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The clock ticks on TikTok

September 2 · Issue #562 · View online
The Interface
Two weeks from today, TikTok as we know it might no longer exist. On Monday, President Trump reiterated his insistence that ByteDance divest itself of the popular app by September 15th on national security grounds. In addition, Trump repeated his demand that the United States be “well compensated” as part of the deal, a demand that seemingly has no legal basis but which everyone seems to be more or less shrugging off because we are only equipped to handle so many crises at once.
Several large American companies have confirmed their interest in making a deal, led by Oracle in one corner and the unholy combination of Microsoft and Walmart in another. The price tag is reported to be between $20 billion and $30 billion. But there’s a catch: the Chinese government has intervened, and it now seems possible that no deal will be struck at all.
The reason is that the recommendation algorithms that power TikTok’s core feed, the For You page, may no longer be for sale. Liza Lin, Aaron Tilley and Georgia Wells have the story in the Wall Street Journal:
The algorithms, which determine the videos served to users and are seen as TikTok’s secret sauce, were considered part of the deal negotiations up until Friday, when the Chinese government issued new restrictions on the export of artificial-intelligence technology, according to people familiar with the matter.
Now both sides are trying to figure out whether the order means the algorithms need Chinese government approval for transfer, and if so, whether Beijing would sign off. The complexity involved has reduced the chances that a deal could be completed soon.
TikTok’s algorithms have rapidly become the stuff of legend. Last month, the writer and investor Eugene Wei wrote about how ByteDance had gotten so good at determining a person’s preferences from various signals they send the app that the company managed to overcome the fact that engineers lacked any real cultural understanding of the United States. “A machine learning algorithm significantly responsive and accurate can pierce the veil of cultural ignorance,” Wei wrote. “Today, sometimes culture can be abstracted.”
Until now, the power of those algorithms has been realized primarily in their ability to scale up user bases and sell a massive amount of advertising. The number of American using the app has doubled in the past year, to roughly 100 million, and 680 million people used TikTok in July. Yunan Zhang and Juro Osawa captured the impact this week in The Information:
In the U.S., the world’s most lucrative ad market, TikTok had anticipated it would bring in $500 million in 2020, The Information previously reported. More important, investors said, was the prospect of mammoth revenue growth from the U.S. in the years to come. […]
For now, TikTok still only generates a fraction of the $26 billion in global ad revenue ByteDance expects to have in 2020, almost entirely from advertising sales on two blockbuster apps in China: Toutiao, a news feed, and Douyin, a short-video app similar to Tiktok. But neither of those businesses is adding users as quickly as TikTok. 
But China hawks have long pointed out that the same algorithm that makes TikTok such a good business also makes it a national security threat. There are other concerns about the app’s Chinese ownership — over what data the app collects and might be forced to share with China’s authoritarian government, for example, and about what kinds of speech the app might censor. There is also a simple fairness argument: American social networks are banned in China, so why shouldn’t Chinese social networks be banned in America?
But the most compelling case for divestiture, at least for me, is the threat that TikTok could evolve into a covert propaganda tool. Ben Thompson, who has been leading this conversation, made the point concisely here:
TikTok’s algorithm, unmoored from the constraints of your social network or professional content creators, is free to promote whatever videos it likes, without anyone knowing the difference. TikTok could promote a particular candidate or a particular issue in a particular geography, without anyone — except perhaps the candidate, now indebted to a Chinese company — knowing. You may be skeptical this might happen, but again, China has already demonstrated a willingness to censor speech on a platform banned in China; how much of a leap is it to think that a Party committed to ideological dominance will forever leave a route directly into the hearts and minds of millions of Americans untouched?
That the TikTok deal could fall apart over an algorithm that mostly promotes singing and dancing challenges, at least on my For You page, may seem silly. I talked with some smart folks today, including some who do not work at ByteDance, who find the near-mystical properties that some people ascribe to algorithms to be at least a little ridiculous. An algorithm is just a math equation, after all, and valuable insofar only as it receives a steady stream of new data to train and refine it.
And there’s a fair case to be made that China’s new export controls, which span several industries and go well beyond social recommendation algorithms, are more related to national pride, politics, and the trade war than they are to specific national security concerns. (What would China be worried that America would do with TikTok, exactly? It’s not as if the winning bidder will be allowed to re-launch TikTok in China.)
But the idea that a nation would restrict the export of algorithms is not new — the United States, for example, has long restricted the sale of technology related to cryptography. And the country has added dozens of Chinese companies to an export blacklist in the past year amid a wider trade war.
On the whole, I’d still say China’s effort to restrict the sale of TikTok’s recommendation algorithm lends credence to the idea that it is powerful and deserving of scrutiny by both the buyer and the seller. American technology companies are still catching up to the idea that recommendations can and do cause active harm, from promoting the rise of anti-vaccine zealots to recruiting new adherents to QAnon. The precise motivations may be muddy, but China at least seems to be taking social algorithms exactly as seriously as they ought to be taken.

I got lots of smart feedback on yesterday’s column on why it’s time for Twitter to retire its Trending feature. Two points I wanted to share. One, a former Twitter employee reminded me that the company makes a not-inconsiderable amount of revenue from letting advertisers pay to promote trends, making it far less likely Twitter will hear my plea.
And two, I linked to a story reporting that a significant amount of Twitter activity related to COVID-19 appeared to be posted by bots. It turns out that the research in question had been the subject of a lot of criticism, starting with the fact that there was no published data for anyone to look at. Basically every disinformation researcher I follow on Twitter had dismissed the findings as suspect, and I should have noted that Tuesday. Thanks to Evelyn Douek for reminding me!
The Ratio
Today in news that could affect public perception of the big tech platforms.
