The US push to ban TikTok marks a new phase in its approach to data security that could eventually impact everything from electric vehicles to healthcare, reshaping trade relations between the world’s biggest economies.
US President Joe Biden last week signed legislation barring Chinese parent ByteDance Ltd’s ownership of TikTok, a move aimed at preventing Beijing from accessing troves of data that the video-sharing app collects from its 170 million American users. The law takes a page out of China’s playbook, viewing the potential misuse of data as a national security threat.
Although Beijing has long adopted far more restrictions on US companies in China, authorities have embraced firms that play by its rules and agree to store data locally. Elon Musk’s Tesla Inc is a prime example: Bloomberg reported on Monday last week that it would partner with Beijing-based tech giant Baidu Inc for mapping and navigation functions to deploy autonomous driving features — data only entrusted to a select group of Chinese companies.
The US now appears to be moving “away from an open Internet with unrestricted data flows and toward selected fragmentation based on national security concerns,” Center for Strategic and International Studies senior fellow Caitlin Chin-Rothmann said.
“While TikTok is currently in the hot seat in part due to its enormous popularity and the scope of its data collection, it is not the first and will not be the last Chinese company that US lawmakers target,” she said. “It would seem that tech decoupling — or at least reducing dependence on the other — is becoming increasingly popular among both parties.”
DATA SECURITY
Data security is again taking center stage in the intensifying rivalry between the US and China as Biden faces a rematch in November with former US president Donald Trump, whose administration sought to block countries from buying Huawei Technologies Co equipment for 5G networks. Later Trump proposed a “Clean Network” to prevent Beijing from accessing sensitive personal data of Americans.
While Biden has not gone that far, the clash over data has picked up in recent months. China has been using its 2021 data security law to step up supervision of sectors from agriculture to geography, and the US is raising concerns over logistics networks, autonomous driving and drones. Further restrictions risk carving up parts of the global economy.
“It’s not clear where it ends, unless you want China to proverbially roll over and crawl into a corner, and obviously that’s not going to happen,” said Rogier Creemers, an assistant professor at the University of Leiden who researches China tech policy. “As long as risk exists, there’s always a reason to say we have not derisked enough, so we need to derisk more.”
New technology is creating new risks. Modern devices are becoming ever smarter, gaining unprecedented abilities to generate and transmit data. Cars collect information on drivers and passengers, while medical devices can parse and process personal healthcare intelligence. Washing machines, port cranes and even clothes connect to some sort of remote server. The artificial intelligence era only promises to magnify those capabilities.
The TikTok-inspired law in the US is to extend to any “foreign adversary controlled application” that the US president deems a national security risk. That could change the operating landscape for Chinese platforms such as Tencent Holdings Ltd’s WeChat app or PDD Holdings Inc’s e-commerce marketplace Temu. While fast fashion giant Shein, which originated in China, is now headquartered in Singapore, it has also faced congressional scrutiny given its vast supply chain networks in China.
Complicating TikTok’s case further is the worry among lawmakers about China’s ability to influence US public opinion. TikTok raised eyebrows last month when it mobilized users to petition against a potential ban, demonstrating its influence on Americans.
“Social media of all kinds, as well as messaging apps and websites, can be and are being used by foreign governments to attempt to influence US public opinion,” said Milton Mueller, a professor specializing in cybersecurity policy at the Georgia Institute of Technology. “TikTok is no different from Twitter or Meta or YouTube in this regard.”
Beyond tech apps, US lawmakers have scrutinized data security risks from other Chinese-owned companies. In February, the Biden administration vowed to invest more than US$20 billion in port security, after flagging potential espionage and disruption risks from Shanghai Zhenhua Heavy Industries Co Ltd’s cranes.
Washington has moved to ban cars containing Chinese-produced technologies such as LiDAR, a remote-sensing technology, from the likes of Hesai Group, fearing risks to US military sites. Hesai, the world’s largest supplier of LiDAR, has threatened legal action after the US Department of Defense put it on a list of “Chinese Military Companies.”
China’s biggest EV stars like BYD Co Ltd have little presence in the US market given high US tariffs, but the Biden administration has mulled restrictions that would prevent Chinese makers from moving cars and components into the US through third countries like Mexico.
Biotech is also under the microscope. Chinese firms WuXi AppTec Co and WuXi Biologics, both based in Shanghai, have lost a combined US$21 billion in market value as of Monday’s close, after US lawmakers accused Chinese companies of getting genetic information about Americans and sought to ban federal agencies from contracting with them. Other US legislators want higher tariffs on Chinese drones such as those from SZ DJI Technology Co, as critics argue that foreign-manufactured vehicles could transfer sensitive data.
The more the US scrutinizes China “the more likely it is there will be elements, even whole industries” where Washington deems Beijing to be giving unfair advantages, Carnegie Endowment for International Peace China studies senior fellow Isaac Kardon said.
China has also been clamping down on overseas access to data such as financial indicators, academic databases and even politicians’ biographies. Beyond its highly censored Internet regime known as the Great Firewall, Beijing has raised the alarm about foreign actors exploiting anything from geographic data — which it says could reveal critical infrastructure and military networks — to key information on food production, genetics and weather.
GREAT FIREWALL
Chinese authorities have implemented complex approvals to transfer personal data outside of the country, a widening ban on Apple Inc’s devices in state-owned companies and restrictions on Tesla’s vehicles in government compounds — even though Apple and Tesla have fully localized the data they collect in China. At Beijing’s behest, Apple last month removed foreign platforms such as Meta Platforms Inc’s WhatsApp and Threads from its Chinese app store, although both were already largely inaccessible in the country.
Chinese President Xi Jinping (習近平) has long seen data as a core pillar of his flagship “holistic approach to national security,” as Beijing highlights growing risks of information theft from cyberattacks.
Beijing has consistently protested US data-related restrictions. A government-backed industry association on Sunday hit out at the US in a bilingual report, accusing Washington of overstretching the definition of national security. It criticized the TikTok move as reflecting the US’ “double standard to maintain its cyberhegemony of controlling and manipulating international public opinion platforms.”
The main fear in the US about TikTok is the sway Beijing holds over its private sector. China’s data security and other laws could be used to compel private companies to hand over data to authorities, although ByteDance has denied that it would comply with such requests.
ByteDance executives sought unsuccessfully to dispel some of those fears with an initiative dubbed “Project Texas” to silo American user’s data in the US, away from Beijing’s purview, along with a similar blueprint for Europe called “Project Clover.”
In recent months, the Biden administration has taken steps to tackle broader concerns about Beijing’s access to sensitive US data. The White House signed an executive order in February to prevent large amounts of American’s personal data from being transferred to “countries of concern.” Moreover, inside the TikTok bill, another provision was tacked on to target third-party data brokers, barring them from selling Americans’ personal data to adversarial countries like China.
“While the concerns over sensitive data flows to China have been building for some time, TikTok is the big shiny object for Congress to wade into the realm of data security measures,” Rhodium Group director Reva Goujon said. “The TikTok bill sets an important precedent for targeting Chinese tech platforms that have successfully penetrated the US market.”
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