Factual Dispatch #46 - Information Nationalism: Tik Tok & Bytedance with the Devil

(We’re back! Between starting a new job during Covid-19, losing a non-zero number of friends and family to the terrible disease, and adjusting to the new normal that is the pandemic world, it’s been a rough time. Dusting off and trying to get back into the swing of things. If you’re interested in helping shape the future of Factual Dispatch, take this quick survey to help me understand what you like and hate about this!)

I had to come off the bench to talk about TikTok. Much of the commentary either incorrectly focuses on the app as more privacy-violating than others (which it’s not), or the breach of executive branch norms/rules that the White House is engaging in by forcing a fire sale and demanding a “key fee” or finder’s fee for the Treasury department (which is par for the Trump presidency).

In my opinion, Bytedance is about to get mugged by America, US Big Tech companies will rifle through TikTok’s pockets to snatch its secret sauce: algorithmic competence. The advancements in personalizing-through-algo-not-social made by Bytedance & TikTok far outstrip what YouTube, Twitter, and other domestic platforms have been able to cobble together. Think of TikTok as the croc coming/clock ticking for Captain Hook. