TikTok Technology Overview and Issues Updated November 17 2020 Congressional Research Service https crsreports congress gov R46543 SUMMARY TikTok Technology Overview and Issues TikTok is a globally popular video-sharing smartphone application app owned by ByteDance Ltd a privately held company headquartered in Beijing China It is under increasing scrutiny by the U S government as a potential privacy and security risk to U S citizens This is because ByteDance like all technology companies doing business in China is subject to Chinese laws that require companies operating in the country to turn over user data when asked by the government Researchers differ over how TikTok data collection compares with other social media apps and whether TikTok poses a threat to the privacy and security of its U S users R46543 November 17 2020 Patricia Moloney Figliola Specialist in Internet and Telecommunications Policy TikTok launched in the United States in August 2018 The app is available in over 155 countries in 39 languages and has approximately 800 million monthly active users In the United States the app has approximately 49 million monthly active users TikTok’s appeal lies heavily on what has been called its “addictive” video feed For You The app builds this feed through a “recommendation engine” algorithm built on artificial intelligence AI technologies and data mining practices According to the company the recommendation engine relies on a complex set of weighted factors to recommend content including hashtags and videos watched previously as well as the kind of device a person is using TikTok critics cite problems with how much data TikTok collects from and about its users and with how that data is stored— and could be shared On August 6 2020 President Trump signed an Executive Order aimed at stopping TikTok from doing business in the United States If the order had gone into effect on September 27 2020 as scheduled it would have prohibited any U S company or person from “transacting” with ByteDance On August 14 2020 the President issued a second Executive Order stating that ByteDance must divest from all assets that support TikTok’s operations in the United States and destroy all previously collected U S user data Divestiture may be accomplished by finding a U S buyer for TikTok The requirements are designed to limit the Chinese government’s access to current and future data from U S TikTok users ByteDance does not want to divest from TikTok and sued the Trump Administration On September 14 2020 Oracle announced that it had reached an agreement with ByteDance to “serve as the company’s trusted technology provider” in the United States Treasury Secretary Steven Mnuchin announced that he had received the proposal From the terminology used it appears that the deal may involve a partnership between the two companies rather than a sale This arrangement would keep the source code of the For You recommendation engine in the hands of ByteDance It is unclear if this deal satisfies the conditions in President Trump’s Executive Orders Secretary Mnuchin said that the Committee on Foreign Investment in the United States will review the proposal and present President Trump with its opinion On September 19 2020 Oracle announced that Walmart would be joining the TikTok acquisition TikTok has until November 27 2020 to persuade the U S government to approve this sale On September 27 2020 Judge Carl J Nichols of the United States District Court for the District of Columbia granted a preliminary injunction against the Trump administration order He stated that while President Trump has broad authority to prohibit business transactions with foreign entities that are deemed to pose a national security risk TikTok appears to be exempt from such a prohibition because it is a personal communication service which is protected by the International Emergency Economic Powers Act On October 30 2020 a federal judge in Pennsylvania granted a preliminary injunction against a series of bans by the U S Department of Commerce DoC that had been set to go into effect on November 12 2020 Although TikTok is suing to block its app from being banned this ruling is from a lawsuit brought by three TikTok creators who worried the ban would prevent them from earning a living The judge agreed that the videos constitute “informational materials ” which are protected by law On November 12 2020 the DoC stated that it would comply with the injunction Some believe TikTok and other Chinese-owned apps pose a serious security risk to the United States because Chinese companies are subject to China’s laws that require compliance with government requests for data Others believe that TikTok has fallen into “the crosshairs of a global technology battle” based on technology trade protectionism Similar situations may arise in the future with other apps created by foreign companies Options that Congress may consider include 1 developing an overarching legal and regulatory framework to protect the security and privacy of U S citizens’ data and communications and 2 developing a uniform transparent process to assess and mediate risks from foreign apps Congressional Research Service TikTok Technology Overview and Issues Contents Background 1 What Is TikTok 1 TikTok’s Recommendation Engine 2 Data Collection Storage and Sharing by TikTok 3 Data Collection 3 Data Storage 4 Data Sharing 4 White House TikTok Executive Orders 4 Prohibiting Transactions with ByteDance 5 TikTok Creators Lawsuit 5 Requiring Divestiture of ByteDance from TikTok 5 ByteDance Lawsuit Against Order to Divest 5 China’s Cybersecurity Law and Export Rules 6 Status of Potential Oracle and Walmart Partnership with TikTok 7 Discussion 8 Threat to Security 8 Technology Trade Protectionism 9 Related Congressional Activity 10 Hearings 10 Legislation 11 Conclusion 11 Tables Table 1 “For You” Feed Factors and Elements 2 Appendixes