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U.S. opens a national security review of TikTok’s acquisition of Musical.ly

393 points| situational87 | 6 years ago |reuters.com

368 comments

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[+] Merrill|6 years ago|reply
Musical.ly was started by entrepreneurs in Shanghai. Although it may have had US and Japanese investors, I don't think it was an American company. https://en.wikipedia.org/wiki/Musical.ly

>"It’s the first company to be headquartered in China, designed in China, but popular in the US," said Greylock investor Josh Elman. "Finally we’re seeing talented people who live in that ecosystem in that world and actually transcend it and build products in the US."

https://www.businessinsider.com/what-is-musically-2016-5

[+] nknealk|6 years ago|reply
I highly recommend folks listen to recent episodes of Ben Thompson’s exponent podcast where he discusses TikTok and its influence in the USA.

He makes the point that US consumers become subject to Chinese censorship policies when using the platform while China outright bans or heavily restricts American companies from operating (eg google search, Facebook).

[+] dv_dt|6 years ago|reply
US consumers become subject to Chinese censorship policies under services, media, and entertainment provided by US companies too.
[+] stevenhubertron|6 years ago|reply
I tried to find it but failed. Do you happen to remember the date it aired?
[+] bamboozled|6 years ago|reply
What’s the point here though?

America et al also don’t like certain things being published on social media and try stop it from existing on those platforms too.

[+] debt|6 years ago|reply
Yet we got Lil Nas X out of it.

Their censorship algorithm must be broken.

[+] duxup|6 years ago|reply
I wonder too if say you tried to advertise on TikTok but your company was not complying with Chinese censorship requests, or you employed an outspoken advocate, or you employed some folks who posted something about Uyghurs on social media elsewhere ... what would TikTok's response be?
[+] fruzz|6 years ago|reply
I mean, as a Canadian consumer using American social media platforms, we're subject to American censorship policies. Tumblr / Facebook / YouTube being most notable in their filtering of LGBT content and suspending accounts of LGBT users, because of the American governments stance on human sexuality. This argument of who censors makes sense for Americans, but it's more about picking your poison for people from other countries.
[+] TheMinorityGuy|6 years ago|reply
People need to be more skeptical about governments (both murican and chinese) and have more faith in fellow human beings. Why is it that US government gets it panties wet at the thought of Tiktok having influence in USA but somehow is proud of he fact that Google or Facebook are global companies ? What is that Tiktok would do to american that Google or Facebook won't do to Indians ?

Google and Facebook not being in China is not necessarily a bad thing. Both the companies are massively popular in India but make no profits off Indians yet. On other than their popularity has made Indians value these companies a lot as employers and every third Google/Facebook engineer in Mountain View is an Indian person. Google or Facebooks adventures in India (and China) if at all are nothing but a huge subsidy being delivered to these upcoming markets at the expense of American consumers.

Say China opens up its markets for Google and Facebook like tomorrow would you be fine with that ? Both Google and Facebook are then going to borrow money from american to build massive data center networks in China spending billions of dollars which may or may not be recovered in near future.

Xenophobia and divergence from free market principles in USA have made other countries better potential successors to Silicon Valley. In near future we will see more and more companies coming up from China. What USA has done with Tiktok is essentially a child like tantrum to scare other investors and chinese companies but very likely US government will end up with an egg on its face.

[+] situational87|6 years ago|reply
After the US claimed that Huawei was a national security threat only to drop this claim completely when China started cooperating on trade talks I honestly don't know what to believe anymore.
[+] bredren|6 years ago|reply
It was clear to me how threatened Facebook was by TikTok when I brought it up with an employee in June.

They kept mentioning infinite scroll, and that everyone was supposed to be thinking about how to incorporate that into product.

After zuck discussed TikTok directly recently, I’m not surprised google and fb lobbyists would press for this investigation.

One question I have, is the real-time interests of millions of 16-24 yo Americans reported back to the Chinese government a national security concern?

[+] Scaevolus|6 years ago|reply
Facebook has released a TikTok clone, Lasso, but they miss a lot of basic things that made TikTok popular, both from a policy perspective and from UX. It's much less competitive than Instagram's cloning of Snapchat.

Initially Lasso only supported registering with a Facebook account, defaulting to exposing your real name to the world. TikTok let you browse anonymously and register with just a phone number or email account, letting users protect their identities much easier. Lasso now allows you to register with an Instagram account.

Lasso has much worse video quality-- seemingly SD vs HD, presumably to save bandwidth, but it makes videos much less appealing since they're noticeably blurrier. This may be because Lasso decided to show me Spanish videos for no apparent reason (or maybe that's where their users are?), and most Spanish-speaking countries have predominantly Android phones which have worse video quality.

