TikTok CEO, Facing Congressional Grilling, Touts U.S.-Based Data Protection Unit

TikTok CEO Shou Chew, testifying on March 23 before the House Committee on Energy and Commerce, pushed back against accusations that the platform is beholden to the Chinese government or that it shares data on its U.S. users. TikTok’s parent company, ByteDance, is Chinese, and debates about TikTok’s influence have been colored by the current contentious state of U.S.-China relations. The social platform, which has approximately 150 million U.S. users and more than 1 billion creators, faces at least three bills that would impose greater regulations on TikTok or attempt to ban it altogether.

In his prepared remarks, Chew cited TikTok’s setting up of a special-purpose subsidiary in June 2022, TikTok U.S. Data Security Inc. (USDS). He said the subsidiary currently has nearly 1,500 full-time employees and that TikTok routes all U.S. user traffic to an infrastructure controlled by Oracle and USDS and located within the U.S.

It’s all part of the overall Project Texas initiative, which Chew said “addresses key issues of corporate governance, content recommendation and moderation, data security and system access. It is a comprehensive package of measures with layers of independent oversight to protect against backdoors into TikTok that could be used to manipulate the platform or access U.S. user protected data.”

While both Republican and Democratic lawmakers on the committee had tough questions for Chew, it’s not clear whether either Congress or the Biden Administration has many viable options for banning TikTok — or even disciplining it in a meaningful way. An attempted ban by the previous administration in September 2020 was successfully challenged by a group of TikTok creators, according to reporting in the New York Times, and any new ban would likely face court challenges on First Amendment grounds. However, the federal government and more than two dozen states already have banned TikTok on state-owned devices used by their employees.

Another option would be to force ByteDance to sell TikTok to a U.S. company; in fact, the U.S. government threatened an outright ban earlier this month unless ByteDance agreed, but Beijing’s opposition to such a move means such a sale is unlikely. The platform’s likely price of $50 billion doesn’t help, putting TikTok out of the reach of most organizations. The companies that could afford such a purchase, such as Google, Microsoft or Meta, would probably face antitrust scrutiny if they did so.

Despite the concerns about China’s potential influence on the app, advertisers continue to leverage TikTok, according to Insider Intelligence. The platform has been upgrading its Promote advertising platform with new features designed to help creators and small businesses.

TikTok’s popularity, particularly with younger users, is perhaps the biggest barrier to any action being taken. U.S. Commerce Secretary Gina Raimondo was quoted as telling Bloomberg News that “The politician in me thinks you’re going to literally lose every voter under 35, forever,” but added that the political fallout was not a reason to back away from a total ban if national security concerns warranted it.