Is TikTok a National Security Threat?

TikTok America insists it operates separately from ByteDance in China, but how could that be?

While TikTok owner ByteDance says it has no immediate Hong Kong IPO plans, a major cash infusion from Softbank Vision Fund second AI-based fund is highly likely.

This means it will evolve to be an existential global threat to Facebook. While the FTC and congress probes Facebook, TikTok is now also being probed.

This all started when U.S. Senate Minority Leader Chuck Schumer and Senator Tom Cotton on asked intelligence officials to investigate whether the popular Chinese-owned app TikTok poses national security risks. They supposed reasons are its acquisition of musical.ly. TikTok has exploded in user growth in 2019, and while it's not gone into political Ads (whcih Twitter has also said it will stop), TikTok has gone more viral than any consumer app since Instagram all those years ago.

The seven-year-old Chinese start-up posted a better-than-expected revenue for the first half of the year at over $7 billion and was valued at $78 billion late last year, which in the age of VC over-estimates of valuations, positions it as the most valuable startup in the world. The only catch? This is a company based in Beijing.

Masoyoshi Son needs to save face after the WeWork disaster. Meanwhile, ByteDance is one of the best bets for the progress of consumer apps intersecting with artificial intelligence (what ByteDance meekly refers to as smart technology).

If American companies are sometimes seen as ambassadors of American values like Starbucks, Apple, and Nike in China, ByteDance could easily be seen as the opposite globally along with Huawei and other Chinese companies that are going global successfully like Alibaba. This is particularly true with China's blockchain ambitions around a digital RMB that could be centralized to all of China's consumer apps and FinTech innovators in mobile payments including Tencent's WeChat and Alipay. ByteDance's apps would have no choice but to accept the edicts of its Government on such a Libra clone that is coming.

 Senator Marco Rubio has asked U.S. authorities to review allegations that the Chinese government uses TikTok for political censorship. Of course, this is also part of the trade war tactics where the supposed "phase one" of the trade war agreement looks very unsubstantial and lacking any major agreements. Trump's manipulation of the stock market is well known in 2019, at this point.

TikTok thus finds itself a victim of its own success. ByteDance is likely going to fuel Chinese growth in cultural influence with its suite of apps. It has the potential not just to displace Facebook for young people, but to innovate in a way that Silicon Valley isn't capable of following, just as Huawei and Alibaba have been doing in recent years.

According to Reuters, “With over 110 million downloads in the U.S. alone, TikTok is a potential counterintelligence threat we cannot ignore,” wrote Schumer, the Senate’s senior Democrat, and Cotton, a Republican senator from Arkansas. Congress is a bit faster in the uptake with antitrust violations and probes on deck in recent months and with the trade war brewing for what seems like the long haul.

If WeWork, Uber and Slack have been IPO flops, Softbank Venture Fund could make ByteDance the next global tech company of prominence, whether it's a national security threat to the U.S. or not.

Related reading: Why AI is Becoming Dangerous to Global Order.

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