In 2019, teenagers traded Twitter for TikTok. Teens who would normally be found scrolling through news feeds and commenting on selfies transferred their attention to 60-second clips on a new mobile app: lip syncs to “The Office,” influencers doing “renegade dance,” stall-workers turned street-dancers. Amassing over 1.5 billion downloads, TikTok was the first Chinese media app to make it big outside Beijing.
Then, this month, its expansion hit a roadblock. Narendra Modi’s India—which accounted for roughly a third of TikTok’s downloads—banned the app following a deadly border conflict with Chinese forces in the Himalayas. According to the Indian government, the app was “stealing and surreptitiously transmitting users’ data to nefarious forces outside the country.”
The accusation is probably a fair one. Two months ago, a senior software engineer reverse engineered TikTok’s code and published a public letter warning people to stop using the app immediately. His findings suggest that the app can send whatever’s on your clipboard—intimate texts, pictures, and even bank account credentials—to TikTok’s servers. The lack of encryption allows practically anyone to swap real videos for fake videos, and developers can even search for your phone’s IP address and GPS location, all the while making it near-impossible to figure out what data is being extracted. Some of the details are comically ironic: The developers use a stream cipher called “Leviathan” to encrypt some of their data requests.
So although you might feel anonymous while you scroll through the app, in reality, you are anything but. By itself, this wouldn’t be exceptionally worrisome; plenty of other apps collect user data, and while their privacy policies have come under fire, no one is calling for them to be banned.
The problem is that ByteDance—TikTok’s parent company—has a long track record of entanglement with the Chinese government. It has censored content critical of the Chinese government and given preference to communist party members in its hiring. One of ByteDance’s subsidiaries is co-owned by the Chinese state, and the country’s National Intelligence Law makes it possible for the CCP to access data from Chinese companies. A 2004 amendment to China’s constitution guarantees that “citizens’ legally obtained private property shall not be violated,” but the word “legal” does the Party’s work. The legality of held property rests with a set of widely criticized courts, responsible for placing 17 percent of China’s wealthiest citizens in prison. Hence, the assertion that TikTok is a data collection service thinly-veiled as a social network—a form of malware that targets children and Millennials—is hardly unfounded.
After pro-democracy protests erupted in Hong Kong last year, TikTok asked moderators to remove videos about the protests until mid-2019. Former moderators have also said they were asked to take down videos referring to the 1989 Tiananmen Square protest. And when protests over the killing of George Floyd took off in the U.S. in late May, some TikTok users said the hashtag “Black Lives Matter ” was being censored on the app. (TikTok has since attributed the problem to a glitch.) This, while the app continues to harvest the data of its rapidly growing user base.
Since Modi’s move, the app has also been withdrawn from Hong Kong. And this month, Secretary of State Pompeo announced the United States is looking into banning the app. While such a drastic move would solve the immediate threat that TikTok poses to American national security, it would also be extremely difficult to implement, and paternalistic in ways that might not go down well in the country that founded the open internet. Fortunately, a lighter-touch approach would achieve the same goals—without forcing America to follow China’s problematic precedent.
In China, Facebook is banned, just as Twitter, YouTube, and Google are banned. In 1997, Beijing decided to set up “the great firewall,” granting Chinese authorities complete control over all internet traffic coming into and out of the country. The philosophy behind the firewall was summed up by Deng Xiaoping: “If you open the window, both fresh air and flies will be blown in.” China decided to opt for a screen.
Through the early 2000s, the World Trade Organization generally tolerated this arrangement. The only people making money off the internet were e-commerce websites and online shops. Advertising was associated with slicked hair and whiskey, not the digital economy. As China began to build the framework it would use to quell any internal dissent—developing surveillance technology, arresting citizens for inappropriate emails, and cracking down on overseas news websites—international bodies turned a blind eye. By 2003, China had the enforcement mechanisms to control the online public sphere. It was not long before prominent dissidents, journalists, lawyers, historians, academics, businessmen, and activists, including the Yahoo! Democracy activist Wang Xianoning, vanished into prison or disappeared in Deng’s footsteps.
All the while, Western investors operated under the beguiling assumption that free trade would eventually liberalize China. Today’s Chinese internet giants—Tencent, Alibaba, and Baidu—all received massive capital injections from American investors swooning over the dot-com run-up. When China began to ban American apps, in keeping with its screened-in approach to the internet, policymakers were relatively sanguine. This was just a growing pain, the price of progress—open access would come soon enough.
So it came to be that Tencent and Baidu, near analogs of Yahoo Messenger and Google, reaped the rewards from sanctions that blocked American companies from the Chinese market. Free from competition and coddled by Beijing, China’s domestic services flourished. Google experienced losses in China estimated to be in the billions, while Baidu—the Chinese company that took its place—reaped the rewards of a virtual monopoly. The Chinese Communist Party employed concerted state power to become a global economic powerhouse, throwing away its foundational ideology in favor of cold, calculated, distinctly Chinese capitalism.
