White House targets Chinese-owned TikTok, encouraging Microsoft to buy it - YouTube

JUDY WOODRUFF: Now a look at how the popular video streaming app TikTok became the subject

of intense political scrutiny and why Microsoft hopes to land the U.S. part of the business

as its own.

Nick Schifrin has the story.

NICK SCHIFRIN: A coconut crusher, a donut dancer, a teenage lip synch diva.

TEENAGER (singing): When they say I'm not hot, all these lies need to stop

NICK SCHIFRIN: TikTok's viral sensations have combined access to music...

MAN: Some see this glass as half full.

NICK SCHIFRIN: ... and editing tricks made easy...

MAN: But I see it as a piece of cake.

NICK SCHIFRIN: ... to create a social media monster.

TikTok has nearly a billion users, and videos of viral sensations and their Mini-Me's are

watched hundreds of millions of times.

DANIEL IVES, Wedbush Securities: TikTok's really become a phenomenon. It's the users,

the graphics. It's the interface. And they basically have a magic formula that's really

had a magnetic attraction.

NICK SCHIFRIN: Daniel Ives is the managing director of the venture capital firm Wedbush

Securities. He says one of the youngest tech companies is the perfect target for one of

the oldest, Microsoft.

DANIEL IVES: They're the ones that -- $136 billion in cash. They're untethered from a

regulatory perspective, because they, of course, have no social media platform. And they have

had a consumer strategy that's been really on a treadmill for the last 10 years. It's

really your grandpa's Microsoft.

NICK SCHIFRIN: This weekend, Microsoft released a statement confirming it would pursue discussions

with TikTok's Chinese parent company, ByteDance, over the next few weeks, and vowed TikTok's

American users' data would be transferred to and remain in the U.S.

The Trump administration says TikTok's sleight of hand isn't this American magician.

MAN: Like my costume?

MAN: Yes. That's so cool. How are you doing that?

NICK SCHIFRIN: But the app's Chinese parent company, ByteDance, and what the Trump administration

calls a national security threat to users' data, as Deputy Attorney General John Demers

told me on Friday.

JOHN DEMERS, U.S. Assistant Attorney General for National Security: We have seen the Chinese

acquire, either through theft or through attempted acquisitions, large quantities of sensitive

personal data.

NICK SCHIFRIN: Do you have any evidence that TikTok has passed information of American

or other users to the Chinese government or the Chinese intelligence apparatus?

JOHN DEMERS: We know that any Chinese company is subject to its national security laws,

which requires that they share data with the Chinese government.

NICK SCHIFRIN: Senior administration officials tell "PBS NewsHour" that, by Friday, they

were prepared to ban TikTok from the U.S.

President Trump made that threat public on Friday night. It's not clear whether the threat

was empty, but it worked. Over the weekend, ByteDance reportedly sweetened its offer.

CEO Zhang Yiming promised to sell his stake and divest ByteDance from the U.S. TikTok

completely. And, over the weekend, President Trump gave his blessing in a phone conversation

with Microsoft CEO Satya Nadella.

DONALD TRUMP, President of the United States: I don't mind if, whether it's Microsoft or

somebody else, a big company, a secure company, a very American company, buy it.

NICK SCHIFRIN: For more on TikTok and the security concerns surrounding it, we turn

to Samm Sacks. She is a cybersecurity policy and China digital economy fellow at New America,

a Washington-based think tank.

Samm Sacks, welcome to the "NewsHour."

You just heard John Demers talk about how data in a Chinese company can end up with

the Chinese government. We also watched how most of these videos on TikTok are pretty

silly.

So, how valid is the administration's security concerns?

SAMM SACKS, New America: Let's look at the concerns one by one.

The first one is that data collected on the platform could end up in the hands of the

Chinese government, most likely through the parent company, ByteDance, since, according

to TikTok's transparency report, it has never responded to a lawful data request.

We -- so, that's risk number one. The second question is around censorship. Could the Chinese

government essentially assert an extraterritorial version of its great firewall and influence

the kind of content that was being -- that was being seen by users outside of China?

The third threat, I think, actually is probably the most likely. And maybe it has less to

do with these specific issues and is more the idea that the Trump administration views

the government of Xi Jinping as an existential threat from a national security standpoint,

and TikTok is a very large, very high-profile company that has managed to make it outside

of China.

So, those are really the three risks we're talking about here.

NICK SCHIFRIN: On that first point, what John Demers and others will point out is that,

in 2017, China passed a national security law that forces its companies, whether it

wants to or not, to share with the government, if the government or the intelligence agency

asks for it.

SAMM SACKS: The national intelligence law is very vague.

It essentially says that Chinese organizations have to comply with national security investigations.

What does that mean in practice? Could it mean that the Ministry of State Security or

the Public Security Bureau could compel a company to turn over data? In theory, yes.

Does that -- is that necessarily how it works in practice? Not necessarily. And I would

argue that, particularly when it comes to companies that are operating outside of China,

like TikTok, the Chinese government may not have incentive to force that data to be turned

over.

This raises the question, what is the strategic intelligence value of data on lip-synching

and dancing? And, here, I think it's important to look at the kind of data we're talking

about, location data, preferences. Is the Chinese government collecting a dossier on

American citizens that could be used in a nefarious way?

To date, there is no specific intelligence, other than citing this very vague law, which

could be read either way. And, in practice, oftentimes, turning data over to the Chinese

government is much more of a negotiation. And I'd say that the percentage of the time

in which the government is focused on high-value, high-impact national security targets is probably

quite small.

In those cases, companies probably cannot push back. But the vast majority of those

data access requests do not meet that high threshold, and it's much more of a negotiation

in practice.

NICK SCHIFRIN: We have only got about 30 seconds left, Samm Sacks.

But is the solution to these concerns that you and the government are raising, to a certain

extent, to have TikTok owned by an American company or even to ban TikTok?

SAMM SACKS: So, I think that there are ways to get at the security issue, without banning

the company, without essentially forcing the divestiture.

Put in place robust rules for how much data companies, regardless of national origin,

can collect. If it's sensitive data that they have, put in place strong restrictions on

their ability to retain that data, backed up by strong audits.

And, this way, you can avoid a blanket ban or a sale -- a sell-off.

NICK SCHIFRIN: Samm Sacks of New America, thank you very much.

SAMM SACKS: Thank you.