If you are in the DC area, consider attending the first AI Bloomers happy hour of 2025, happening tonight. Register here.
Last week, the Supreme Court unanimously upheld the law forcing Bytedance to sell Tiktok to owners outside of China, Russia, Iran, or North Korea. Tiktok’s parent company Bytedance has not yet found a new owner for the social media app. With an impending shutdown of its productive assets, Bytedance’s 300 billion dollar valuation might soon be closer to zero.
Several offers have been made for the Chinese social media app, including from Billionaire Frank McCourt, Former Treasury Secretary Steve Mnuchin, Microsoft, Oracle, Walmart, and even possibly Elon Musk. Meanwhile, China has enacted laws controlling the sale of Tiktok, while the Chinese embassy has attempted to block the divestment law.
The lack of a deal raises a simple economic question: what is the value of Tiktok to China? If the value is in the network, technology, or brand, then getting any money out of a deal is better than facing a ban. On the other hand, if its value is in spying or manipulating foreign populations, Tiktok’s multibillion dollar price tag could pale in comparison to the damage a sale would do to China's capabilities and reputation.
The Twitter files, a set of documents and reports released following Elon Musk’s purchase of twitter, provide one parallel for what the damage to the CCP might look like. The Twitter files exposed the strategy and implementation of American social media censorship, data collection and government coordination. It showed that specific Americans were censored, the political goals and hidden policies of that censorship, and the algorithmic methods used to accomplish censorship. In doing so, it changed how Americans understood the information provided by twitter in the past decade. The value of the Twitter files was part of Elon’s pitch for his 44 billion dollar purchase of Twitter.
While the Twitter files dropped a bombshell on domestic politics, the geopolitical scale of ‘the Tiktok files’ could be even more significant, documenting censorship and surveillance at an international scale.
One study found that Tiktok censored controversial topics in China, including Hong Kong, Tibet, and Tiannamen Square. Access to historical changes in the Tiktok algorithm could grant insight into how and why different content was suppressed.
https://www.tibetanreview.net/independent-tiktoks-algorithm-found-to-show-pronounced-china-bias/
While outside observers can determine what content is suppressed or promoted, it is difficult to identify a clear “smoking gun” documenting how those changes relate to CCP goals. The Twitter files found a targeted dashboard for censoring and shadowbanning individual accounts. These non-public algorithms and administrative controls would confirm both the why and how topics were censored or promoted on Tiktok.
Tiktok’s data management would come under full scrutiny. Tiktok is regularly suspected of sending data to China. This personal information not only includes app usage, but location tracking, direct messages, and device information. Legal frameworks like China's National Intelligence Law of 2017 mandate that Chinese companies comply with government data requests, raising fears that American user information could be accessed by Chinese authorities. While Tiktok representatives have denied ordinary user data is sent to China, its CEO Shou Chew has admitted creator data is sent to China.
If a sale does occur, Tiktok’s outgoing management may try to hide as much of this information as possible. However, it is unlikely that all digital records can be fully deleted. Once again, the economic value of this information would pale in comparison to the costs of a Tiktok ban. However, its strategic value may be the reason the Chinese Communist Party is willing to pay the price of an outright ban.