TikTok CEO Shou Zi Chew is testifying before Congress at a time when calls for a forced sale of the company’s American branch or a ban on the use of the app are growing.
The hearing was meant to give TikTok an opportunity to allay authorities’ concerns about the company’s data privacy policies and its ties to China through its parent company, Bytedance.
However, after hours of interrogation, the testimony may have backfired.
We would describe today’s testimony by TikTok CEO Shou Zi Chew on the Beltway as a disastrous moment that will likely lead congressmen and the White House to demand a ban on TikTok in the US if the company doesn’t want to split up. Perhaps that finally drives app sales from Chinese parent Bytedance – said Dan Ives, an analyst at Wedbush.
Politicians were visibly frustrated by Chew’s response
The Biden administration is pushing to sell off the US branch of TikTok and has threatened to ban the app if it doesn’t. Thursday’s hearing is likely to give lawmakers more arguments for a sale or ban.
“I didn’t think he would make any new friends today and change his mind said Matthew Schettenhelm, senior government and judicial affairs analyst at Bloomberg Intelligence. “That will be a very unhappy day for TikTok. And that’s what happened,” he added.
Most of the questions related to national security issues and TikTok’s relationship with China. The congressman also asked the president about the company’s strategy around harmful content on the platform and plans to improve the safety of children using the apps.
However, politicians seem frustrated with Chew’s answers to many questions. In some cases, officials from both major parties pressured CEOs to answer tricky questions with simple “yes” or “no” answers.
“Nothing you’ve said so far has convinced me.” Frankly, your testimony has raised more questions than it answers said Lisa Blunt Rochester, a Delaware Democrat.
In fact, changing the opinion of the authorities is an almost impossible task, according to analysts. Mark Shmulik, an analyst at Bernstein, noted that previous testimony from leaders like Meta’s Mark Zuckerberg and Google’s Sundar Pichai did little to change perceptions of these companies on Capitol Hill.
“In the past, this type of testimony had little impact on changing behavior and more often reinforced existing beliefs,” he says.
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Selling or banning TikTok is still possible
Without radical changes in the debate, the status quo remains. That is, the same questions are being asked now: Is TikTok likely to be forced to sell or banned altogether?
TikTok currently has 150 million monthly active users in the US, which makes up nearly half of the population, and this means that any attempt to ban it could face stiff resistance.
However, the kinds of questions lawmakers are asking make it clear that many of them, both Democrats and Republicans, support banning.
At the same time, sales were tough and the list of available buyers was short. China is unlikely to agree to any forced sale, especially one that would involve selling TikTok’s content recommendation algorithm to US entities. This would significantly reduce the value of the company and probably would not allay US authorities’ concerns.
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Regulation is a possible way out for TikTok
There have been several bills in Congress to introduce restrictions on TikTok and other apps, such as Senator Mark Warner’s RESTRICT Bill. That would allow the federal government to regulate and ban foreign-produced technology, including TikTok. However, as Schettenhelm said, the final decision rests with President Biden.
“It’s entirely possible Congress will push this bill and pass it, but they’re not going to ban TikTok,” he said. “Ultimately, Joe Biden will have to make a decision before the 2024 presidential election,” he explained.
Dan Ives estimates that TikTok has three to six months to find a buyer in the US or risks being banned by the end of 2023. Other analysts believe that time is longer and TikTok will remain in this stalemate for another two years, if not more.
See also: Global companies under pressure. “They are partly responsible for the Chinese government’s genocidal policies”
Either way, the trial has not changed TikTok’s fortunes, except perhaps to present a list of actions that need to be taken to improve security on the platform.
“We think Chew is on the same level game and he’s trying to answer questions,” said Ives. “But ultimately that leaves a lot of questions unanswered, and TikTok is now in the hands of US authorities to decide on their next steps,” he added.
Author: Paayal Zaveri/“insider”Translated by Mateusz Albin
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