TikTok CEO Says ‘Project Texas’ To Allay US Security Concerns

(Bloomberg) – Hit video app TikTok is investing heavily to address US concerns about its data security and expects to partner with Oracle Corp. to provide a satisfactory solution.

TikTok Chief Executive Officer Shou Zi Chew said the company is working on a project called Project Texas that aims to isolate sensitive data from its American users so that only employees in the US have access. He called the effort “extremely difficult and expensive to build,” but addressed concerns from American officials.

“This is unprecedented. No company has attempted this,” Chew said at the Bloomberg New Economy Forum in Singapore on Wednesday. “I am very confident that through the detailed discussions we will have, we will find a solution that adequately addresses national security concerns.”

TikTok has come under fire because employees in China, where parent company ByteDance Ltd. based, could tap into US user data. Just this week, FBI Director Christopher Wray said the bureau was “extremely concerned” that the Chinese government could influence the app to control millions of user data or software and its recommendation algorithm – which determines which videos users watch next will.

Chew dismissed the idea that a social media company would verify citizenship before deciding who gets access to specific data.

“No consumer internet company that I know organizes access to data by nationality,” he said.

Instead, he argued that data controls should be geographical to ensure security.

“Only a US resident entity has access to a specific set of US proprietary data,” he said of TikTok’s strategy with Oracle, which would host the app’s data.

TikTok is the crown jewel of ByteDance’s app portfolio, an online repository of bite-sized clips that brought the short video format into the mainstream, siphoning off users from US social media services like Meta Platforms Inc. and Google’s YouTube.

Its success made the Chinese company the most valuable startup in the world and elevated co-founder Zhang Yiming to the distinguished ranks of billionaire entrepreneurs. However, Beijing-based ByteDance has endured a brutal two years as first the Trump administration, and then their own government, attempted to curtail their growing hold on user data and the wider population. Chew, a citizen of Singapore, left Chinese handset maker Xiaomi Corp in 2021 amid a series of leadership reshuffles. to ByteDance.

Washington’s concerns centered on the massive amounts of data TikTok sucked up from its more than a billion users, the potential for spreading misinformation among America’s youth, and the threat of espionage. The Biden White House is now forging a security deal with TikTok to save the app from an all-out US ban imposed during the Trump era, but critics fear such an approach is unlikely to prevent data from going to China reach.

On Wednesday, Beijing accused Washington of intentionally restricting Chinese companies abroad.

“Spreading false information and using it as an excuse to suppress relevant Chinese companies has become a common practice in the United States,” Chinese Foreign Ministry spokeswoman Mao Ning told reporters at a regular news briefing.

FBI’s Wray ‘extremely concerned’ about TikTok data issue (2)

Chew runs a still fast-growing video platform, but it’s not immune to the fallout from a global downturn that has hit western internet giants. The TikTok boss recently lowered the app’s advertising forecast for 2022 to $10 billion from a previous at least $12 billion, Bloomberg News reported this month, reflecting a decline in marketing spending worldwide.

Parent company ByteDance has postponed plans for an IPO as investors flee riskier assets. In September, it offered to buy back up to $3 billion of its own stock at a value of about $300 billion to give existing backers a way to cash out. Domestically, its TikTok-style Douyin app competes with Tencent Holdings Ltd. and Alibaba Group Holding Ltd. in arenas ranging from entertainment to e-commerce.

The New Economy Forum is organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.

©2022 Bloomberg LP



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