TikTok tries to win allies in the US with more transparency

In recent conversations with Washington lawmakers and civil-society organizations, TikTok has revealed details of a complex, $1.5 billion plan to reorganize the company’s U.S. operations, according to people familiar with the discussions.

TikTok previously has kept its plans largely quiet with such groups as the tech company continues to negotiate with the Committee on Foreign Investment in the U.S., or Cfius, an executive-branch panel deliberating over how TikTok can remain operating in the U.S.

The talks with U.S. officials and lawmakers have become more urgent for TikTok in recent months as federal and state politicians made moves to ban the app on government-issued devices. Congress is also considering a bill that would ban TikTok in the U.S. Lawmakers cite concerns that Beijing could access U.S. users’ data on TikTok, or shape what Americans see on the platform—accusations that the company has denied.

TikTok is hoping that details of its planned reorganization—and promised measures to ensure oversight of its content-recommendation algorithms—will convince potential allies in Washington of its ability to operate independently of its parent company, China-based ByteDance Ltd., according to the people familiar with the discussions.

A TikTok spokeswoman said it believes the proposal addresses concerns about content recommendation and user-data access with layers of government and independent oversight.

“We are not waiting for an agreement to be in place," she said. “We’ve made substantial progress on implementing that solution over the past year and look forward to completing that work to put these concerns to rest."

Creating a system for monitoring the secret algorithms that power TikTok’s video-sharing app is emerging as a central piece of the plan to assuage U.S. concerns about its content.

In conversations in Washington, TikTok executives have described how Oracle Corp. and other third-party monitors would review the code related to how TikTok selects which videos to serve to users, as well as how TikTok identifies which videos to delete, some of the people familiar with the discussions said.

ByteDance is trying to walk a fine line in talks with U.S. officials. Its goal is to maintain ownership of TikTok in the U.S., but also make the app’s operations more transparent and silo it off in a separate unit overseen by U.S. government-approved employees. TikTok is trying to convince lawmakers that with these measures in place, the app won’t pose a threat to U.S. citizens.

If TikTok doesn’t reach a deal, the U.S. government could try to force ByteDance to sell parts of its operations or leave the U.S. market.

Scrutiny of TikTok increased after an internal probe found TikTok employees misused their authority to access the data of journalists on the platform in an effort to identify leaks of company information.

Rep. Mike Gallagher (R., Wis.), one of the lawmakers concerned about TikTok’s ownership, said he is as worried about Beijing’s ability to influence videos on the platform as he is about user data. He said he is concerned about TikTok suppressing videos critical of China and its rulers, while promoting stories beneficial to them.

“For younger users, the concern isn’t that they’re using TikTok just to watch stupid videos," said Mr. Gallagher, who co-sponsored a bipartisan bill to ban TikTok from operating in the U.S. “It’s that they’re relying on TikTok to get their news."

As a part of its proposal, TikTok has said all of its systems related to serving content would be housed with Oracle. The code that runs these systems would be visible to both Oracle and third-party monitors, according to people familiar with TikTok’s proposal.

Since the summer, TikTok has routed all new traffic exclusively through Oracle and the proposal includes an audited process to delete the backup data.

American executives didn’t always understand what was happening with the app’s algorithms.

For example, in 2020, U.S. TikTok executives noticed views for videos from certain creators about the U.S. presidential election were mysteriously dropping 30% to 40%, people familiar with the episode said. When those executives asked their bosses in China, they found that TikTok’s algorithm team had tweaked certain aspects of the type of content shown on the app to play down political conversations about the election, and this had inadvertently buried the videos of a range of users, the people said.

Responding to questions about the incident, another TikTok spokeswoman said political content was popular on the app in 2020. She said the hashtags #trump, #biden, #trump2020, and #biden2020 garnered more than two trillion cumulative views monthly at that time.

In the new proposed arrangement, according to the people familiar with it, third-party monitors would check the code for the video-recommendation algorithms to detect whether it has been manipulated or if the Chinese government or other foreign actors have had access. Provisions in the proposal stipulate that if the U.S. government or the third-party monitors see anything that concerns them, there would be a process to flag the issues to TikTok, and ultimately to the U.S. government if necessary.

To try to address the security of user data, TikTok would create a new wholly owned subsidiary called TikTok U.S. Data Security, or USDS. The unit would be charged with safeguarding the app and report to an outside board of directors whose primary fiduciary responsibility would be to Cfius instead of ByteDance.

All of the employees hired into this 2,500-person unit would be subject to a set of requirements from the U.S. government, and would follow International Traffic in Arms Regulations, which would effectively bar Chinese nationals from working in USDS.

The Treasury Department, which oversees Cfius, didn’t respond to a request for comment.

TikTok has spent an estimated $1.5 billion setting up the Oracle data center, moving code and hiring and paying the third-party monitors, according to people familiar with the proposal. They said they expect such expenses to cost TikTok $700 million to $1 billion annually going forward, if TikTok reaches a deal.

TikTok also will likely need approval from Beijing for any structures that involve the company’s content-recommendation algorithms.

Proponents of TikTok’s proposal say these measures would make it impossible for the Chinese government to intervene in the TikTok app in the U.S.

Still, some China skeptics say they won’t trust a deal with TikTok as long as ByteDance owns the app.

“It is becoming more and more untenable for a company to comply with American laws and also comply with Chinese laws," said Jacob Helberg, a senior adviser at the Stanford University Center on Geopolitics and Technology, who hasn’t seen the TikTok proposal.

This story has been published from a wire agency feed without modifications to the text