Plain English with Derek Thompson - Should the U.S. Ban TikTok?

Episode Date: March 19, 2024

Derek shares his thoughts on the question of the moment in tech and tech politics. If you have questions, observations, or ideas for future episodes, email us at [e-mail].  Host: Derek Thompson Producer: Devon Baroldi Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey, can I talk to you? Over 25 years ago on September 29, 1998, we watched a brainy girl with curly hair drop everything to follow a guy she only kind of knew all the way to college. And so began Felicity. My name is Juliet Litman, and I'm a Felicity Superfan. Join me, Amanda Foreman, who you may know better as Megan, the roommate, and Greg Grunberg, who you may also know as Sean Blunberg,

as the three of us revisit our favorite moments from the show and talk to the people who help shape it. Listen now to Dear Felicity on Spotify or wherever you get your podcasts. Today, the question of the moment in tech and tech politics, should the U.S. ban TikTok over fears of Chinese influence? Last week, the House voted to pass a new piece of legislation that would prohibit TikTok from being available for download in the U.S. unless its Chinese parent company, ByteDance, divested by selling TikTok to a government-approved buyer with Ins6. six months. Obviously, this legislation still needs to be passed by the Senate, signed by the president in order to become a law. But for longtime listeners of the show, you might remember

that a bold tech prediction of mine last year, 2023, was that a divided Congress would unite around TikTok fears and pass legislation just like this. Now, depending on how nice you want to be about my skills of prognostication, I was either completely wrong here, after all, it did not happen in 2023 when I thought it would, or perhaps just off. by six months. It's sort of one of the meta things that some people are confused by, including, apparently, TikTok,

is that the goal of banning the app should have went nowhere for 18 months and then just suddenly sprang into view. Now, I was not going to do a show about this topic this week. I think it's kind of snuck up on all of us. But I think I've received more direct requests for a TikTok episode

than I've received requests for like any particular thing in a long time. So today, you're going to get my thoughts, all of them, about TikTok and at length. We're going to talk about the best and worst arguments for and against the ban. I'm going to tell you where I tentatively stand on this issue, even as I'm looking forward to talking to more experts in the coming weeks, especially, of course, if this legislation gains momentum in the Senate. Let's start for the moment on the question most people seem to be focused on, which is the motivation. How strong is the case

for prohibiting Chinese ownership of TikTok? I think the most of the most of the question. I think the most provocative analogy that I've found persuasive was best articulated by the substack writer Matt Iglesias. Matt said, imagine the year is 1975, we're in the middle of the Cold War, the Soviet Union, and a state-owned Soviet firm asks to buy the TV channel CBS. What would happen? Well, what would happen is we'd say, go kick rocks. That's what would happen. A Soviet media company with plausible ties to the government of a geopolitical adversary should not have control or veto power over American news and information. Now, is that a persuasive metaphor? Is it a useful metaphor for thinking about the U.S. today, its relationship with China, TikTok, bite dance, the parent company of TikTok,

and its relationship to China? Well, I thought about this for a long time. And without taking the analogy at faith, I think we should say that for it to hold up, for the analogy to be useful, full, we should have to prove three distinct things. Number one, that TikTok is indeed, among other things, a source of news. Number two, that the Chinese state has a history of directly influencing some of its largest companies. And number three, that the Chinese state has a demonstrable interest in controlling speech around the world. And I think if we look at this situation clearly, we see that all three things are true. So first, TikTok, it is clearly an important source of news.

170 million Americans are on TikTok, and roughly half of them say they get their news from the site. Among Americans under 30, TikTok is a more popular source of news than cable news, local news, newspapers, magazines, radio, or podcasts. If you're taking the CBS metaphor very, very, very literally, it is fair to point out that CBS is a news production company, while TikTok is an algorithmic platform that distributes news, right? It's something a little bit more akin to maybe the entire platform of television in the 1970s. But I'm not sure that changes the force of the analogy. If Iran, North Korea, China inquired about buying Comcast or Verizon today, I don't think that conversation would go

very far. Now, second, does the Chinese state have a history of directly influencing its largest companies? If the answer were no to this question, it would be unbelievably paranoid for anybody to worry about the downsides of foreign ownership of social media. I mean, after all, I imagine many of you are listening to this podcast on the platform that owns the ringer, Spotify, a Swedish company. But here again, China's relationship to its companies is very different. The Chinese state clearly has played an unusually aggressive role in shaping corporate strategy and corporate decision making. The Chinese Communist Party, the CCP, does not just direct the development of key industries like clean energy, software.