Appendix What Is WeChat 12 Contacts Author Information 12 Congressional Research Service TikTok Technology Overview and Issues Background TikTok is a popular video-sharing smartphone application app owned by ByteDance Ltd a privately held company headquartered in Beijing China The app is under intense scrutiny by the U S government as a potential privacy and security risk to U S users A major concern is that ByteDance is subject to Chinese laws that require companies operating in China to turn over user data when asked to by the national government On August 6 and August 14 2020 President Trump signed Executive Orders aimed at stopping U S persons and entities from doing business with ByteDance1 and requiring ByteDance to divest from any holding used to support the operation of TikTok in the United States 2 Researchers differ over how TikTok’s collection of user data compares with other social media apps and whether TikTok poses a unique threat to the privacy and security of its U S users including many minors WeChat another Chinese-owned app is often mentioned in conjunction with TikTok but the two apps are quite different TikTok has a single function—short video—while WeChat has multiple—voice and data messaging social media and digital payment WeChat is used in the United States primarily by the Chinese language community whereas TikTok is used more widely On the same day as the TikTok order President Trump also signed an Executive Order prohibiting any U S individual or entity from engaging in any transaction related to WeChat and its owner Tencent Holdings Ltd 3 While issues with the two apps are often conflated their functions technical capabilities and the data collected from their users are different Only TikTok is discussed in this report Background information about WeChat is in the Appendix What Is TikTok On August 2 2018 U S users of the Musical ly app a short video service headquartered in Shanghai China with a U S office in Santa Monica CA found that it had been merged into TikTok Musical ly had been acquired by ByteDance the owner of TikTok in November 2017 for $1 billion as a means to enter the U S market The TikTok app is available in over 155 countries in 39 languages and has approximately 800 million monthly active users 4 In the United States TikTok has approximately 49 million monthly active users 5 and the company maintains offices in Los Angeles and New York When ByteDance first released the TikTok app in September 2016 videos could be no longer than 15 seconds but now users are allowed to link together four 15second segments 6 Longer videos recorded outside the app can also be uploaded to the platform President Donald J T rump “ Executive Order on Addressing the T hreat Posed by T ikT ok ” August 6 2020 at https www whitehouse gov presidential-actions executive-order-addressing-threat-posed-tiktok 2 President Donald J T rump “Executive Order Regarding the Acquisition of Musical ly by ByteDance Ltd ” August 14 2020 at https home treasury gov system files 136 EO-on-TikTok-8-14-20 pdf 1 President Donald J T rump “ Executive Order on Addressing the T hreat Posed by WeChat ” August 6 2020 at https www whitehouse gov presidential-actions executive-order-addressing-threat-posed-wechat 3 Katie Brigham “How T ikT ok Became the Hottest App of 2020 ” CNBC com June 16 2020 at https www cnbc com 2020 06 16 tiktok-sees-rapid-growth-amid-quarantines-but-privacy-concerns-linger html 5 Raymond Zhong and Sheera Frenkel “A T hird of T ikT ok’s U S Users May Be 14 or Under Raising Safety Questions ” New York Times September 17 2020 sec T echnology at https www nytimes com 2020 08 14 technology tiktok-underage-users-ftc html 4 6 T his limitation applies only to videos recorded through the app Videos recorded using other methods or apps can be longer than 60 seconds T ikT ok videos are intended for viewing on mobile device screens rather than on computers or T V and are formatted for that purpose Congressional Research Service 1 TikTok Technology Overview and Issues ByteDance is currently estimated to be worth over $100 billion 7 The company’s core product in China is Toutiao which means “Headlines ” Toutiao began as a mobile news recommendation engine but has evolved into a platform to deliver content and targeted advertising in other formats as well e g text messages images question-and-answer posts microblogs videos TikTok’s Recommendation Engine TikTok’s appeal relies on what has been called its “addictive” video feed For You 8 The app builds this feed through a “recommendation engine” using artificial intelligence AI technologies and data mining practices How each user’s feed is constructed had been a tightly held secret until recently On June 18 2020 TikTok published a blog post “How TikTok Recommends Videos #ForYou ”9 The company says its algorithm relies on a complex set of weighted factors to recommend content based on user preferences including hashtags and videos watched videos “liked ” shared and commented on as well as the kind of device a person is using Each user’s feed is unique Table 1 lists the specific factors the company says it uses Table 1 “For You” Feed Factors and Elements Factors Elements User interactions  Videos liked or shared  Accounts followed  Comments posted  Content created  Captions  Sounds  Hashtags  Language preference  Country setting Video information details Device and account settings  Device type These factors are included to make sure the system is optimized for performance but they receive lower weight in the recommendation system relative to other data points because users don’t actively express these as preferences Source “How TikTok Recommends Videos #ForYou ” TikTok Blog June 18 2020 at https newsroom tiktok com en-us how-tiktok-rec ommends-videos-for-you “ByteDance the Chinese Company Behind T iktok Is Now Reportedly Worth over $100 Billion ” Business Insider