🔽 Trending down: Amazon is spying on its workers in closed Facebook groups. Corporate employees are getting regular reports about the social media posts of Flex drivers, and using these reports to monitor potential strikes and protests. The company ended the practice after it was reported. (Lauren Kaori Gurley and Joseph Cox / Vice)
Prominent Republicans are sharing deceptive videos of Joe Biden, and the big tech platforms aren’t doing much to prevent it. Adding a manipulated media label under a video that’s already racked up millions of views likely won’t contain the spread. Donie O’Sullivan and Daniel Dale at CNN have the story:
One that circulated widely was a false video about Democratic presidential nominee Joe Biden posted to the Twitter account of House Minority Whip Steve Scalise. After an outcry, including from a person in the video who had words put in his mouth in order to distort what Biden was saying, Twitter took the action it takes in such instances, labeling the video as “manipulated media.”
The manipulated media label is just that, however — a label appearing below the video when people look at the specific tweet to which it has been applied. It’s small and potentially missed by users, and though it may potentially make some users pause before sharing a given video, it does not actually stop them if they decide to go ahead anyway.
Facebook removed a post from Rep. Clay Higgins (R-LA) where he threatened to kill armed protestors. Higgins is a former police officer and a vocal gun rights advocate. And murder advocate, apparently! (Salvador Hernandez and Sarah Mimms / BuzzFeed)
A coalition of progressive groups is demanding that Joe Biden commit to not appointing Facebook executives or registered lobbyists to the Biden transition team or his future administration, if he is elected. They cited Facebook’s involvement in spreading “dangerous COVID-19 health conspiracies and supercharging election misinformation.” (Makena Kelly / The Verge)
The FBI has significantly changed how it communicates with hacking victims in order to avoid a repeat of what happened in 2016 with the DNC. One of the changes involves notifying more senior people in an organization if there’s been a breach. (Andy Greenberg / Wired)
Melania Trump regularly used a private email account, iMessage, and the encrypted messaging app Signal while in the White House, according to an advisor and close friend. Some messages contained discussions of government hires and contracts and detailed schedules for the president and first lady. (Jada Yuan / The Washington Post)
Facebook updated its Terms of Service to allow it to take down content that could increase its regulatory risks, even if the content itself isn’t illegal. The change allows it to block people and publishers in Australia from sharing news, in response to a proposed law that would force the company to pay media companies for articles. Got some messages asking what this pop-up was about — here you go! (Sarah Frier / Bloomberg)
Facebook evades Apple’s 30 percent commission on its biggest social apps, this somewhat troll-ish piece argues. So why is Mark Zuckerberg speaking out about the iPhone markers’ monopoly, the writer wants to know. Feel free to sound off in my DMs! (iA)
Apple, Google, and Amazon are all raising prices on UK enterprise customers in order to offset a new “digital services tax” introduced by the UK government. This increases tax on any revenue produced by “search engines, social media services and online marketplaces” by 2 percent. (James Vincent / The Verge)
India banned another 118 Chinese apps, citing national security concerns. The “splinternet” effect is accelerating. See also the item below. (Medianama)
Pakistan blocked five dating apps including Tinder and Grindr for not adhering to local laws. It’s the latest move the government has made to curb “immoral content.” It’s a shame — immoral content is by far the best part of Grindr. (Gibran Naiyyar Peshimam / Reuters)
Police in Canada are using controversial algorithms to predict where crimes might occur and determine where they should patrol. The practice poses a threat to human rights, according to a new report from the University of Toronto’s International Human Rights Program and Citizen Lab. (Nathan Munn / Vice)
The dating app Bumble is preparing to go public at a $6 billion valuation. The IPO is expected to happen early next year. Here are Katie Roof and Kiel Porter at Bloomberg:
Bumble could seek a valuation of $6 billion to $8 billion, said one of the people, asking not to be named because the matter is private. While it is talking to banks, it hasn’t settled on a lineup, the people added. No plans have been finalized and the timing of Bumble’s IPO could still change. […]
Private equity firm Blackstone Group Inc. bought a majority stake in Bumble last year — when it was known as MagicLab — in a deal that valued the company at $3 billion. Founded in 2006 by Andrey Andreev, MagicLab had been mulling an IPO before that deal.
Google’s personalized audio news feature, Your News Update, is launching on Google Podcasts. The feature leverages machine learning techniques to create personalized news broadcasts. (Sarah Perez / TechCrunch)
ByteDance faces tough odds as it looks for something to replace the success of TikTok. So far, the company has struggled to develop new products that could aspire to TikTok’s popularity. (Yunan Zhang and Juro Osawa / The Information)
Twitch is rolling out Prime Video watch parties to all users, following a closed beta in the US. Now, anyone with a Prime Video subscription can broadcast Prime shows to Twitch, and other Prime subscribers will be able to watch along and point out that The Marvelous Mrs. Maisel got really bad in season two. (Nick Summers / Engadget)
Microsoft created a new tool called the Microsoft Video Authenticator to spot deepfakes. It also launched an interactive quiz to help people learn about synthetic media, in partnership with the UW Center for an Informed Public. (Microsoft)
When Silk Road died, drug dealers moved to the encrypted messaging app Telegram. In the Ukraine, 90 percent of drug sales now take place on the platform. (Laura Brickman / Rest of World)
Those good tweets
Jesse Daniel Lifson
Halloween is coming up soon. I think I will dress up as a mailbox since nothing terrifies Republicans more.
yesenia ✿
my trust issues so bad I don’t even trust these:
Did you know 17 muscles are activated when youre crying?? Fitness is my passion
The French History Podcast
French Prime Minister Édouard Philippe defeats children in a game of dominos during a visit to a school, July 2020.
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