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Breakout

28 May 2020 By Jennifer Saba

TikTok parent ByteDance’s attempts to show it’s politically distancing itself from China don’t go far enough. The owner of the wildly popular video app wants to prove to U.S. lawmakers that the People’s Republic cannot exert undue influence over the company. But only a clean break will do the job.

ByteDance’s latest move involves shifting its power base by moving decision-making and research capabilities outside its home country, according to a Reuters exclusive on Thursday. That follows its appointment last week of Kevin Mayer as group chief operating officer as well as boss of TikTok. The former Walt Disney executive, who most recently ran streaming service Disney+, will be based in the United States, where all data collected from America-based users is stored. These form parts of a larger initiative to put a protective seal around TikTok and other non-China based subsidiaries like India’s social network app Helo.

All this is unlikely to offer enough protection against Washington’s scrutiny, though. The Committee on Foreign Investment in the United States is investigating ByteDance’s purchase of Musical.ly, which morphed into TikTok. The Federal Trade Commission slapped a $5.7 million fine on the app for violating child-privacy rules. A group of Democratic representatives urged the FTC on Thursday to consider probing TikTok for breaking the agreement. Senators Josh Hawley and Rick Scott introduced a bill to ban TikTok from government devices. And that’s all while in the background tensions between D.C. and Beijing are intensifying.

Besides, homegrown social media networks Facebook, YouTube and Twitter are increasingly under the microscope for their power. TikTok’s influence is also growing. So far this year more than one in five social-network users have turned to TikTok at least once a month, according to eMarketer.

ByteDance’s most realistic political option is to sell its rising star. Disney could be a potential buyer, though perhaps not until after the pandemic clears. After all, Chair Bob Iger once mulled buying Twitter. Amazon.com could use a social-media push, too. Alphabet and Facebook would love to grab TikTok, though regulators are primed to nix such transactions. A sale may not be ByteDance’s preference, but Washington is closing in.

 

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