India May 20 2020 at https www businessinsider in stock-market news bytedance-the-chinese-company-behindtiktok-is-now-reportedly-worth-over-100-billion articleshow 75850118 cms 7 John Hermann “How T ikT ok Is Rewriting the World ” New York Times March 10 2019 at https www nytimes com 2019 03 10 style what-is-tik-tok html 8 “ How T ikT ok recommends videos #ForYou ” TikTok Blog June 18 2020 at https newsroom tiktok com en-us howtiktok-recommends-videos-for-you 9 Congressional Research Service 2 TikTok Technology Overview and Issues According to TikTok a ll these factors are processed by our recommendation system and weighted based on their value to a user A strong indicator of interest such as whether a user finishes watching a longer video from beginning to end would receive greater weight than a weak indicator such as whether the video’s viewer and creator are both in the same country Videos are then ranked to determine the likelihood of a user’s interest in a piece of content and delivered to each unique For You feed The blog post was seen by most as an effort to provide more transparency to the public as the U S government was increasing its scrutiny of the company’s practices 10 Data Collection Storage and Sharing by TikTok Critics as well as some members of Congress cite as problematic the amount of data that TikTok collects from and about its users how that data is stored and how it could potentially be shared with the Chinese government and used in influence campaigns 11 or against U S citizens 12 Based on these concerns both the Democratic and Republican national committees the Department of Defense and some private firms such as Wells Fargo Inc have banned or discouraged the use of the TikTok app 13 Data Collection According to its privacy policy 14 TikTok collects a range of user information including location data and internet address keystroke patterns and the type of device being used to access the app The app also collects and stores a user’s browsing and search history within the app as well as the content of any messages exchanged using the app Additional information can be collected based on user permission phone number phone book and social-network contacts GPS data user age user-generated content e g photos and videos store payment information and the videos “liked ” shared watched all the way through and re-watched TikTok states that the app collects less personal data than many other apps such as Facebook and Google both of which track user activity across devices TikTok claims that it does not 15 The data that TikTok collects from users appears in many regards to be comparable to what other social media companies Louise Matsakis “T ikT ok Finally Explains How the ‘For You’ Algorithm Works ” Wired com June 18 2020 at https www wired com story tiktok-finally-explains-for-you-algorithm-works 11 Rebecca Jennings “What’s Going on with T ikT ok China and the US Government ” Vox December 16 2019 at https www vox com open-sourced 2019 12 16 21013048 tiktok-china-national-security-investigation Hereinafter “ What’s Going on with T ikT ok China and the US Government ” 10 Robert McMillan Liza Lin and Shan Li “T ikTok User Data What Does the App Collect and Why Are U S Authorities Concerned ” Wall Street Journal July 7 2020 at https www wsj com articles tiktok-user-data-whatdoes-the-app-collect-and-why-are-u-s-authorities-concerned-11594157084 Hereinafter “TikTok User Data What Does the App Collect and Why Are U S Authorities Concerned ” 13 Shelly Banjo Kartikay Mehrotra and William T urton “TikTok’s Huge Data Harvesting Prompts U S Security Concerns ” Bloomberg com July 14 2020 at https www bloomberg com news articles 2020-07-14 tiktok-s-massivedata-harvesting-prompts-u-s-security-concerns Hereinafter “ TikTok’s Huge Data Harvesting Prompts U S Security Concerns ” 12 14 T he privacy policy is available online at https www tiktok com legal privacy-policy lang en 15 “T ikTok User Data What Does the App Collect and Why Are U S Authorities Concerned ” Congressional Research Service 3 TikTok Technology Overview and Issues gather and use 16 Some critics have described TikTok’s approach to data mining as aggressive17 and that its ability to track user behavior while using the app as well as access to a user’s photos videos and phone book and geolocation tracking based on user permissions means that it can build extremely detailed behavioral profiles of its users that could potentially be shared with the Chinese government 18 On August 11 2020 the Wall Street Journal reported that TikTok avoided privacy safeguards in Google’s Android operating system to collect users’ mobile device MAC addresses unique identifiers that allow “the app to track users online ” and concealed this activity with an additional layer of encryption before ending the practice after 15 months in November 2019 19 Data Storage TikTok claims to store all content created by U S users—as well as data about those users—only on servers located within the United States and backed up in Singapore Those servers are owned or controlled by TikTok but the company denies that it shares or would share this data with the Chinese government 20 stating that The key personnel responsible for TikTok … are all Americans based in the United States—and therefore are not subject to Chinese law U S content moderation is likewise led by a U S -based team and operates independently from China and as noted above the TikTok application stores U S user data on servers located in the United States and Singapore 21 Data Sharing Despite these assertions TikTok’s website says that information can be shared with its parent company in China or other affiliates usually advertisers which operate under Chinese law 22 Further a lawsuit filed in federal court in December 2019 asserted that user data was harvested and sent to servers in China 23 White House TikTok Executive