It's gone much further than that. Jack Ma, the founder of the e-commerce giant Alibaba, several years ago gave a speech that criticized Chinese policy and regulations. He disappeared for four months while the government cracked down on his business and sold some of it for parts. When the government determined that Chinese teenagers were playing too many video games, games, the state froze new game approvals at the media and tech giant Tencent. The U.S. has already barred the Chinese company, Huawei, from selling products in the U.S. over fears

that Huawei works hand-in-glove with the Chinese government to spy on U.S. operations. You can say all of these examples are a little bit murky. Maybe none of them are a perfect metaphor for, or a perfect analogy for understanding the relationship between TikTok, bite dance, and the government. But together, I think, you get the strong, that the Chinese government has an unusually intimate relationship with its biggest companies, and when the shit hits the fan, they often direct corporate behavior. In fact, according to Axios, China has a set of national security laws that require individuals and companies to help the CCP in their security and intelligence work. In the event of an incipient invasion of Taiwan,

I don't think it takes a great imagination to think that the CCP might decide that they have security and intelligence needs that require by dance to essentially operate as they please. Now, third, I said, is there any evidence that the Chinese state has tried to control speech around the world? This is a really important question to answer, because if you're afraid of Chinese ownership or Chinese control over TikTok, I should say, then what you're essentially afraid of is that the Chinese government is going to use its power to turn the knobs of TikTok in the future and shape the news that American consumers see and hear. Again, I think we absolutely have some reason to be concerned.

China has a profound and repeatedly demonstrated interest in controlling global speech about its government. It has gone to extreme lengths to curtail speech that is critical of the CCP. For example, several years ago in an essay for the Atlantic, I reported around the fracas around Daryl, then he was the general manager of the Houston Rockets' Bavis. basketball team, he's now with the Philadelphia 76ers. In 2019, Mori famously sent and quickly deleted a tweet that publicized his support for Hong Kong protesters. At the time, people in Hong Kong were demanding civil rights protections from mainland China and protesting the draconian Hong Kong police. In response to this quickly posted and deleted tweet, China suspended licensing agreements with the NBA,

they blacklisted the rockets and barred them from appearing on state team. TV, the NBA, for its part, discouraged players from commenting on China at all. In one particularly egregious display of cowardliness, pro-Hong Kong signs were confiscated at NBA games in Washington, D.C. But this is not the only time that China has used its power in unusual ways to shape global speech. In 2018, the year before the Mori tweet, Marriott published an online poll that I believe believe in a drop-down menu listed Tibet as a separate country from China, rather than as a part of

China, as the CCP insists. A man named Roy Jones was a 49-year-old making 14 bucks an hour running social media accounts for Marriott. His job was like scrolling through social media and giving little digital high-fives to people who said they had, you know, a good experience at the Fort Lauderdale Marriott North. Well, a Tibetan separatist group celebrating their recognition in this little drop-down menu, I mean, talk about small wins, published a post that praised Marriott's online survey. And Jones, because this was basically his job, liked that post from an official Marriott account. What happened? Chinese officials saw the problematic like and pressured Marriott to fire Roy Jones within the week. Roy Jones did not write the survey. He probably didn't know the first thing about

the relationship between China and Tibet. He probably did not even care. He was just doing his job to cheer-on Marriott fans and social media, but because Chinese authorities got mad about a like, he lost his job. So what should we learn about these stories about Roy Jones and Daryl Morey? Well, one theme of these stories is clearly the cowardice of global corporations. But the other is that China aggressively shapes speech about its government around the world. The CCP is extremely hypersensitive to criticism and extremely aggressive about propaganda. And this is all borne out in the brief history of TikTok in America. As the tech analyst Ben Thompson, who lives in Taiwan, wrote in a 2020 post, quote, TikTok has already censored Black Lives Matter and George Floyd,

blocked a teenager discussing China's genocide in Xinjiang, blocked a video of Tankman in Tiananmen Square, the Guardian published TikTok guidelines that censored Tiananmen Square, Tibetan independence, and the Falun Gong. And I myself, demonstrate. that TikTok appeared to be censoring the Hong Kong protests and Houston Rockets basketball team. The point, though, Thompson continues, is not just censorship, but it's inverse. Propaganda. TikTok could promote a particular candidate or a particular issue in a particular geography without anyone knowing. You may be skeptical that this might happen, but how much of a leap is it to think that a party committed to ideological dominant,

will forever leave a route directly into the hearts and minds of millions of Americans untouched. End quote. Is it really so hard to imagine casting these examples forward? Do you want to learn after the next George Floyd-style cataclysm in the culture war that Gen Z has been algorithmically spoon-fed a specific agenda at the request of the Chinese government bureaucrats, who, by the way, will never identify and can never interrogate or drag to Washington, D.C.,

for testimony? Do you want to learn, months after the 2024 election, that the CCP put pressure on bite dance to tweak their black box algorithm to give greater weight to, let's just say, your political opponent? I want to be clear here. I don't think the executives at TikTok,

or even bite dance are bad people. I think they might be fantastic people. We're not talking about or debate, the moral character of TikTok's executive suite. This is about the nature of Chinese law and the history of CCP behavior. Bight Dance executives now say that they operate separately from China's government.

