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The hammer comes down on TikTok

Revue
 
Not since the heyday of Vine have we seen a social app become an engine for the production of culture
 
October 24 · Issue #406 · View online
The Interface
Not since the heyday of Vine have we seen a social app become an engine for the production of culture the way TikTok is right now. Barely a year old, TikTok is having a moment — and to see it, you don’t even have to open the app.
Open Instagram, or Twitter, or Facebook, or YouTube, and you’re likely to see one of the short, looping videos created in TikTok. The app helped Lil Nas X’s “Old Town Road” rocket top of the Billboard charts, and stay there for a record amount of time. American high schools are starting TikTok clubs to participate in viral dance challenges and other memes.
But the more popular the app has gotten, the more likely it has become that regulators would take notice. TikTok is, after all, owned by the Chinese company ByteDance, and is arguably the first mainstream hit consumer app in America to be made in China. And that’s a fraught position to be in, given the ongoing trade war and growing concern about Chinese censorship of American companies.
As I wrote here in August, in a piece about how TikTok could stumble:
The Chinese version of TikTok is already a propaganda outlet for the government. What happens if TikTok becomes a propaganda outlet for China here in the United States? Think Russia’s RT network, but with 1 billion monthly users and an algorithmic feed that it can manipulate however it wants. That seems like something the US government might take an interest in, too.
As of today, the US government has taken an interest, requesting an investigation into the app on national security grounds. Here’s Tony Romm and Drew Harwell in the Washington Post
Two senior members of Congress, Senate Minority Leader Charles E. Schumer (D-N.Y.) and Sen. Tom Cotton (R-Ark.), asked U.S. intelligence officials late Wednesday to determine whether the Chinese-owned social-networking app TikTok poses “national security risks.”
In a letter to Joseph Maguire, the director of national intelligence, the lawmakers questioned TikTok’s data-collection practices and whether the app adheres to censorship rules directed by the Chinese government that could limit what U.S. users see. TikTok, which provides users a feed of short videos, has become wildly popular among teenagers worldwide.
“With over 110 million downloads in the U.S. alone, TikTok is a potential counterintelligence threat we cannot ignore,” wrote Schumer and Cotton, who sits on the Senate Intelligence Committee. “Given these concerns, we ask that the Intelligence Community conduct an assessment of the national security risks posed by TikTok and other China-based content platforms operating in the U.S. and brief Congress on these findings.”
TikTok responded forcefully, saying that the company stores data about US users here and in Singapore rather than in China. And it said it would reject any government requests to censor content, including requests from China:
Our data centers are located entirely outside of China, and none of our data is subject to Chinese law. Further, we have a dedicated technical team focused on adhering to robust cybersecurity policies, and data privacy and security practices.
Second, in regards to content concerns. Let us be very clear: TikTok does not remove content based on sensitivities related to China. We have never been asked by the Chinese government to remove any content and we would not do so if asked. Period. Our US moderation team, which is led out of California, reviews content for adherence to our US policies – just like other US companies in our space. We are not influenced by any foreign government, including the Chinese government; TikTok does not operate in China, nor do we have any intention of doing so in the future.
It’s a good statement, written in plain English. And yet somehow I doubt it alone will satisfy regulators.
On the censorship front, there’s evidence that TikTok has been true to its word. Here’s Ryan Broderick doing a little stunt journalism in BuzzFeed:
To test this claim, BuzzFeed News talked to three Tik Tok users in the United States who had recently created content that supported protests in Hong Kong — as well as posting videos of our own that documented the unrest. None of their videos — or ours — were removed.
The most likely explanation for this is simply that pro-Hong Kong content is not a particularly hot topic for TikTok’s mostly-teenage users in the US. … Claims of censorship on TikTok didn’t seem to take into account the fact that American teenagers don’t appear to be creating viral pro-Hong Kong content on platforms like Facebook or Instagram either.
