This “TikTok Ban” is a Massive Red Herring
If we want to navigate the risks and opportunities of social media, we need to work harder
The House passed a bill Wednesday (March 13, 2023) that would effectively ban the TikTok app in the U.S. (it still needs to pass in the Senate to become law). The Biden administration is all for it. The bill would require TikTok to sever itself completely from its Chinese parent company ByteDance or face a potential ban from mobile app stores and web-hosting services.
This ban feels like a massive red herring.
A red herring is something that misleads or distracts from a relevant or important question.
The ban feels like another example of Congress being slow, misguided and solving for the wrong things with respect to technology and its impact on people, structures, and systems. And it distracts from the much bigger, more important issue which is:
Given social media platforms are effectively public utilities with well-documented benefits and severe risks FOR people, businesses and nations: how should they be governed?
A public utility is an entity that provides goods or services to the general public.
Public utilities include common carriers as well as corporations that provide electric, gas, water, heat, and television cable systems. Guess what? They’re basically small potatoes compared to social media companies
The largest social platforms like Facebook, Instagram, YouTube, and WhatsApp report over 2 billion Daily Active Users (DAUs) each. TikTok is estimated at around 1.1 billion DAUs.
In contrast, even for countries with advanced utilities, the companies running these operations are tiny:
Residential water connections are typically in the tens of millions range per utility service area.
Electricity customer accounts are between 10-100 million per major utility company.
Cable/broadband subscribers are usually under 50 million for large providers.
Put another way, there are about 8 billion people in the world. While overall global access to water and electricity is higher on a percentage basis than social media (broadband access is less than social media), those access points at a company level are not concentrated / dominated in nearly the same way as social media.
Let’s use three tests to help answer the question: are the major social media companies public utilities based on the definition: “provides goods or services to the general public”?
Question 1: Do the majority of people use social media platforms on a regular basis?
Answer: Yes. 59% of the global population use social media platforms. And I’m using old data here, so it’s all probably bigger now (https://datareportal.com/social-media-users).
Meta / Mark Zuckerberg Founder and CEO
Facebook (Meta): 2.96 billion monthly active users as of Q4 2022
WhatsApp (Meta): Over 2 billion daily active users as of Q4 2022
Instagram (Meta): Over 2 billion monthly active users as of Q4 2022
Google / Larry Page and Sergey Brin Founded (Sundar Pichai CEO)
YouTube (Google): 2.5 billion+ monthly logged-in users as of Q4 2022
TikTok / privately held by ByteDance which was founded by Zhang Yiming (current CEO of ByteDance is CEO: Liang Rubo)
Over 1 billion monthly active users estimated
Snapchat: Co-founders Evan Spiegel and Bobby Murphy (CEO: Evan Spiegel)
375 million daily active users as of Q4 2022
Twitter: Owner and CEO Elon Musk
238 million daily active monetizable users as of Q4 2022
Question 2: Do the private owners control the decisions in the company that could impact the users?
Answer: Yes. The following special voting structures concentrate decision-making power with the founders or owners, despite them often owning much smaller economic stakes. It insulates them from being overruled on major corporate decisions by other shareholders.
Meta (Facebook): Mark Zuckerberg has around 58% voting rights through his special class of shares, allowing him to control decisions at the company he founded.
Snap Inc. (Snapchat): Co-founders Evan Spiegel and Bobby Murphy collectively own around 99% of the voting shares through a special class of stock.
Alphabet (Google): Co-founders Larry Page and Sergey Brin previously held supervoting shares, but have since moved to pass control to Sundar Pichai. However, they still own supervoting B shares.
TikTok (Bytedance) Zhang Yiming currently owns around 24-25% of ByteDance's shares, making him the single largest individual shareholder in the company he co-founded in 2012.
Twitter: Elon Musk acquired Twitter in a $44 billion deal in 2022, taking the company private and giving him sole voting control as the owner.
Question 3: Do these companies impact the global economy?
Answer: Yes.
The combined market cap represents around 2.3% of global GDP when including TikTok's parent ByteDance.
If we exclude ByteDance/TikTok, the remaining companies have a combined market cap of around $1.905 Trillion. This would represent around 1.9% of global GDP without TikTok included.