In a way, I believe them for now. But I also know that Jack Ma, the CEO of Alibaba, also operated separately from the Chinese government until he didn't. I believe the 10 cents video game development pipeline operated separately from the Chinese government until it didn't. The Chinese government has already blocked most social media apps, Facebook, Twitter, Instagram, Snapchat.

They have already threatened several major global companies that will cut off access to China unless those companies tow the line on speech, especially as it involves the so-called three T's of Taiwan, Tibet, and Tiananmen Square. The CCP has again and again bullied its own companies, and now that same government expects that its products will be embraced with open arms in the U.S. Is that a reasonable expectation? Is China really so powerful that it can ban and bully with impunity and without consequence? So to conclude, yeah, I do think that limiting

Chinese control over the most important source of news for young millennials and Gen Z, the most important source of news for tens of millions of Americans, I do think that is a little bit like fearing Soviet control over CBS in the 1970s. This is not about TikTok being too dangerous to exist. This is about the Chinese Communist Party being simply too hard to trust. Now, part two, let's talk about the law itself, what it says, what legal issues it automatically raises, and what happens to TikTok if it passes? Because at the end of the day, opinions, arguments, blabbering about motivations, this is interesting, it's important, but they're just words. And what ultimately matters here is the letter of the law. And here's

where I'm going to maybe sound like I'm zagging a bit, because despite the fact that I just told you I have deep sympathy for the motivations behind this law, the more I read the text. The itself, the more concerned I am about its prospects. So at bottom, and we're going to go in pretty deep detail here, this legislation that was just passed in the House makes it illegal for U.S. app stores or internet hosting providers to, quote, distribute, maintain, or update certain covered companies controlled by a foreign adversary. And the prohibition takes effect 180 days after the president signs, unless bite dance divests of TikTok by selling to a qualified buyer. Now, there were a lot of words in that paragraph that might not have immediately made sense to you,

covered company, foreign adversary, qualified buyer. So let's take a closer look at how the law defines those key terms. Covered companies, control by a foreign adversary, and qualified divestiture. Fortunately, for our purposes, the legislative text defines all of these terms. So what is a covered company in the purposes of this law? It is an internet company with more than one million monthly active users, which allows people to create accounts and profiles to generate and share content. That's basically taken from the language of the law itself.

Now, clearly, lifting out of the legalese here, this is an attempt to define large social media company by legal language, right? It would not make it illegal for, say, an internet, hosting company to distribute a Chinese newspaper. Like American users aren't generating articles for the South China Morning Post. And some people who are critical of this law say it'd be a really bad idea if you cut Americans off entirely from any information coming out of China just because it was owned by a Chinese company.

I think that's a really good point. I think it should, of course, be legal for Americans to be able to read Chinese newspapers. What the law is clearly trying to do here in the definition of covered company is define a popular social media company. They also, by the way, have exemptions for certain types of companies. So, for example, if you're trying to visit Beijing, the U.S. government isn't going to block Chinese websites where users review the best hotels and restaurants. It'd be ridiculous for Americans to not be able to research the best restaurants in Shanghai. So you have within this law exemptions for certain types of companies, including review sites. The second terms, that's covered

company. The second term I think we need to define here is control by a foreign adversary. Fortunately, this is easier to define. It means at least 20% of the company is owned by an entity in China, Russia, Iran, or North Korea. Those are the four countries specified by this legislation as being foreign adversaries. China, Russia, Iran, North Korea. Finally, we have this term qualified divestiture, right? Who determines whether a sale of TikTok passes muster? under this law, and the answer, according to the text, the law, is the president of the United States. There was one big landmine here that I think is worth pointing out. It's the power that this law gives the president. For example, let's say that the Senate passes this law and Joe Biden signs it,

and Trump enters office in 2025. Suddenly, this law hands the president, the new president, the extraordinary ability to almost single-handedly determine who qualifies to buy TikTok. Would Trump bar political enemies from contention? Would he insist that his own social media company, Truth Social, be a part of the bidding coalition so that his own firm could control a portion of the most popular news app for young people in America? Now, that little bubble thought is really an example