The infinite scrolling feels worse because videos fade in from black instead of displaying their first frame while scrolling into view. The feed isn't actually infinite, but refuses to load past a certain point. You can't swipe right from the feed to view a user's profile.

Regarding censorship, I'm not convinced ByteDance's Chinese style "ban anything contentious" censorship is actually a downside for most teen users. Instagram has _very_ loose censorship policies, which easily allow the feed to become very sexualized. I expect this makes younger users feel less comfortable posting publicly-- Instagram is where the bikini models and their followers hang out!-- while TikTok's more carefully curated space feels age-appropriate. That may all be network effects, though, with social networks as always being colonized first by the young.

[+] paxys|6 years ago|reply
16-24 yo (and even younger) American kids/youth being exposed to Chinese propoganda and censorship is most definitely a national security concern.
[+] RandomBacon|6 years ago|reply
> is the real-time interests of millions of 16-24 yo Americans reported back to the Chinese government a national security concern?

Yes. They are kids today, but they might be a Senator, CEO, or President tomorrow.

Or they might grow up to be an average person, but with a sensitive job and a Chinese intelligence officer needs background on someone to flip them.

They don't need sensational information, just insight on how their target can be influenced.

[+] jasonjayr|6 years ago|reply
>One question I have, is the real-time interests of millions of 16-24 yo Americans reported back to the Chinese government a national security concern?

Perhaps not, but the influence of a nebulous "algorithm" controlling what comes up next certainly can reinforce a message or way of life that line up with China's cultural norms

[+] bigodbiel|6 years ago|reply
Grindr's in the hands of the Chinese was already raising hairs. When you consider that Tik Tok is again (after COPA) under FCC investigation over its handling of children data.
[+] justinzollars|6 years ago|reply
TikTok is actually a great app. When I was a kid in the 00's my friends and I used to carry around a video camera to make music videos. With TikTok you can do it with your cell phone.

They beat SnapChat, FB and Instagram on experience.

Censorship is something serious to consider, but these are mainly kids making music videos. They aren't using it to organize campaigns.

[+] yorwba|6 years ago|reply
The article conveniently forgets to mention that Musical.ly was founded by Chinese founders and headquartered in Shanghai. Maybe they technically were an American company, but it's not clear the outcome would have been much different from a "national security" perspective.
[+] rygh|6 years ago|reply
I know this a long time ago, they ban lgbt content and I never download the app on my phone. Chinese business is controlled by the state.
[+] nostromo|6 years ago|reply
I would support a wholesale ban on Chinese acquisitions of American companies until American companies are allowed to acquire Chinese companies (or otherwise operate in China).

These ridiculous double standards from China are not free trade, and we should stop pretending it is.

[+] president|6 years ago|reply
Most people probably realize it. What we need is for the American CEOs, financial elite, members of government that have investments in China to invest in their own country rather than in a lop-sided trade economy that doesn't allow free flow of money back to the US.
[+] DiogenesKynikos|6 years ago|reply
American companies can and do buy Chinese companies. Foreign ownership restrictions have been relaxed or dropped entirely in most sectors in China over the last two decades.

Complaining that American companies can't invest in China is strange, given that until fairly recently, the flow of investment was almost 100% in that direction. It's only in the last few years that Chinese companies have begun investing significantly in American companies.

As for "operat[ing] in China," American companies have a massive presence in China. Where are you getting the idea that American (or foreign) companies can't operate in China? It's the most important market for all sorts of Western companies. The restrictions on tech companies, specifically, have to do with political censorship. Companies that censor have access.

[+] sambull|6 years ago|reply
What about French companies buying strategically important companies in the US? That then gets bought by a Chinese company at a later date? Is it a French company still?
[+] vkou|6 years ago|reply
Why do you care that US firms can't invest in China? Globalization proponents tell me that this sort of thing only hurts China, by limiting its access to capital - which doesn't seem to be our issue.

Or are you claiming that foreign investment into local companies hurts local companies? If so, please justify our past three decades of policy towards Asia, Africa, South America, and the post-Soviet Eastern Europe. Foreign investment into those countries owns a lot of key businesses and infrastructure, but for some reason, very few firms originating in those countries have significant investments in the US.

If openness to foreign investment is a good thing, why do you care about making it quid-pro-quo? If it's a bad thing, why do we push so hard for it?

[+] headsupftw|6 years ago|reply
So are you saying that currently American companies are NOT allowed to acquire Chinese companies or operate in China?

