamed it.

From the hearing’s first minutes, Chew made clear his power at the helm of TikTok is limited. He could not say definitively that TikTok wouldn’t promote messages supporting Chinese hostilities toward Taiwan. He could not commit that TikTok wouldn’t sell its data. He couldn’t even clearly answer questions about who helped him prepare for the hearing.

To those watching, Chew came off as someone struggling to discuss issues above his pay grade. Even as TikTok’s CEO, he didn’t seem like the boss.

“He doesn’t run it,” Geoffrey Cain, a senior fellow at the Lincoln Network who briefed the committee last week, told me via DM. “I don’t think he’s fit for these hearings. There’s a reason they didn’t roll him out until now.”

With TikTok’s lack of independence now even clearer in lawmakers’ heads, support to ban it in the U.S. will likely grow — as will speculation about what the move will mean for Facebook, YouTube, and others — but there’s a long road ahead until anything moves forward. 

The hearings took place as the U.S. Committee on Foreign Investment (CFIUS) reviews TikTok’s ability to operate in the country following its 2017 acquisition of Musical.ly. That review has been underway for years though. And while Chew’s performance might help the U.S. win more assurances from TikTok around data security, those assurances may not mean much anymore. 

The U.S. Congress is already working on backup plans in case it doesn’t get what it wants from CFIUS. A bill called The Restrict Act that’s making its way through Congress would empower the Commerce Department to ban technology from China, including TikTok. But given that 150 million Americans use TikTok, an outright ban would be politically tricky (though perhaps not impossible). 

Getting Bytedance to divest TikTok is one remaining option. “The solution is the forced sale,” said Cain. But that option’s also challenging. Public investors own 60% of TikTok, employees own 20%, and its founders own the remaining 20%, according to the company. A forced sale would be difficult for a company with that structure to complete. The Chinese government’s intent to fight such a sale would further complicate matters. So, it might take an extreme event to push anything into action.

And indeed, that this is all happening without any proof that TikTok is actually doing the things it might do is remarkable. It speaks to the flailing nature of the U.S.-China relationship, one that seems to be worsening as China’s stood by Russia amid its invasion of Ukraine. A similar pursuit of Taiwan by China would assuredly hasten any action the U.S. is contemplating against TikTok. But until then, the app will most likely continue on, gaining users and influence, marching toward an uncertain future with a figurehead at the helm. 

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What Else I’m Reading, Etc. 

Inside the final hours at Silicon Valley Bank [WSJ]

What happened when India banned TikTok [Apptopia]

Github integrated GPT-4 into Copilot [The Verge]

Wired visited TSMC [Wired]

Bill Gates on AI’s great potential [GatesNotes]

The bull case for OpenAI’s challenge to Google [Sarah Tavel]

The Fed hiked rates again and may almost be done [CNBC]

Short seller Hindenberg Research targets Block [Dealbook]

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Number Of The Week

150 Million 

TikTok’s monthly active users, up from 100 million in 2020.

Quote Of The Week 

“I know that my experiences online drift into family life. I know that my anxiety can radiate outward to affect my kids. Our own addictions — to alcohol or drugs, yes, but also to information and outrage — can devastate our families.”

David French asking if stressed-out parents are contributing to the rise in child sadness.

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