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

TikTok is under intense political scrutiny. The U.S. Department of Justice has expressed concerns that the video-streaming app's Chinese parent company, ByteDance, may be sharing user data with the Chinese government. Now tech giant Microsoft says it’s interested in purchasing TikTok -- an idea President Trump says he supports. Nick Schifrin talks to cybersecurity expert Samm Sacks of New America.

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  • 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:

    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:

    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.

  • President Donald Trump:

    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:

    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.

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