Cold War 2.0 triggers US-China Big Tech risks

Big Tech security risks have triggered a Cold War 2.0 confrontation between China and the United States.

As diplomatic relations deteriorate, technology has been thrust into the frontline. Protecting vast reservoirs of data has become a priority.

These pools of information could not only threaten national security but also change hearts and minds.

Hardly surprising then that the clock is ticking on Chinese-owned TikTok, the GenZ short video-sharing app that has taken the world by storm.

“The reason why this has been so challenging for companies to respond to in the United States, but also around the world, is the scale of TikTok’s investment,” Snap CEO Evan Spiegel said at the Code Conference in glitzy Beverly Hills last week.

“No startup could afford to invest billions and billions and billions of dollars in user acquisition like that around the world. It wasn’t an innovation-led strategy – it was really about subsidizing large-scale user acquisition,” he added.

What makes TikTok tick:

• Its parent company is Chinese tech juggernaut ByteDance, which is compelled by law to follow ruling Communist Party protocols.
• TikTok operates in 150 countries, including the US and nations across Europe. 
• It also has more than one billion active users and the numbers are climbing.
• Major investors include the state-owned Bank of China and Beijing-based Primavera Capital Group.
• In 2020, investors valued TikTok at about US$50 billion.
• That was more than established social media big guns such as Snapchat, owned by Snap.

TikTok should be banned in every democracy. I think it’s silly not to do that.

Mathias Dopfner, CEO of Axel Springer

Delve deeper: “Today, TikTok has some of the best algorithms in the business, and a suite of data-collection mechanisms,” David Tuffley, a cybersecurity academic at Griffith University in the Australian city of Brisbane, said.

Online addiction: “This is how it manages to be so addictive, with some 1.2 billion users as of December 2021. This number is expected to rise to 1.8 billion by the end of the year,” he wrote in a commentary for The Conversation, an academic website.

Digital dilemma: The rise of TikTok in the US and its links with ByteDance have spooked members of the US Federal Communications Commission. Earlier this year, the FCC wrote a “strongly worded letter” to the chief executives of Apple and Google.

Between the lines: The FCC “urged them to remove TikTok from their app stores” because of concerns about data from American users being “accessed from” Beijing. 

Key points: “TikTok is owned by Beijing-based ByteDance – an organization that is beholden to the Communist Party of China and required by Chinese law to comply with the PCR’s [People’s Republic of China] surveillance demands,” FCC commissioner Brendan Carr said in the letter.

For the record: In July, TikTok admitted that China-based employees of ByteDance had access to US user data under certain criteria. It was confirmed in a letter obtained by The New York Times after requests from US Republican senators.

Big Picture: Inside the industry, there are also growing concerns. Mathias Dopfner, the CEO of Axel Springer, which owns news outlets such as Insider, Politico and Protocol, was a vocal critic at the Code Conference.

Call time: “TikTok should be banned in every democracy. I think it’s silly not to do that. We cannot enter China … with Facebook, with Google, with Amazon, with other platforms — [so] why would we allow them to play such a dominant role in our free market economy,” he said as reported by Forbes.

China Factor comment: TikTok has always been a fun app for teens. But now, it has been caught up in a major row between the grown-ups in Beijing and Washington.