Orders President Trump has issued two Executive Orders affecting the future of TikTok in the United States one on August 6 2020 E O 13942 and another on August 14 2020 No number assigned Sherrod DeGrippo “Understanding the Information T ikTok Gathers and Stores ” Proofpoint January 8 2020 at https www proofpoint com us blog threat-protection understanding-information-tiktok-gathers-and-stores 16 Ryan Broderick “Forget the T rade War T ikTok Is China’s Most Important Export Right Now ” BuzzFeed News May 16 2019 at https www buzzfeednews com article ryanhatesthis forget-the-trade-war-tiktok-is-chinas-mostimportant-export 17 18 “ T ikTok’s Huge Data Harvesting Prompts U S Security Concerns ” Kevin Poulsen and Robert McMillan “T ikTok T racked User Dat a Using T actic Banned by Google ” Wall Street Journal August 11 2020 sec T ech at https www wsj com articles tiktok-tracked-user-data-using-tactic-banned-bygoogle-11597176738 20 “T ikTok User Data What Does the App Collect and Why Are U S Authorities Concerned ” 19 “Why We Are Suing the Administration ” TikTok Blog August 24 2020 at https newsroom tiktok com en-us tiktok-files-lawsuit 21 “T ikTok User Data What Does the App Collect and Why Are U S Authorities Concerned ” “T iktok Sent US User Data to China Lawsuit Claims ” BBC com December 3 2019 at https www bbc com news business-50640110 22 23 Congressional Research Service 4 TikTok Technology Overview and Issues Prohibiting Transactions with ByteDance The August 6 2020 E O 13942 had been set to take effect on September 20 2020 but that date was extended The order does not state which specific transactions would be prohibited but it would likely result in the removal of the TikTok app from Apple’s App Store and Google’s Play Store in the United States It could also make it illegal for U S companies to purchase advertising on TikTok Some U S TikTok employees have speculated that they would no longer be able to be paid TikTok Creators Law suit On September 18 2020 TikTok creators Douglas Marland Cosette Rinab and Alec Chambers “plaintiffs” filed a motion to prevent implementation of E O 13942 TikTok is suing separately to block its app from being banned but this lawsuit is based on plaintiffs’ assertion that the ban would prevent them from earning a living The motion was amended by plaintiffs on October 1 2020 On October 30 2020 a federal judge in Pennsylvania granted a preliminary injunction in favor of the plaintiffs stopping the ban that was set to go into effect on November 12 2020 The judge agreed that the videos constitute “informational materials ” which are protected by law On November 12 2020 the DoC stated that it would comply with the injunction Requiring Divestiture of ByteDance from TikTok On August 14 2020 President Trump issued an additional Executive Order “Regarding the Acquisition of Musical ly by ByteDance Ltd ”24 that imposed additional conditions on the ability of ByteDance to operate TikTok in the United States The order requires ByteDance and its “subsidiaries affiliates and Chinese shareholders” to divest from “any tangible or intangible assets or property wherever located used to enable or support ByteDance’s operation of the TikTok application in the United States” as determined by the Committee on Foreign Investment in the United States CFIUS 25 The order also requires ByteDance to destroy all data obtained or derived from either the TikTok or Music ly apps from U S users upon divestiture and certify in writing to CFIUS that it has done so The order requires these actions within 90 days November 12 2020 rather than the 45 days included in the first order giving ByteDance additional time to find a buyer 26 A transfer of ownership and operation of TikTok to a U S entity not subject to Chinese laws including management of collected user data appears designed to limit the ability of the Chinese government to acquire access to future U S user data ByteDance Law suit Against Order to Divest ByteDance opposed divestiture from TikTok and on August 24 2020 sued the Trump Administration 27 In a blog post TikTok stated that it was “shocked by the recent Executive President Donald J T rump “Executive Order Regarding the Acquisition of Musical ly by ByteDance Ltd ” August 14 2020 at https home treasury gov system files 136 EO-on-TikTok-8-14-20 pdf 25 CFIUS is an interagency committee that serves the President in overseeing the national security imp lications of foreign investment in the economy For more information see CRS In Focus IF10177 The Committee on Foreign Investment in the United States by James K Jackson 24 Lora Kolodny “T rump Orders Bytedance to Divest from Its U S T iktok Business Within 90 Days ” CNBC com August 14 2020 at https www cnbc com 2020 08 14 president-trump-orders-bytedance-to-divest-from-its-us-tiktokbusiness-within-90-days html 27 Rachel Lerman “T ikTok Sues T rump Administration to Fight Impending Ban ” Washington Post August 24 2020 at https www washingtonpost com technology 2020 08 24 tiktok-lawsuit-trump The lawsuit complaint is available 26 Congressional Research Service 5 TikTok Technology Overview and Issues Order which was issued without any due process ”28 On September 27 2020 Judge Carl J Nichols of the United States District Court for the District of Columbia granted a preliminary injunction against the Trump administration order He stated that while President Trump has broad authority to prohibit business transactions with foreign entities that are deemed to pose a national security risk TikTok appears to be exempt from such a prohibition because it is a personal communication service which is protected by the International Emergency Economic Powers Act China’s Cybersecurity Law and Export Rules The Cybersecurity Law of the People’s Republic of China was passed in November 2016 and went into effect in June 2017 It was updated in November 2018 by the Regulations on