Unraveling the TikTok Conundrum

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The future of TikTok in the United States is uncertain following the passing of a bill by the House of Representatives. This could potentially result in the popular video app being banned.

Lawmakers in the US are worried about the level of control Beijing has over the app TikTok. They are pushing for the Chinese owner, ByteDance, to relinquish control. Specifically, there are concerns that TikTok may share user data with the Chinese government or manipulate the content shown on the platform. However, at this point, there is not much evidence to back up these worries.

TikTok's CEO, Shou Chew, has emphasized that the app has never been active in mainland China, despite being questioned by American officials. This raises the question: Is TikTok Chinese?

At first glance, it may seem like the answer is "no." According to US court documents, TikTok was initially established in California in April 2015.

Although TikTok has never been present in mainland China, the app was accessible in Hong Kong until July 2020. However, it withdrew shortly after Beijing implemented a controversial national security law in the city.

At the time, the app was trying to distance itself from China in the face of growing pressure from the Trump administration.

An Indian mobile user browses through the Chinese owned video-sharing 'Tik Tok' app on a smartphone in Bangalore on June 30, 2020. - TikTok on June 30 denied sharing information on Indian users with the Chinese government, after New Delhi banned the wildly popular app citing national security and privacy concerns. "TikTok continues to comply with all data privacy and security requirements under Indian law and have not shared any information of our users in India with any foreign government, including the Chinese Government," said the company, which is owned by China's ByteDance. (Photo by Manjunath Kiran / AFP) (Photo by MANJUNATH KIRAN/AFP via Getty Images)

An Indian mobile user was seen using the Chinese-owned video-sharing app 'TikTok' on a smartphone in Bangalore on June 30, 2020. TikTok denied allegations of sharing Indian users' information with the Chinese government after the app was banned in India due to national security and privacy concerns. The company, owned by China's ByteDance, stated that they continue to adhere to all data privacy and security requirements in Indian law and have not shared any user information with any foreign government, including China. (Photo by Manjunath Kiran / AFP) (Photo by MANJUNATH KIRAN/AFP via Getty Images)

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In China, there is another version of TikTok called Douyin. It was launched before TikTok and quickly gained popularity in the large mainland market. The algorithm used in Douyin has played a key role in the success of TikTok worldwide.

In March 2023, US lawmakers kept asking CEO Chew if TikTok was Chinese. He didn’t give a clear answer, just mentioned that the app wasn’t in the country and had offices in Los Angeles and Singapore.

However, TikTok is actually owned by ByteDance, a big tech company, through a complicated corporate setup.

The app is owned by TikTok LLC, a company based in Culver City, California. The LLC is controlled by TikTok Ltd, which is registered in the Cayman Islands and based in Shanghai. Ultimately, both of these companies are owned by ByteDance Ltd, which is based in Beijing.

TikTok's CEO is Singaporean Shou Chew.

TikTok's CEO is Singaporean Shou Chew.

Jose Luis Magana/AP

ByteDance created TikTok as a global short video platform and officially released it in May 2017. Just six months later, they purchased rival Musical.ly and integrated it into the main app.

TikTok's website states that all its international branches operate under ByteDance Ltd.

Is ByteDance Chinese?

Definitely.

ByteDance was established in 2012 in Beijing by Zhang Yiming and Liang Rubo, who were college roommates at Tianjin’s Nankai University, as mentioned in company information and Zhang’s public speeches.

Since its inception, ByteDance has been headquartered in the Chinese capital. In 2021, Zhang made the decision to step down as CEO of ByteDance and passed the leadership role to Liang.

ByteDance, a company with over 110,000 employees worldwide, owns several popular Chinese apps including Douyin, Jinri Toutiao, and Xigua.

During a congressional hearing last year, Chew avoided directly addressing questions about whether ByteDance is a Chinese company.

ByteDance is a Chinese-founded private company that operates various businesses in China but has a global presence. According to Chew, 60% of ByteDance is owned by international investors like the Carlyle Group, General Atlantic, and Susquehanna International Group. Zhang owns 20% of the company, while the remaining 20% is owned by employees worldwide. Additionally, three out of the five board members of ByteDance are Americans.

Zhang Yiming is the co-founder of ByteDance.

Zhang Yiming is the co-founder of ByteDance.

Shannon Stapleton/Reuters/File

Does the Chinese government own or control ByteDance or TikTok?

Chew has made it clear to Congress that ByteDance is not owned or controlled by the Chinese government. However, similar to many other Chinese companies, ByteDance is required by law to have an in-house Communist Party committee consisting of employees who are party members.

Zhang Fuping, the company’s vice president and editor-in-chief, also serves as the secretary of the party committee. The committee frequently gathers to discuss the party and Chinese leader Xi Jinping. In 2018, Zhang Yiming and his management team participated in one of these sessions, as reported by the Beijing government.

Similarly to its rivals, ByteDance had to grant the Chinese government a "golden share" in one of its main subsidiaries.

The Cyberspace Administration of China is the country's main internet watchdog.

The Cyberspace Administration of China is the country's main internet watchdog.

The Chinese government now owns 1% of Beijing Douyin Information Service, the domestic Chinese unit of Bytedance. Wu Shugang, an official from the Cyberspace Administration of China, the country’s internet watchdog and censor, sits on its board.

Analysts have pointed out that these “golden shares” allow the Chinese government to have a more direct role in the operations of tech companies, including the content they offer to the public.

Chew has acknowledged the presence of the "golden share," explaining that it is specifically for internet licensing in China. ByteDance clarified on its website that this is a standard practice for companies running news and information platforms in China, and it does not impact their operations in other countries.

Can the Chinese Communist Party manipulate ByteDance or TikTok?

As a China-based company, ByteDance is subject to a myriad of national intelligence, data security and cybersecurity laws.

In 2018, China updated its National Intelligence Law, stating that all organizations and citizens must assist and cooperate with national intelligence efforts.

This means that ByteDance is obligated by law to support intelligence gathering activities.

In 2021, China implemented a new data security law that covers data processing activities conducted outside the country that could potentially threaten national security or public interests.

Additionally, China has a cybersecurity law in place, stating that the government will take action to monitor, prevent, and address cybersecurity risks and threats that originate both within and outside the country.

These vague and broad laws apply to technology companies and may be used to regulate them.

Can Beijing prevent the sale of TikTok?

Yes, Beijing has the legal ability to do so and has already indicated it would. In August 2020, following an attempt by the Trump administration to force the sale of TikTok, Beijing revised its export control rules to cover a variety of technologies it deemed sensitive, including technology that appears similar to TikTok’s personalized information recommendation services.

In early 2023, a Commerce Ministry spokeswoman stated that China would not support any forced sale of TikTok. She mentioned that selling or divesting the app would require approval from the Chinese government as it involves "exporting technology".

Beijing has not indicated any change to this position since that time.

Editor's P/S:

The future of TikTok in the United States remains uncertain amid concerns about the app's ties to China. While the app has never been available in mainland China, it is owned by ByteDance, a Chinese-founded company. ByteDance is subject to Chinese laws, including those that require companies to cooperate with national intelligence efforts. This has raised concerns that TikTok may share user data with the Chinese government or manipulate the content shown on the platform.

Despite these concerns, TikTok has repeatedly denied any wrongdoing. The company has emphasized that it has never shared user data with the Chinese government and that it operates independently of the Chinese government. However, the US government has continued to investigate TikTok's ties to China, and the House of Representatives has passed a bill that could potentially ban the app in the United States. The future of TikTok in the United States is uncertain, and it remains to be seen whether the app will be able to continue operating in the country. the potential implications for TikTok's users, the tech industry, and international relations.