This does not even touch on the number of businesses that rely on these platforms to build their businesses (see reaction from creators and small business owners who say House ban threatens lives and livelihoods).
Ok, fine, you might be thinking. But we’ll get to the utility thing later. Right now, perhaps you agree with the strange alliance of Republicans and Democrats who think TikTok is really scary because of the Chinese ownership thing. After all, Rep. Mike Gallagher (R-Wis.) who helped introduce the legislation said in Tuesday's statement that he has one message for TikTok: “break up with the Chinese Communist Party or lose access to your American users.”
Personally, I don’t get it.
Let’s dig into the five concerns about TikTok that Congress has referenced:
Data Privacy: There are concerns that TikTok collects vast amounts of user data, including personal information and browsing history, which could be (and evidence suggests has been) misused or accessed by the Chinese government for surveillance or other purposes. Congress fears that this data collection could compromise the privacy and security of American users.
National Security: TikTok's ties to China raise national security concerns, as Chinese laws require domestic companies to cooperate with the government on matters of national security. Congress worries that TikTok could be compelled to provide user data to the Chinese government, posing a risk to U.S. national security interests and potentially allowing for espionage or cyberattacks. Note: “It’s not that we know TikTok has done something, it’s that distrust of China and awareness of Chinese espionage has increased,” said James Lewis, an information security expert at the Center for Strategic and International Studies. “The context for TikTok is much worse as trust in China vanishes.”
Content Moderation: There have been concerns about TikTok's content moderation practices, particularly regarding the spread of misinformation, hate speech, and inappropriate content on the platform. Congress fears that TikTok's algorithms and content recommendation systems could be manipulated or exploited to influence public opinion or spread harmful content.
Impact on Children and Teens: TikTok's popularity among children and teenagers has raised concerns about its potential impact on their mental health, privacy, and online safety. Congress worries that TikTok's addictive nature and viral content could expose young users to harmful content or predatory behavior.
Foreign Influence: Congress is concerned about the potential for foreign influence and propaganda on TikTok, particularly given its large user base and global reach. There are fears that foreign actors, including the Chinese government, could use TikTok to spread disinformation, influence public opinion, or undermine democratic processes in the United States and other countries. I have not seen any public direct evidence to show that the CCP or others have ha yet conducted influence operations through TikTok.
These are all very real concerns.
They also are not exclusive to TikTok.
Yes, the Chinese ownership structure poses a unique flavor of risk on all the above that may be slightly different.
All American-owned social media platforms present all these risks as well and they have track records of knowingly persisting in behavior that exacerbates these threats; there have been no real business consequences for any of them.
Let’s just refresh our memory of what some of our “made in America” platforms have done with respect to privacy, security, children’s safety, etc:
Privacy Concerns: In 2019, Facebook (now Meta) experienced a massive data breach where the personal information of millions of users was exposed to hackers. This breach occurred due to vulnerabilities in Facebook's systems, allowing hackers to access user data stored on the platform. There was a PR debacle, but no material business consequence
Technical Explanation: Hackers exploit vulnerabilities in a platform's security protocols or gain unauthorized access to databases containing user information, allowing them to steal sensitive data such as usernames, passwords, and personal details.
National Security: Social media platforms owned by companies based in other countries may pose national security risks. You may recall the attack on Twitter, supposedly by North Korea (but could have been by any number of entities), that broke into VIP accounts like Musk, Biden, Obama and ran a bitcoin scam. More recently, Twitter’s former head of security, reporting directly to the CEO. alleged with solid documentation that Twitter’s leadership has misled its own board and government regulators about its security vulnerabilities, including some that could allegedly open the door to foreign spying or manipulation, hacking and disinformation campaign. Two massive breaches, among others, and no material business consequence to Twitter for this.
Technical Explanation: Social media platforms collect vast amounts of user data, which could be accessed by foreign governments through legal requests, data breaches, or exploitation of backdoor access granted by the platform's owners.
Content on the Internet: Social media algorithms may recommend inappropriate content to users, including children and teens. YouTube has faced criticism for its algorithm recommending violent or sexually explicit videos to young users. As recently as May 2023, a nonprofit study found that the YouTube algorithm sends gun videos to kids as young as 9. This is due to the algorithm's optimization for engagement, which sometimes prioritizes clickbait or sensational content over appropriateness.
Technical Explanation: Social media algorithms use machine learning to analyze user behavior and preferences, leading to the recommendation of content that maximizes user engagement. However, these algorithms may not adequately filter out inappropriate content, especially for vulnerable audiences.
Foreign Influence: Social media platforms can be used to spread misinformation and influence public opinion. During the 2016 U.S. presidential election, Russian agents utilized platforms like Facebook and Twitter to disseminate false information and sway voter perceptions. Meticulous analysis of online activity during the 2016 campaign makes a proof-positive case that targeted cyberattacks by hackers and trolls were decisive in swinging the election in Trump’s favor. This manipulation of all the big social media platforms highlighted the vulnerability of online discourse to foreign interference. But no business or leader was ultimately held accountable.
Technical Explanation: Foreign actors create and distribute misleading or false content on social media platforms to exploit existing social divisions, amplify political polarization, and undermine trust in democratic institutions.
Threat to Kids and Teens: Children and teenagers are extremely vulnerable to cyberbullying and harassment on social media platforms, among many other things. There is an NIH study on this, there is a huge, ongoing lawsuit of multiple social media companies by parents. I think Congress has held 40+ hearings on children’s safety on the Internet and nothing significant has come out to protect kids as a result.
Technical Explanation: Social media platforms may lack adequate moderation tools and policies to prevent cyberbullying and harassment, allowing abusive behavior to thrive and negatively impact vulnerable users.
IF TIKTOK IS NOT UNIQUE, THEN WHY DID THE HOUSE JUST BAN IT?
It feels very clear that TikTok is not unique in the risks it poses. It also feels very clear that American companies have substantially opened the U.S. and U.S. citizens up to major risks but, despite very dramatic hearings, none of the major companies have been held accountable in any way outside of some PR hits.
So why is the House doing this?
I’m not sure.
Here are three potential contributing factors.
United States politicians and policy makers do not trust China. There is a long and complicated history here, but the current state of relations with China has traveled a negative trajectory from 2017-2023.
TikTok is gaining ground from a growth rate perspective, growing faster than major American social media companies particularly among younger people and getting ad revenue as a result, so nothing like Big Government intervention to squelch competition. Oh, wait, Republicans and Technologists don’t like intervention?! Except when they do.
There is simply not enough depth of understanding in Congress on issues of technology which is why we get experts like Tim Wu demonstrates brilliantly in this Atlantic Piece: “Why Congress Keeps Failing to Protect Kids Online; Americans are broadly united in support of laws to make the internet safer for kids. So why doesn’t Congress act?”
I think the bigger factor is much harder to admit: we don’t know what the heck to do.
I THINK THE BIGGEST FACTOR IS THIS: IT'S COMPLEX.
NAVIGATING THIS ISSUE REPRESENTS A SOCIETAL, COMMERCIAL and CIVIC CHALLENGES (and OPPORTUNITIES) for the U.S. and the WORLD THAT TAKES COLLABORATION TO SOLVE.
The main difference between complicated and complex systems is that, with the former, one can usually predict outcomes by knowing the starting conditions.
In a complex system, the same starting conditions can produce different outcomes, depending on interactions of the elements in the system.
These platforms collectively have huge influence over lives and livelihoods globally.
They’re controlled by a handful of very powerful male American citizens, with one exception.
To navigate the well documented risks with data privacy, national security, content, foreign influence, and child/teen safety, we would have to work together with shared values and motivation and skills to design a different way of getting the best of social media and mitigating or eliminating the worst.
We would very likely have to say that it’s not ok for a handful of men to retain unchecked power when that power has been so gravely abused. Then people would cry “big government can’t get in the way of freedom - of either people or markets,” even though we keep doing that time and time again (see big government telling women we can’t conceive with IVF).
Indeed, a durable solution is very complex and it requires public and private sector collaboration, across borders, in a way that we have never before witnessed in most of our lifetimes.
The TikTok ban is not this.
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Feel free to tell me what I’m missing or where my logic is faulty on this issue. Because I am SHOCKED by the number of people I respect who support this ban. DM me at hi@lexireese.com or just comment here. I’d love your feedback.