Internet Security Supervision and Inspection by Public Security Organs These laws—    strictly control online activities mandate the local storage of user data and the registration of certain network assets and allow the government to conduct onsite and remote inspection of computer networks 29 The law requires Chinese companies to cooperate with government intelligence operations if so requested30 and may allow the Chinese government access to user data collected by any company doing business in China One analyst notes that “by demanding access to any data collected and stored in China the updated regulations force domestic and foreign companies based in China to comply with its investigative measures leaving intellectual property and private information vulnerable to government abuse ”31 On August 31 2020 China took specific action that could prohibit the sale of TikTok’s underlying technology and processes The new export regulations cover such technologies as “text analysis content recommendation speech modeling and voice recognition ”32 Since the For You feed and algorithmic recommendation engine is considered the key element of TikTok’s success a ban on transferring the technology and processes used to create it could make it more difficult to sell the app or prevent a sale altogether 33 online at https assets documentcloud org documents 7043165 TikTok-Trump-Complaint pdf “ Statement on the Administration’s Executive Order ” TikTok Blog August 7 2020 at https newsroom tiktok com en-us tiktok-responds See also “ Why We Are Suing the Administration ” TikTok Blog August 24 2020 at https newsroom tiktok com en-us tiktok-files-lawsuit 28 29 Generally defined in the Cybersecurity Law as five or more computers connected to the internet which account for almost every foreign company operating in China “What’s Going on with T ikT ok China and the US Government ” Lauren Maranto “Who Benefits from China’s Cybersecurity Laws ” Center for Strategic and International Studies June 25 2020 at https www csis org blogs new-perspectives-asia who-benefits-chinas-cybersecurity-laws 30 31 T imothy B Lee “China Announces New Export Rules T hat Could Prevent Sale of T iktok ” ArsTechnica com August 31 2020 at https arstechnica com tech-policy 2020 08 china-announces-new-export-rules-that-could-preventsale-of-tiktok Hereinafter “China Announces New Export Rules T hat Could Prevent Sale of T iktok ” 32 33 “China Announces New Export Rules T hat Could Prevent Sale of T iktok ” Congressional Research Service 6 TikTok Technology Overview and Issues Status of Potential Oracle and Walmart Partnership with TikTok In response to the TikTok Executive Order two leading bidders emerged as potential buyers of the app Oracle and a partnership between Microsoft and Walmart Bids were reported to be in the range of $20 billion to $30 billion 34 Twitter and Google were also rumored to be interested in acquiring the app 35 On September 13 2020 Microsoft announced that its bid had been rejected by ByteDance In its announcement the company stated “We would have made significant changes to ensure the service met the highest standards for security privacy online safety and combating disinformation ” One expert Alex Stamos Director of the Stanford Internet Observatory commented that this statement is “an attempt to poison the well against an Oracle deal where they only take over hosting And Microsoft is right to do so ”36 On September 14 2020 Oracle announced that it had reached an agreement with ByteDance to “serve as the company’s trusted technology provider” in the United States Treasury Secretary Steven Mnuchin announced that he had received the proposal 37 From the terminology used it appears that the deal may involve a partnership rather than a sale with TikTok using Oracle’s cloud hosting services 38 This arrangement would keep the source code of the For You feed and algorithmic recommendation engine in the hands of ByteDance Secretary Mnuchin said that CFIUS will review the proposal and present President Trump with its opinion On September 19 2020 Oracle announced that Walmart would join its bid for TikTok with the two companies acquiring 20% of a newly formed company TikTok Global 39 with the remaining 80% owned by ByteDance According to announcements made by the companies 40% of ByteDance is owned by U S investors which is meant to indicate that the new company would be under majority U S ownership 40 However this arrangement along with TikTok keeping the 34 In addition to U S companies making a bid for T ikT ok in the United States Centricus Asset Management and T riller are reported to have made a bid to buy T ikT ok’s operations in several other countries for $20 billion Kim Lyons “T witter and T ikT ok Reportedly Have Had T alks About a Deal ” TheVerge com August 8 2020 at https www theverge com 2020 8 8 21360259 twitter-and-tiktok-acquisition-trump-microsoft 35 36 T he Stanford Internet Observatory a program of the Cyber Policy Center of the Freeman Spogli Institute for International Studies is a cross-disciplinary program of research teaching and policy engagement for the study of abuse in current information technologies with a focus on social media Prior to his current position Mr Stamos served as Chief Security Officer of Facebook and Chief Information Security Officer at Yahoo He has also been involved with securing the U S election system as a contributor to Harvard University’s Defending Digital Democracy Project Jordan Novet “ Oracle Confirms Deal with T iktok-Owner Bytedance to Become ‘T rusted T echnology Provider’ ” CNBC com September 14 2020 at https www cnbc com 2020 09 14 oracle-confirms-deal-with-tiktok-ownerbytedance-to-become-trusted-technology-provider html 37 Larry Dignan “With T ikTok Oracle Hopes Its Cloud Infrastructure Business Goes Viral ” ZDNet com September 21 2020 at https www zdnet com article