TikTok CEO appeals to U.S. users in video ahead of Capitol Hill hearing
Yahoo Finance Live discusses TikTok CEO Shou Zi Chew making a plea to U.S. users ahead of his testimony to Congress as lawmakers consider a ban on the popular app.
DAVE BRIGGS: The TikTok CEO on Capitol Hill Thursday to defend his company against accusations that it poses a national security threat. Dan Howley has a preview.
DAN HOWLEY: TikTok is on the verge of being banned in the US, meaning your days of endlessly swiping on the platform may be numbered. Of course, there's also a couple of conversations to be had about First Amendment rights, data privacy, and what this means for competitors like Meta and Snap. But let's just start first with how we got here. TikTok wasn't always TikTok, at least not exactly.
Back in 2014, Alex Zhu and Luyu Yang launched Musical.ly. The app became incredibly popular among US teens and tweens, who would use it to lip sync to songs. Sound familiar? ByteDance, meanwhile, was already running TikTok. And seeing how incredibly popular Musical.ly was, decided to vacuum up the company for a billion dollars in 2017. It then merged the two in 2018, forming the TikTok we know today.
But TikTok's connection to China, coupled with the fact that it's so popular with tweens and teens, sent US lawmakers and regulators into overdrive. It's not as though the app has been without its controversies either. In 2019, it paid a $5.7 million settlement to the FTC over allegations that it violated the Federal Children's Online Privacy Protection Act. The government's main beef with TikTok is over whether it collects US user data, which then shipped to China and spread pro-Beijing propaganda or spy on Americans.
A number of states, federal agencies, and even the military have already banned the use of the app on official devices. Former president Trump attempted to ban the app via executive order, but was shot down in the courts. TikTok then said it will work with Oracle to ensure that US user data is stored on Oracle servers. For its part, the Biden administration has been negotiating with owner ByteDance for months. But the two appear to be at an impasse now by throwing down an ultimatum-- either sell the app or get out of the US. If that doesn't work, there are a number of bills circulating around Congress aimed at killing TikTok.
It's not as though the US is the only country that's trying to ban the app either. In 2019, India outright banned it from its citizens. And both the UK, and Canada have banned it on official devices, as has the EU. Where do we go from here? Well, Trump already failed at trying to ban TikTok, so it's hard to tell whether or not Biden will succeed at the same task. Either way, whichever party does ban it is sure to face backlash from younger voters.
DAVE BRIGGS: All right, Dan Howley, thank you for that preview. I mentioned it was surprising to see this note on Meta not mentioning the potential TikTok ban and what it could mean for Reels, what it could mean for Meta. But ahead of that hearing on Thursday, the TikTok CEO took to TikTok to try to rally some support. Listen to what he had to say.
SHOU ZI CHEW: Some politicians have started talking about banning TikTok. Now this could take TikTok away from all 150 million of you. I'll be testifying before Congress later this week to share all that we're doing to protect Americans using the app and deliver on our mission to inspire creativity and to bring joy. Let me know in the comments what you want your elected representatives to know about what you love about TikTok.
DAVE BRIGGS: A few of the things he mentioned in that video is that reiterating that number of 150 million American users on the platform, which, when you look at the math, is almost impossible, but I'll leave that for another day. Also said there are 5 million businesses on the platform-- very smart play there. He says most of them are small and medium businesses, and that would impact their ability to reach the consumer, which is a fair point.
But he is going to be facing, unlike any hearing we've seen, other than Facebook, I think, incoming fire from both sides. Most of these hearings are overly partisan. I see this one as a lot like that Facebook hearing a couple of years ago on the harm to kids. Both sides are coming for you. He has got an uphill climb.
SEANA SMITH: He certainly does have an uphill climb. And I think that's why the expectation here is that he will probably do little to convince lawmakers at least that they should pivot, that they should change their view, just in terms of the national security threat that TikTok does pose. And we know you're right, Dave. This momentum-- it's really been gaining momentum, I should say, this view that is over the last several months. I thought it was very smart of him to point out the fact that, yes, 5 million of those accounts are businesses.
Also just pointing to the fact how many more even larger businesses-- it's not only small and medium sized businesses-- larger businesses are allocating their marketing revenue towards influencers that use TikTok, that use some of the other social media sites to really resonate with fans to get their product out there. It could have massive implications beyond even the smaller and medium sized businesses in the long-term.
DAVE BRIGGS: Not entirely clear, though, when there are plenty of alternatives, most notably the aforementioned Reels. And Meta, they do have almost a 6 to-- maybe it's a bit different in terms of the algorithm and their ability to interact with the consumer. But it is still a very similar reach for this business.
SEANA SMITH: It's similar.
DAVE BRIGGS: This is going to be must see TV tomorrow and important for our national security and our children.
SEANA SMITH: Yeah, very, very important. Of course, we will bring you the latest on that testimony.