In any case, regulation isn’t TikTok’s only concern at the moment. It is also beginning to shed users as ByteDance ratchets down the amount of money it’s spending to acquire new ones. (Something else I predicted might happen in August.) Here’s Zheping Huang and Shelly Banjo in Bloomberg:
The app amassed an estimated 177 million first-time users across the Apple App Store and Google Play for the third quarter ended September. That represents a 4% decline from a year ago. It’s the first time the hit app saw new installs drop on a quarterly basis, the mobile data provider said. 
ByteDance has long splashed huge chunks of money to advertise TikTok on Facebook, essentially buying users away from its biggest rival. But more recently, the company appears to have curtailed that spending. According to Sensor Tower, TikTok was the top app-install advertiser on Facebook in the U.S. for four quarters in a row – until it dropped out of the Top 10 in the second quarter. That coincided with a sharp plunge in new user growth in the country – from the first quarter’s 182% year on year to just 16% in the second quarter.
A final concern for TikTok today: competition. Recently I was talking to a smart person about TikTok who told me that the app had the basic business model of a videogame on Facebook during the heyday of mobile app installs. Developers would determine the lifetime value of a mobile user, then bid less than that amount to acquire them via Facebook. You keep pouring money into Facebook for as long as you can acquire new users for less than you can make from showing them ads. Eventually you run out, the game withers away, and you go make another game and repeat the process.
So far, TikTok has run the same playbook. It knows how much money it can make by showing users ads, and it spends a portion of that money on Facebook, Snapchat, and other platforms to acquire them. But the Bloomberg report above suggests it may be running out of those cheap, early users.
Over the past year, TikTok has had the AI-powered entertainment app market to itself — at least when it comes to apps that have hundreds of millions of dollars to spend on user acquisition. But not any more. Here’s Geoff Weiss in TubeFilter:
Triller, an AI-powered platform that enables creators to make music videos using licensed songs, has raised $28 million in Series B funding, led by media investment company Proxima (which was founded by veteran businessman and film producer Ryan Kavanaugh, who founded Relativity Media and is behind films like The Social Network and Mamma Mia).
New funds will be allocated to fuel growth and for product enhancements according to the company — and presumably for acquisitions. At the same time as it announced the funding round, Triller — which likens itself to a TikTok competitor — said it has acquired U.K.-based MashTraxx, a machine learning platform for music video editing.
Maybe Triller will be the US-based TikTok clone that outgrows the original. Or maybe it just heralds the arrival of a time when AI-based entertainment apps swell in number to the point where customer acquisition gets so expensive that they’re no longer viable.
TikTok is still ascendant in many ways, and it may yet navigate these issues and whatever comes after them. But the road ahead is getting more challenging all the time.

The Ratio
Today in news that could affect public perception of the big tech platforms.
🔼 Trending up: Twitter’s algorithm is getting better at flagging abuse content. This past quarter, 50 percent of the tweets it removed were pulled before a user flagged the content. 
🔽 Trending down: But Twitter reported slow revenue growth due to advertising product “bugs” and other “unexpected headwinds” in its ads business. The news sent Twitter’s stock plunging more than 15 percent.
🔽 Trending down: Twitter admitted that it showed more ads to less popular users, likely in an effort to keep them on the platform. They’ve now changed the policy, prompting popular users to complain they’re seeing more ads.
Thank you
… to everyone who came to the first-ever Interface Live event at Manny’s in San Francisco on Saturday. We just about sold the place out, with more than 150 of you coming to hear my conversation with the brilliant Renee DiResta. I got to meet newsletter readers from Facebook, YouTube, and Twitter in person, along with a bunch of independent app developers and other folks who are simply interested in staying better informed. I’ve never been so excited about this project, and I can’t wait to bring you more live events in 2020.
Governing
The Trump administration can’t agree on how aggressively to restrict China’s access to United States technology. Too many constraints could hurt American industry, but too few could lead to national security risks, reports Ana Swanson at The New York Times:
“There’s a clear fight in the administration between those who want to have a broad response to China’s technology acquisition and development strategies and those who want to surgically limit China’s access to very specific items and essentially return to a business-as-usual approach to China,” said Michael R. Wessel, a member of the U.S.-China Economic and Security Review Commission, who advocates more comprehensive controls.
