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.)
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.