of me getting ahead of myself because we are only at the first step right now of what you should probably think of as a six-step process. Step one is passage in the house. We've already gone there. Step two is that this bill has to be introduced and passed in the Senate. If there are major changes to the law, it might have to go back to the House for another vote. Step three, if both houses sign the bill, Biden needs to sign it, and all indications are for the

moment that Joe Biden would sign this bill. Number four, after the bill becomes a law, TikTok has 180 days to find an approved buyer before it becomes illegal for any American entity to distribute, maintain, or update the app. Step five. This bill is going to be immediately and powerfully besieged by lawsuits, and a legal battle could extend the six-month window for BightDance to find that qualified buyer. And finally, step six, if BightDance finds a buyer that is approved by the president of the U.S., TikTok lives, at least in theory.

If BightDance fails to find a buyer, TikTok dies in the U.S., at least in theory. Now, I say at least in theory because the forced divestiture of a mega-popular Chinese media app has no direct analogy in modern business history. And anybody telling you they know exactly how this is going to turn out is lying to you. Let me repeat that again. Anybody who is confidently predicting how this TikTok bill is going to turn out is lying to you with their prediction. For example, is this law even constitutional? Well, during the Trump administration, the Commerce Department tried several times to ban TikTok, and federal judges ruled against those efforts several times. Okay, so initially you might say, oh, well, that means they're going to rule against this legislation

as well. But if you look closer, those decisions said that the executive branch exceeded the authority granted to them by a 1977 law called the IEPA, the International Emergency Powers Act. But today in 2024, this legislation is going to create an entirely new law, which would have to hold up to the Constitution and legal precedent. But if I'm a lawmaker trying to ban TikTok right now, there is one Supreme Court case that I am pretty concerned about. And that is the 1965 case Lamont versus Postmaster General. Lamont versus Postmaster General. In that case, the Supreme Court in 1965 struck down a federal law that required the Postmaster General to destroy foreign mailings of, quote, communist political propaganda. The Supreme Court said that the law conflicted with the, quote, uninhibited, robust, and wide open debate and discussion that the First Amendment contemplates.

So here, we have a law winding its way through Congress that seeks to ban foreign propaganda. but it is running potentially headlong into a Supreme Court precedent that has already determined that the delivery of foreign propaganda is constitutionally protected in some circumstances. Again, I am not predicting any outcome here. I am just telling you this law faces a very interesting obstacle course even if Biden puts a signature to it. Here's another big question that people are going to face if this bill becomes a law. Who could even buy TikTok?

The closest comp in modern business history to a forced TikTok divestiture is Grindr, the online dating app mostly for gay men. Grindr had a field on the site that allowed users to display their HIV status, and the U.S. government was worried about sharing that sort of thing with a Chinese company. So under the Trump administration, we forced a sale of Grindr from a Chinese-owned company to a group of investors, The total price tag, about $600 million. Well, TikTok could be 100 times more valuable than Grindr. It could be 200 times more valuable than Grindr. It could fetch $50 to $100 billion in the market.

And that price tag creates a very interesting conundrum. The only tech companies who understand how to run something like a social media app and can easily afford and justify a $100 billion acquisition, well, those tend to be tech giants, right? Meta, maybe even Microsoft. The U.S. government, though, has spent the last few years suing big tech companies under the theory that they're too big, that they're already gobbling up too much of the market.

It's very hard for me to imagine President Biden simultaneously using the FTC and the DOJ to break up big tech companies while also personally allowing one of those big tech companies to gobble up TikTok. So we're potentially looking at a big tech sale without a big tech buyer. Very unusual situation. Like imagine of New York City forced the Museum of Modern Art to sell off its Picasso collection, but nobody who already owned any valuable art was legally allowed to bid on the Picasso collection.

It's a really, really strange situation. And that means that the short list of potential TikTok buyers is actually quite short. Some people are talking about the venture capital firms, General Atlantic and Sequoia getting together to buy up TikTok. The Wall Street Journal reports that former Treasury Secretary Steve Mnuchin is putting together, a group to buy the app. But this leads to another side effect of the legislation, which is the future of TikTok's business.

Imagine if you're a creator debating whether to devote your time to building an audience on TikTok or Instagram. Maybe you could just make videos and post them simultaneously to both apps, But maybe you think, why am I shoveling all of my energy into building up my following on an app that might disappear in six months? And actually, even more to the point, imagine you're an advertiser, debating whether to put a chunk of your marketing spend on Instagram or TikTok right now. It's kind of hard to get your boss to sign up for a one-year marketing campaign on a platform that might die in seven months. So it's not just a depleted field of buyers that could affect TikTok selling price. the business itself is clearly threatened just by the momentum around this law to say nothing about the chaos that happens if it actually becomes law.