Next month, the bureau is expected to announce an initial set of restrictions on exporting some technologies, including quantum computing, 3-D manufacturing and an algorithm that guides artificial intelligence, an official from the bureau said. While those restrictions are a start, they are not enough to satisfy the president’s more hawkish advisers.
Instagram is relying on Facebook to help it root out misinformation related to the 2020 election. Adam Mosseri, head of Instagram, said more engineers work on safety and election-interference issues at Facebook than work on Instagram overall. His strategy is to leverage their resources to work on Instagram-specific issues. (Sarah Frier / Bloomberg)
The lawyer once in charge of selling the Patriot Act to Congress has a new job defending Facebook. Jennifer Newstead is the company’s new general counsel. She joins at a time when Facebook is being investigated for possible antitrust violations and mishandling user data. (Isaac Stanley-Becker / The Washington Post)
Reddit refused an appeal from members of the Pro-Trump subreddit r/The_Donald to lift a “quarantine” that limits the reach and visibility of their posts. The subreddit has been quarantined since June for inciting violence, though conservatives don’t see it that way. The situation highlights the vastly different ways liberals and conservatives view content moderation. (Allum Bokhari / Breitbart)
The Apple lawyer in charge of preventing employees from participating in insider trading was indicted on charges of insider trading, Which is really the one thing he never should have done. The lawyer, Gene Levoff, allegedly traded Apple shares during a blackout period. (Kif Leswing / CNBC)
House Republicans disrupted the impeachment depositions, barging into a secure room where they’re being held, and prompting national security concerns. Many brought their phones with them — a national security no-no, since malware can take over smartphone microphones. (Brian Barrett / Wired)
Industry
40 major music festivals, including SXSW, Coachella, Pitchfork, and Bonnaroo, pledged not to use facial recognition technology. The move comes after musicians and activists lobbied to have it banned, says Lauren Kaori Gurley at Vice:
In perhaps the biggest victory, Ticketmaster took a step back from a surveillance technology company that it invested in last year with plans to develop a facial scan for concertgoers faces instead of having them wait in lines to enter a venue. That surveillance company, Blink Identity, helped build out the U.S. military’s facial recognition technology during the war in Afghanistan. On its website, Blink Identity brags that it “spent the last decade building and deploying large scale biometric identification systems in the Middle East for the Department of Defense.”
Following the campaign’s demand that Ticketmaster terminate its relationship with Blink Identity, the ticket distribution giant issued a statement in late September, saying “Ticketmaster is always exploring new ways to enhance the fan experience, and while we do not currently have plans to deploy facial recognition technology at our ‘clients’ venues, rest assured, any future consideration would be strictly opt-in, always giving fans the right to choose.”
Mark Zuckerberg framed Libra as a charitable endeavor to help the world’s poor — but not everyone is buying it. Annie Lowrey makes the case that Facebook is not the best company to launch a cryptocurrency. (Annie Lowrey / The Atlantic)
Fortnite’s black hole event broke Twitch and Twitter viewing records. More than 7 million people tuned in to the event, which ushered in the game’s eleventh season and a new redesigned map. (Nick Statt / The Verge)
LinkedIn is hiring more journalists and editors to build out its newsfeed. Their job is to find original content and “deliver it to the right audience.” (Kerry Flynn / CNN)
And finally ...
Alexandra Petri reimagines the Facebook origin story movie if it had taken place in a world where the company’s founding had something to do with the Iraq War, as Zuckerberg said in his free speech address last week:
Mark types rapidly at his computer. His roommates stare over his shoulder.
ROOMMATE: What is it?
MARK: It’s called FaceMash. You use it to look at photos of two of your female classmates and vote hot or not based on how principled you think her opposition would be to the U.S. military presence in Iraq.
Bye.
Talk to us
Send us tips, comments, questions, and TikToks: casey@theverge.com and zoe@theverge.com.
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