The rise of TikTok has shown that Chinese apps can capture the imagination—and data—of U.S. citizens as well as anything homegrown. Furthermore, the genocide currently taking place in Xinjiang province is a reminder that technology can be put to the service of catastrophe. Reversing the influence of Chinese software must involve countering the protectionist policies that enabled it. One obvious response would be to emulate Beijing. Following in Narendra Modi’s footsteps, Washington could impose a set of sanctions on Chinese tech companies that might, in theory, force reforms.
This approach has obvious merits. An effective ban would put an end to the app’s corrupt activities in the U.S., and limit its ability to meddle in affairs abroad. That could serve as a real leverage point in the escalating trade war between the two countries, particularly considering that TikTok has become an important tool for the extraterritorial enforcement of Chinese laws. For such a ban to be effective, all the United States would need to do is choke the app’s user base. There is precedent for Apple removing apps from its store as a result of sanctions, particularly in Iran.
Yet there are also real barriers to implementing such a policy. Apple and Google may have complied in Iran, but the chances they would crackdown on their most popular app in the United States is slim. Even if they did, that would not constitute a complete ban: TikTok would still be available to users who have downloaded the app in the past, on the internet, and through a growing number of third party app stores (as is currently the case in India). U.S. authorities have previously taken down hundreds of websites, but they have never blocked a website that remains accessible around the world. This is not a trivial exercise, because the internet is decentralized by design. Laws that take aim at this decentralization, such as the Stop Online Piracy Act, resulted in prominent protests from Google, Twitter, and other major internet companies while garnering millions of signatures. TikTok’s user base of tech-savvy millennials is likely to generate similar ire, particularly if Donald Trump is unable to paint TikTok as a tangible national security threat.
Matching sanctions with sanctions could also hurt US companies. Banning TikTok outright might put an end to its corrupt activities in the U.S., but it would also provide a green light for techno-nationalism. A U.S. ban on Chinese software would set a precedent that European governments could use against American companies, in ways that might harm the U.S. tech sector.
Fortunately, there is a lighter touch solution that could allow the U.S. to respond to Chinese sanctions while gaining leverage to pursue other policy objectives. In recent months, the OECD has proposed a plan that would dramatically alter how nations divide up the tax revenues generated by tech companies. This digital tax would reallocate advertising tax revenue away from the country where the advertisements were bought—and where the app was made—to wherever the app’s users are located. In effect, this would enable governments to generate advertising tax revenues from their residents, regardless of where the company responsible for hosting the advertisements resides.
Of course, China has nothing to gain from collecting tax revenue from domestic users on foreign apps, because they do not permit the use of any foreign apps within their borders. Perhaps it is no surprise, then, that the current proposal would not apply to China (or, for that matter, India, Russia, or any of the African nations). The OECD has 37 member countries, and the country that would take the greatest hit from their plan is the United States. But it would do nothing to affect the apps that pose the greatest threats to national security and represent the greatest distortion of the global software economy.
But if the WTO were to propose a global digital tax along similar lines, it could fare much better. The WTO has 164 member states, including every major power. Domesticizing app revenue across the board would grant every government the authority to ensure that foreign apps comply with domestic privacy laws. This would solve two problems at once.
First, penalties for data harvesting could force nefarious companies like TikTok to adjust their data policies—consider the $57 million fine levied on Google for lack of compliance with privacy laws in France. And where fines fail, tariffs could be used as an additional tool, granting the United States and other democratic nations a forum by which to handle election meddling.
Second, China’s digital isolationism would quickly stop paying economic dividends. Currently, apps that generate their tax revenue in China are not liable to tariffs in countries where the app is being used. Hence, in India, any tariff on Chinese software products would have looked like a pittance compared to the profits being made in China from Indian consumers. A digital tariff would help level the playing field , enabling states to respond to sanctions with real economic leverage. The Trump administration has even begun using trade tariffs as a form of sanctions, permitting increasingly punitive measures to be implemented over time.
The U.S. response must strike a balance between retaliation and restraint. China’s slowing growth rate and aging population render talk of a Chinese century deeply premature. From its difficulties exerting control over Taiwan to its dependence on the U.S. federal reserve—to say nothing of the coronavirus pandemic—there are reasons to think that the success of TikTok masks a profoundly fragile Chinese future. Replacing reckless dovism with equally reckless aggression would play into the hands of a regime that relishes geopolitical instability and the decline of internationalism. But a truly multilateral approach—one that grants independent nations additional powers and prioritizes international cooperation—would put an end to China’s malfeasance without playing by its rules. And it would also help bring on board the Asian allies that America needs most in the 21st century, from Modi’s India to Shinzo Abe’s Japan.
All while letting us enjoy our dance videos.