All right. And there's one more chaotic possibility, or actually two more other chaotic possibilities that I want to talk about. Let's say that ByteDance does sell an American TikTok to an improved buyer, but the app slowly erodes anyway. Remember, TikTok's power isn't just the base of users, but also the technology. the algorithm, which are currently owned by bite dance. After a sale, the data and the accounts might transfer the U.S., but the algorithm, and more to the point its updates, might not. It's absolutely conceivable that, let's say, the Mnuchin Group acquires a property

and TikTok that just gets kind of shittier and shittier over the months and then slowly dies. Another chaotic possibility. A few minutes ago, I just told you that China has in the last few years used its economic might to enforce speech rules on U.S. and European companies. well, what if, and this is some real out of the frying pan into the fire ship, but stay with me, what if ByteDance sells TikTok to an improved buyer that actually has business interests in China? Several years from now, we realize that the new owners of TikTok have been sandbagging the virality of certain subjects critical of China because of their own particular business interests.

I mean, like, for example, if Elon Musk bought TikTok, and I'm not predicting that he will, But if Elon Musk bought TikTok, he would absolutely have an incentive to throttle Taiwanese political speech in order to keep the Chinese market open for Tesla. Given the history of Western companies restricting China critical speech in order to stay on the right side of the CCP, it is possible that we go through this entire process of forcing China or bite dance to divest of TikTok only to put TikTok in the hands of a non-Chinese company that is still sandbagging speech critical of China. The final ingredient in this chaos stew is the election.

It's broadly understood that young people are both disproportionate users of TikTok, but also a meaningful part of the Democratic electorate who are already sour on the president. I have not seen high-quality polling yet on what exactly happens to the extremely online vote if Biden gets blamed for a TikTok ban, but to be clear, any TikTok ban

would need approval from both Democrats and Republicans. The Democrats hold the Senate and the White House, Republicans hold the House representatives. So if TikTok users are upset about this at the end of the day, it's hard for me to know exactly how that blame pie is going to be shared between Republicans and Democrats. What I can say for sure is that Donald Trump could be president in 2025. Now, you might recall, although you might not,

because I actually didn't recall before I did research for this episode, one of Trump's last acts as president was executive orders to accelerate the sale of TikTok to an American entity. Joe Biden withdrew those orders since lawyers said they were unlikely or they were likely to get struck down in court. Now, you might expect that Trump would hail this TikTok legislation since he did all of this work to get TikTok sold to an American company when he was president. Erroneous. In fact, Trump now says he is against the sale of TikTok and it does not take too much digging to figure out why. Trump, as you might have read, is desperate for money. He's running an expensive national presidential campaign and the ruling in his civil fraud case. could cost him all of his available cash.

So he's sort of speed-dating Republican megadowners. One of those Republican megadowners is a guy named Jeff Yass. Yass, who is a major benefactor to the conservative organization club for growth, also holds a financial stake in a company called BiteDance. Since a TikTok sale is bad for Jeff Yass

and Trump needs money from billionaires like Jeff Yass, that means that now Trump has decided that a TikTok sale is suddenly unattractive to him. So how this turns out in January, even if this bill becomes law, I'm telling you, we simply do not know. Anybody who claims to know exactly how this is going to turn out is lying to you. A divestiture of this size and type is utterly unprecedented. The most attractive buyers in the market might be legally barred from acquiring it. The law won't actually take effect until the end of October at the very, very, very earliest. And it's conceivable that after all this

Hubbub, Trump wins the election in November, announces his intent to reinstate TikTok, and none of this matters. My closing position, after all of this, is to repeat that I understand the logic behind a for sale of TikTok, but I am not convinced that this law is constitutional, and I am not convinced that Biden's signature on an accelerated divestiture bill easily solves the problems that people associate with TikTok. We are going to be talking about and debating the story for a long time because as messy as it is for 170 million Americans

to be getting information entertainment and news from a Chinese-owned black box algorithm, the process that this bill unveils might be just as messy. Thank you for listening. Plain English is produced by Devin Biroldi, one quick programming note. We in the month of March are going to move just temporarily to a once-a-week publishing schedule.

We'll be coming at you every Tuesday. No Friday episodes for the month of March. We've got a little bit of extra work. We got a little bit of travel. This is just the best way to smooth out the time that we have to bring you consistent weekly entertainment. So one show a week in March, and we will be back to our regular two-episode-per-week schedule in April. Thank you.