There are a few instances where that's true (there are also a few instances where Chinese companies are not allowed to acquire U.S. companies or operate in the U.S.) but you said "I would support a wholesale ban on Chinese acquisitions of American companies". So again are you insinuating that at this moment, no American companies are allowed to acquire Chinese companies or operate in China?

[+] arminiusreturns|6 years ago|reply
A curious development I noticed: Chinese dominated parent company in the Caymans or equiv with two subsidiary "sister companies", with one in US, UK, etc, and the other in China. Besides the obvious IP leakage due to Chinese law, what problems do you see with this and how would you approach this issue?
[+] wslh|6 years ago|reply
It is crystal clear that TikTok is a pivot for China. I think this is the first Chinese application that beats the US (Silicon Valley) "monopoly"? It is a great business and cross cultural achievement.

It seems like the Chinese could be successful in duplicating SV even in a non democratic context.

[+] origami777|6 years ago|reply
These types of applications come and go. That a Chinese company made a popular one shouldn't be shocking or indicate some major breakthrough.
[+] dade_|6 years ago|reply
TikTok is actually a great app. Content is very entertaining and it is actually easy to use. I still can't figure out Snapchat.

Today it is just a way for me to burn 15 minutes, but I see plenty of potential and make the concerns of censorship and ownership valid concerns.

[+] rygh|6 years ago|reply
And jumping bytes is a great company yet they have no choice but to get political and enforce censorship that bans lgbt contents.
[+] AWildC182|6 years ago|reply
Does anyone have any insight into their revenue model? How are they succeeding where Vine failed or are they still just riding investor capital?
[+] will_pseudonym|6 years ago|reply
Bring back Vine, Twitter!

Why was it shuttered? It seemed like such a short-sighted move. Vine had such cachet and was fun to use & create on it. RIP

[+] CydeWeys|6 years ago|reply
I'll never understand why (a) Vine was shut down, and (b) So many Americans are eager to rush out and use a Chinese social network.

I suspect (b) can be explained primarily through ignorance.

[+] undefined3840|6 years ago|reply
Twitter really screwed up by shutting down Vine. What a crazy thing to think that by doing so they may have generated a national security issue? Wild.
[+] RedComet|6 years ago|reply
US companies (Twitter, Facebook, Google) censor people all the time.
[+] mrtksn|6 years ago|reply
After all the political stuff going on, every country began seeing foreign communication companies as a national security threat. Russia and China were early on this but EU is also tightening the grip. We had a good go but since the politicians got involved I expect the internet to become separated into regional islands of regulations.

Facebook probably had a dream of becoming a global political influence broker and sell mandate to the highest bidder but I think the people who control the guys with the guns are not especially thrilled to play this game.

[+] kube-system|6 years ago|reply
This is about more than simply censorship, the broader concern is social manipulation at the hand of foreign governments.

And likewise, those US companies have also drawn similar regulatory attention.

[+] xmly|6 years ago|reply
It is not about censorship. It is about WHO censor WHO.
[+] quaquaqua1|6 years ago|reply
I am an American-born man of Western European descent. My girlfriend is a Chinese passport holder here on H1B. I am an anarchist.

I absolutely do not understand why there is so much hate for Chinese people, Chinese companies, or the Chinese government. Literally everything has flaws, and Western Europe and USA have plenty of them.

If you are not willing to say "China does xyz but actually also my country does something similar to xyz too, and it's definitely bad"...

...then at the very least, please do not act as if your statements about Chinese nationals are 100% true for every individual. Humans are humans, they differ in meaningful ways but they also deserve dignity and respect.

[+] morpheuskafka|6 years ago|reply
Shouldn't this issue be addressed by the free market rather than by the government getting involved? If there is evidence that the app censors content to serve CCP propaganda, then consumers can make the choice not to use it.
[+] chillacy|6 years ago|reply
Markets work best when there is transparency: for instance adding MPG to car labels helps "the market" make good choices by informing customers at the point of sale. The law which dictates an MPG sticker is "the government getting involved".

Another example: trademarks allow superior brands to win over time. The enforcement of trademarks is "the government getting involved".

[+] ng12|6 years ago|reply
The market is no longer free when China is involved. They'll gobble American market share (and use that market share to further their political goals) while completely blocking out American companies from the Chinese market.

Nobody would care if TikTok were Taiwanese or South Korean.

[+] crematoria|6 years ago|reply
The free market is usually predicated on rational actors. I don't think the target market of teenagers fits the bill, nor does any market, really, once propaganda enters the picture.