TikTok CEO defends 'American data stored on American soil' in House hearing
The U.S. government's moves against TikTok - the runaway-success short-form video social app owned by China's ByteDance (BDNCE) - enter a new phase with Thursday's House panel hearing about the app's dangers.
TikTok CEO Shou Chew is making his first appearance before Congress as the sole witness in the House Energy and Commerce Committee's hearing "TikTok: How Congress Can Safeguard American Data Privacy and Protect Children from Online Harms," which got under way Thursday morning.
The panel describes the gathering as "A full committee hearing on TikTokâs consumer privacy and data security practices, how the platform affects children, and its relationship with the Chinese Communist Party," though it comes in the context of efforts to restrict TikTok usage in government settings and even proposed legislation to ban the app in the United States.
Potential restriction of TikTok has shown to be a boon to the stocks of its American social-media rivals, including Facebook parent Meta Platforms (NASDAQ:META), Alphabet's Google (GOOG) (NASDAQ:GOOGL), Snap (NYSE:SNAP) and Pinterest (PINS).
Scrutiny of TikTok has amped up in recent months, with solutions ranging from potentially forcing ByteDance to sell the company to simply banning it outright in order to prevent U.S. user information from falling into the hands of Chinese leadership.
At least for today, though, Chew may be entering an unwinnable fight, as the House Energy and Commerce Committee has made a habit of bringing in technology leaders for a very public grilling, including Meta CEO Mark Zuckerberg, Google CEO Sundar Pichai and then-Twitter chief Jack Dorsey.
"We do not trust TikTok will ever embrace American values - values for freedom, human rights and innovation," Committee Chair Cathy McMorris Rodgers said to open Thursday's hearing. "TikTok has repeatedly chosen a path for more control, more surveillance and more manipulation. Your platform should be banned."
"We've had to learn the lessons of companies have come before us, especially when it comes to the safety of teenagers," Chew said in his opening remarks. "While the vast majority of people on TikTok are over 18, and one of our fastest-growing demographics are people over 35, we spend a lot of time adopting measures to protect teenagers. Many of those measures are firsts for the social media industry."
"ByteDance is not owned or controlled by the Chinese government. It's a private company," Chew said. "Sixty percent of the company is owned by global institutional investors; 20% is owned by the founder; and 20% owned by employees around the world. ByteDance has five board members. Three of them are American."
For the past two years, the company has been building "what amounts to a firewall," Chew said, highlighting TikTok's "Project Texas."
"The bottom line is this: American data, stored on American soil, by an American company overseen by American personnel," Chew said.
Social-media stocks were taking part in a broad rally Thursday morning: Meta (META) +2.9%; Google (GOOG) +2.4%, (GOOGL) +2.5%; Snap (SNAP) +8%; Pinterest (PINS) +3.5%.
Last week, Wedbush analyst Dan Ives said TikTok's "moment of truth" was at hand in a complex situation.