(Bloomberg) — Hit video app TikTok is investing heavily to address US concerns about its data security and anticipates being able to deliver a satisfactory solution with partner Oracle Corp.
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TikTok Chief Executive Officer Shou Zi Chew said the company is working on an effort, called Project Texas, that will isolate sensitive data from its American users so that only staff in the US will have access. He called the effort “extremely difficult and expensive to build,” but aimed at the concerns of American officials.
“It’s unprecedented. No company has attempted this,” Chew said at the Bloomberg New Economy Forum in Singapore on Wednesday. “I’m very confident that through the detailed discussions that we’re going to have, we will come up with a solution that will reasonably address the national security concerns.”
TikTok has come under fire because employees in China, where parent ByteDance Ltd. is based, have been able to tap into US user data. Just this week, FBI Director Christopher Wray said the bureau is “extremely concerned” that China’s government could influence the app to control millions of users’ data or software, and its recommendation algorithm — which determines which videos users will see next.
Chew pushed back on the idea that a social media company would check citizenship before deciding who gets access to certain data.
“No consumer internet company that I know of organizes access to data by nationality,” he said.
Instead, he argued data controls should be geographic to ensure security.
“Only an entity of US residence will have access to a certain set of US-protected data,” he said of TikTok’s strategy with Oracle, which would host the app’s data.
TikTok is the crown jewel of ByteDance’s app portfolio, an online repository of bite-sized clips that took the short-video format mainstream and siphoned users from US social media services like Meta Platforms Inc. and Google’s YouTube.
Its success made the Chinese firm the world’s most richly valued startup, and elevated co-founder Zhang Yiming to the rarefied ranks of billionaire entrepreneurs. Beijing-based ByteDance, however, is coming off a brutal two years, when first the Trump administration and then its own government sought to curtail its growing influence over user data and the broader populace. Chew, a Singaporean citizen, joined ByteDance from Chinese handset maker Xiaomi Corp. in 2021 amid a series of leadership reshuffles.
Washington’s concerns centered on the enormous amounts of data that TikTok was hoovering up from its billion-plus users, the potential for the spread of misinformation among America’s youth, and the threat of espionage. The Biden White House is now forging a security agreement with TikTok to spare the app from a total US ban floated during the Trump era, but critics worry such an approach won’t likely prevent data from leaking to China.
On Wednesday, Beijing accused Washington of intentionally curtailing Chinese enterprises abroad.
“Spreading false information and using it as an excuse to suppress relevant Chinese enterprises has become a common practice of the United States,” Chinese Foreign Ministry spokeswoman Mao Ning told reporters at a regular press briefing.
FBI’s Wray ‘Extremely Concerned’ About TikTok Data Issue (2)
Chew runs a still fast-growing video platform but it’s not immune to the fallout of a global downturn that’s hammered Western internet giants. The TikTok chief recently slashed the app’s ad forecast for 2022 to $10 billion from at least $12 billion previously, Bloomberg News reported this month, reflecting a pullback in marketing spending worldwide.
Parent ByteDance has postponed plans for an initial public offering as investors flee riskier assets. In September, it offered to buy back as much as $3 billion of its own shares at a valuation of about $300 billion, giving existing backers a way to cash out. Domestically, its TikTok-style Douyin app competes with Tencent Holdings Ltd. and Alibaba Group Holding Ltd. in arenas ranging from entertainment to e-commerce.
The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
(Updates with Beijing comments from 12th paragraph)
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