with-tiktok-oracle-hopes-its-cloud-infrastructure-business-goes-viral 39 “ Walmart Statement About Potential Investment in and Commercial Agreements with T ikT ok Global ” Walmart September 19 2020 at https corporate walmart com newsroom 2020 09 19 walmart-statement-about-potentialinvestment-in-and-commercial-agreements-with-tiktok-global 38 Jordan Novet Spencer Kimball and Alex Sherman “ T rump Agrees to T iktok Deal with Oracle and Walmart Allowing App’s U S Operations to Continue ” September 22 2020 CNBC com at https www cnbc com 2020 09 19 trump-says-he-has-approved-tiktok-oracle-deal-in-concept html 40 Congressional Research Service 7 TikTok Technology Overview and Issues For You recommendation engine algorithm 41 would not appear to satisfy conditions in President Trump’s Executive Orders In addition to U S approval of the proposal being uncertain given its provisions Chinese approval of the proposal is also uncertain China’s new export regulations appear to forbid transfer of the For You algorithm but the United States appears to require such a transfer So the legal requirements of each country are at odds with each other On September 23 2020 TikTok filed for and was granted an injunction in federal court to stop the ban on the app that was set to take effect on September 27 2020 TikTok has now been granted an extension until November 27 2020 to persuade the U S government to approve the deal with Oracle and Walmart Discussion Some believe TikTok and other apps developed and owned by Chinese companies pose a serious security risk to the United States because Chinese companies are governed by China’s Cybersecurity Law Others believe that TikTok is caught up in increasing trade tensions between China and the United States 42 Threat to Security Although TikTok forcefully states that it does not share U S user data with the Chinese government many security and privacy advocates are skeptical For example in addition to the lawsuit cited above see “Data Sharing” the American Civil Liberties Union argues that “Chinese apps in particular have a reputation for grabbing more data than required to provide their services often sending information to advertising networks … they are frequently far more abusive than others… ”43 The Chinese government obtains data about and created by its own citizens for purposes that range from censorship to mass surveillance 44 Other countries have also taken action against TikTok on the grounds of security India banned TikTok and 50 other Chinese apps in June 2020 calling them a “threat to sovereignty and integrity ”45 Also in June 2020 the European Union opened an investigation into TikTok to examine possible violations of its General Data Protection Regulation GDPR 46 Australia had threatened to ban the app but on August 4 2020 the country’s Prime Minister indicated that TikTok would not be banned however he warned Australians against the app saying it “connects Isobel Asher Hamilton “T ikTok’s Deal with Oracle and Walmart Lets It Cling on to Its Most Valuable Asset —Its Algorithm ” BusinessInsider com September 21 2020 at https www businessinsider com tiktok-deal-lets-it-holdonto-algorithm-2020-9 42 Kent Calder “Opening Japan ” Foreign Policy vol 47 Summer 1982 1982 pp 82-97 at http www jstor com stable 1148443 Hereinafter “Opening Japan ” 41 43 “ T ikTok User Data What Does the App Collect and Why Are U S Authorities Concerned ” Isobel Cockerell “Inside China’s Massive Surveillance Operation ” Wired com May 9 2019 at https www wired com story inside-chinas-massive-surveillance-operation 45 Kari Paul “ Should You Delete T iktok Here’s What Experts Say About the App T rump Wants to Ban ” The Guardian July 16 2020 at https www theguardian com technology 2020 jul 16 tiktok-video-sharing-app-shouldyou-delete-it 44 Stephanie Bodoni “ T ikTok Faces Scrutiny from Eu Watchdogs over Data Practices ” Bloomberg com June 10 2020 updated June 11 2020 at https www bloomberg com news articles 2020-06-10 tiktok-faces-scrutiny-from-euwatchdogs-over-privacy-practices For more information on the GDPR see CRS In Focus IF10896 EU Data Protection Rules and U S Implications by Rachel F Fefer and Kristin Archick 46 Congressional Research Service 8 TikTok Technology Overview and Issues right back to China ”47 Japan Turkey and Pakistan48 have also taken various measures to protect their countries’ users from possibly security risks 49 Technology Trade Protectionism Other observers argue that TikTok is caught in “the crosshairs of a global technology battle ”50 and that a unilateral U S ban on any app may be comparable to China’s “Great Firewall ”51 One way to potentially understand U S and Chinese government actions in this dispute may be through the concept of techno-nationalism 52 which refers to a country’s refusal or reluctance to import other countries’ advanced technology as well as to export or to allow other nations to benefit from its own advanced technology Within this framework technology is considered a central pillar of a country’s wellbeing Techno-nationalism … links technological innovation and capabilities directly to a nation’s national security economic prosperity and social stability … It seeks to attain competitive advantage for its stakeholders both locally and globally and leverage these advantages for geopolitical gain 53 One policy mechanism that nations use to protect what they view as important or sensitive technologies are export controls rules which limit to which foreign entities and under what circumstances or conditions specific technologies may be sold or licensed 54 For example in August 2020 the Bureau of Industry and Security at the Department of Commerce announced sanctions that restrict foreign semiconductor companies from selling chips developed or produced Stephen Dziedzic “ T ikT ok Ban ‘Not Necessary’ but Prime Minist er Scott Morrison Urges Caution over App’s China Connection ” Australian