Visiting the Annual Football Tournament Hosted by the Assembly
[Asia Economy Reporter Jeong Hyunjin] Shou Zi Chew, CEO of China's TikTok, has been frequently visiting Washington DC recently. According to Bloomberg News citing multiple sources on the 1st (local time), CEO Chew, along with the company's Chief Operating Officer (COO), head of US trust and safety, and star-level lobbyists, has contacted US lawmakers' offices about 130 times over the past three months since June.
He has been actively moving around, attending meetings in person, making phone calls, sending emails, and meeting US political figures at events. Bloomberg reported that on the 21st, he and TikTok's government relations team also attended the annual American football game held by the US Congress.
The reason CEO Chew is increasing contact with US political circles so busily is to persuade the US government and Congress regarding the issue of data storage of US users and to gain their trust. Bloomberg reported that from the White House to Congress, the Committee on Foreign Investment in the United States (CFIUS), and agencies reviewing foreign investments, measures regarding TikTok are being considered. It is known that CEO Chew views regaining trust from US political circles as crucial for TikTok to continue its business in its largest market, the United States.
This tug-of-war between TikTok and US political circles has been ongoing for more than two years. It is also described as a "microcosm of US-China conflicts." Since the Trump administration, the US has been suspicious and cautious about the relationship between TikTok, Huawei, and the Chinese government.
As TikTok users rapidly increase in the US, there are concerns that TikTok could provide these users' data to the Chinese government. During the Trump administration, a ban on TikTok was even issued, but it was lifted in June last year under the Biden administration. The Biden administration is seeking countermeasures against TikTok, including monitoring the impact of software applications linked to China on US national security.
◆ "TikTok Reaches Draft Agreement with Biden Administration"
The New York Times (NYT) reported on the 26th of last month, citing sources, that the Biden administration and TikTok have drafted a preliminary agreement. The focus is on whether TikTok's parent company, ByteDance, will sell TikTok. The Trump administration pressured ByteDance multiple times to sell TikTok's US assets, and at that time, there was speculation that US company Oracle might acquire TikTok.
However, NYT reported that this agreement is unlikely to include the sale of TikTok. It is expected to be resolved by TikTok adjusting data security and governance aspects. Given TikTok's growing influence in the US, it is difficult to pressure it to completely shut down services, so the approach seems to be shifting toward strengthening oversight.
According to reports, the draft includes provisions such as storing US users' data exclusively on US-based servers operated by Oracle, not in Singapore or Virginia; Oracle monitoring TikTok's algorithm; and establishing a security expert committee within TikTok to regularly report operational matters to the US government.
NYT stated that the draft agreement is not finalized and negotiations are ongoing. Lisa Monaco, the Deputy Attorney General and the 'number two' at the US Department of Justice leading the negotiations, is reviewing it but voices calls for stricter regulations. The US Treasury Department also appears skeptical about whether this agreement can fully resolve national security issues posed by TikTok. If TikTok reaches a final agreement through negotiations with CFIUS, President Biden is expected to sign it.
◆ "Republicans Demand 'Cut Ties with ByteDance'... Difficult to Pass US Congress"
Although the possibility of an agreement is emerging, TikTok still faces challenges, namely the US Congress. Currently, pressure on TikTok is intensifying, especially from Republican lawmakers.
If the Republicans take control of the House in the upcoming November midterm elections, TikTok is expected to face a difficult situation. Republicans focus on whether ByteDance employees in China can access information of TikTok's American users, believing that the Chinese Communist Party could use TikTok to influence Americans' thoughts.
Bloomberg reported that although CEO Chew has expanded contact with US political circles, he avoids meetings with Republican lawmakers who are aggressively attacking TikTok. Notable figures include hardline Republicans Senator Marco Rubio (Florida), Senator Josh Hawley (Missouri), and Senator Marsha Blackburn (Tennessee). Bloomberg also reported that TikTok tried to contact Senator Blackburn's office to arrange a phone call, but the call was canceled after failing to set an appointment.
Senator Rubio continues to argue that national security issues will remain unresolved unless TikTok and ByteDance are completely separated. Senator Hawley recently sent a letter to Treasury Secretary Janet Yellen, who chairs CFIUS, demanding direct action to require TikTok to sever all ties with the Chinese company. Senator Blackburn requested in 2020 that fellow lawmakers avoid any meetings with Chinese tech companies.
Nu Wexler, a partner at Seven Letter with government relations experience at Google, Twitter, and Facebook, told Bloomberg that even if TikTok believes the criticism from Congress is unfair, it will face real problems if it does not improve relations with them. "If you don't build relationships, you won't get support when you need it," he said.
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