Broadcasting Corporation News August 4 2020 at https www abc net au news 2020-08-05 prime-minister-scott-morrison-says-government-wont-ban-tiktok 12526246 48 Pakistan had banned the app on October 9 2020 but rescinded the ban 10 days later after T ikT ok provided assurances “ that they will block all accounts repeatedly involved in spreading obscenity and immorality ” Salman Masood “ Pakistan Rescinds T ikT ok Ban ” New York Times October 19 2020 at https www nytimes com 2020 10 19 business pakistan-tiktok-ban html 47 Jennifer Hassan and Ruby Mellen “ It’s Not Just the United States T hese Governments See T iktok as a Growing Problem ” Washington Post August 3 2020 at https www washingtonpost com world 2020 08 03 its-not-just-unitedstates-these-governments-see-tiktok-growing-problem 49 “ Is It T ime to Delete T iktok A Guide to the Rumors and the Real Privacy Risks ” Kevin Roose “ Don’t Ban T ikTok Make an Example of It ” New York Times July 26 2020 at https www nytimes com 2020 07 26 technology tiktok-china-ban-model html T he “Great Firewall” has been described as “ a system of surveillance and blocking technology that prevents Chinese citizens from viewing websites outside the country ” Danny O’Brien “China’s Global Reach Surveillance and Censorship Beyond the Great Firewall ” Electronic Frontier Foundation October 10 2019 at https www eff org deeplinks 2019 10 chinas-globalreach-surveillance-and-censorship-beyond-great-firewall 50 51 “Opening Japan ” Alex Capri “T echno-Nationalism What Is It and How Will It Change Global Commerce ” Forbes com December 20 2019 at https www forbes com sites alexcapri 2019 12 20 techno-nationalism-what-is-it-and-how-will-it-changeglobal-commerce #f8e22c0710f7 52 53 54 For more information on U S export controls and China see CRS In Focus IF11627 U S Export Control Reforms and China Issues for Congress by Ian F Fergusson and Karen M Sutter For more general information on U S export controls see CRS Report R41916 The U S Export Control System and the Export Control Reform Initiative by Ian F Fergusson and Paul K Kerr Congressional Research Service 9 TikTok Technology Overview and Issues using U S software or technology to Huawei another Chinese company without first obtaining a license to do so 55 This restriction has been called a “lethal blow”56 to the company Another mechanism is the use of protectionist practices that privilege domestic entities’ access to domestic markets For example China requires U S telecommunications companies to enter into a partnership with a Chinese company to provide services in that country In June 2020 the Senate Committee on Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations issued a report “Threats to US Networks Oversight of Chinese Government Owned Carriers ” The report notes that while China has access to the U S telecommunications market U S companies do not have that same level of access in China China does not provide US telecommunications companies reciprocal access to the Chinese market and requires foreign carriers seeking to operate in China to enter into joint ventures with Chinese companies These joint ventures often require U S companies to give their technology proprietary know-how and intellectual property to their Chinese partners Since China was allowed to join the World Trade Organization in 2001 the report notes that “not a single foreign firm has succeeded in establishing a new joint venture” to provide basic telecommunications services in China ” Related Congressional Activity Congress began taking an interest in TikTok as early as October 2019 when Senator Marco Rubio reportedly called for a formal investigation into whether TikTok posed a national security risk 57 Later that month Senators Charles Schumer and Tom Cotton sent a letter 58 to the Acting Director of National Intelligence Joseph Maguire expressing their concerns about TikTok and the national security risks they believe it poses More formally Congress has scrutinized TikTok in two hearings and Members have introduced three related bills Hearings The Senate Judiciary Committee’s Subcommittee on Crime and Terrorism has held two hearings on among other topics the impact of Chinese smartphone apps on U S citizens’ privacy  “How Corporations and Big Tech Leave Our Data Exposed to Criminals China and Other Bad Actors” was held on November 5 2019 59  “Dangerous Partners Big Tech and Beijing” was held on March 4 2020 60 “ Commerce Department Further Restricts Huawei Access to U S T echnology and Adds Another 38 Affiliates to the Entity List ” U S Department of Commerce August 17 2020 at https www commerce gov news press-releases 2020 08 commerce-department-further-restricts-huawei-access-us-technology-and 55 Sherisse Pham “New Sanctions Deal ‘Let hal Blow’ to Huawei China Decries US Bullying ” CNN com August 18 2020 at https www cnn com 2020 08 17 tech huawei-us-sanctions-hnk-intl index html 56 Makena Kelly “T ikT ok Should Be Investigated for Censorship Marco Rubio Says ” TheVerge com October 9 2019 at https www theverge com 2019 10 9 20906971 tiktok-censorship-china-bytedance-musically-marco-rubiosenate-mnuchin-cfius-treasury 58 Senator T om Cotton “Cotton Schumer Request Assessment of National Security Risks Posed by China -Owned Video-Sharing Platform T iktok a Potential Counterintelligence T hreat with over 110 Million Downloads in U S Alone ” press release October 24 2019 at https www cotton senate gov p press_release id 1239 57 59 T he hearing page with archived video and other documents is online at https www judiciary senate gov meetings how-corporations-and-big-tech-leave-our-data-exposed-to-criminals-china-and-other-bad-actors 60 T he hearing page with archived video and other documents is online at https www judiciary senate gov meetings Congressional Research Service 10 TikTok Technology Overview and Issues TikTok was invited to testify at these hearings but declined to appear 61 Legislation Three bills have been introduced that would prohibit the use of TikTok and WeChat on U S government devices  S 445262 is a bill to prohibit federal employees from downloading or using WeChat on government devices It was introduced on August 5 2020 by Senator John Kennedy and referred to the Senate Homeland Security and Governmental Affairs the same day  S 3455 63 the No TikTok on Government Devices Act was introduced on March 12 2020 by Senator Josh Hawley This bill was passed by the Senate on August 6 2020 and received in the House the following day See S Rept 116-250 64  H R 6896 65 also called the No TikTok on Government Devices Act is the House companion bill to S 3455 It was introduced on May 15 2020 by Representative Ken Buck and referred to the House Committee on Oversight and Reform and the House Committee on Administration the same day Conclusion The variety of apps available to U S users is enormous Situations similar to the case of TikTok may arise in the future with other apps created by foreign companies Congress may consider taking one or both of two parallel approaches to address such situations 1 developing an overarching legal and regulatory framework to protect the security and privacy of U S citizens’ data and communications and 2 establishing a uniform transparent process to assess the risks posed by foreign apps and establish mechanisms to mediate those risks dangerous-partners-big-tech-and-beijing T ony Romm “ Apple T ikTok Decline to T estify at Second Congressional Hearing Probing T ech’s T ies to China ” Washington Post February 24 2020 at https www washingtonpost com technology 2020 02 24 apple-tiktokcongress-hearing-china 62 T he latest information on this legislation is available online at https www congress gov bill 116th-congress senatebill 4452 61 63 T he latest information on this legislation is available online at https www congress gov bill 116th-congress senatebill 3455 64 T he report is available online at https www congress gov congressional-report 116th-congress senate-report 250 1 T he latest information on this legislation is available online at https www congress gov bill 116th-congress housebill 6896 65 Congressional Research Service 11 TikTok Technology Overview and Issues Appendix What Is WeChat WeChat was released in January 2011 and in 2018 became the world’s most-used standalone mobile app with over 1 billion monthly active users 66 WeChat has been described as China’s “app for everything”67 because of its wide range of functions Through the app users can send messages make mobile payments for purchases and send money to other users 68 hail a ride exchange contact information through Quick Response QR codes share “moments” similar to Facebook’s “Newsfeed” buy tickets to movies and book a hotel room—as well as many other activities In the second quarter of 2020 the app had an estimated 1 2 billion monthly active users 69 up from about 889 million monthly active users in 2016 Tencent the Chinese company that owns WeChat is the biggest video game company in the world It was founded in 1998 and is worth about $500 billion as of May 2020 70 The company owns the U S game studio Riot Games as well as a large stake in U S -based Epic Games which developed the popular game Fortnite As with TikTok researchers have found evidence that WeChat shares user data with the Chinese government “Every day millions of WeChat conversations held inside and outside China are flagged collected and stored in a database connected to public security agencies in China ”71 Some U S users have reported that their messages to friends family and colleagues in China stopped being delivered after they shared news articles critical of the Chinese government once they stopped sharing such articles their access was restored 72 Author Information Patricia Moloney Figliola Specialist in Internet and Telecommunications Policy “ Number of Monthly Active Wechat Users from 2 nd Quarter 2011 to 2 nd Quarter 2020 ” Statista August 20 2020 at https www statista com statistics 255778 number-of-active-wechat-messenger-accounts 67 “How WeChat Became China’s App for Everything ” FastCompany com January 2 2017 at https www fastcompany com 3065255 china-wechat-tencent-red-envelopes-and-social-money Hereinafter “How WeChat Became China’s App for Everything ” 66 “How WeChat Became China’s App for Everything ” “ Number of Monthly Active Wechat Users from 2 nd Quarter 2011 to 2 nd Quarter 2020 ” Statista August 20 2020 at https www statista com statistics 255778 number-of-active-wechat-messenger-accounts 68 69 “WeChat Revenue and Usage Statistics 2020 ” BusinessOfApps com July 30 2020 at https www businessofapps com data wechat-statistics #1 70 “China Intercepts WeChat T exts from U S and Abroad Researchers Say ” NPR org August 29 2019 at https www npr org 2019 08 29 751116338 china-intercepts-wechat-texts-from-u-s-and-abroad-researcher-says Hereinafter “China Intercepts WeChat T exts from U S and Abroad Researchers Say ” 72 “China Intercepts WeChat T exts From U S and Abroad Researchers Say ” 71 Congressional Research Service 12 TikTok Technology Overview and Issues Disclaimer This document was prepared by the Congressional Research Service CRS CRS serves as nonpartisan shared staff to congressional committees and Members of Congress It operates solely at the behest of and under the direction of Congress Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role CRS Reports as a work of the United States Government are not subject to copyright protection in the United States Any CRS Report may be reproduced and distributed in its entirety without permission from CRS However as a CRS Report may include copyrighted images or material from a third party you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material Congressional Research Service R46543 · VERSION 11 · UPDATED 13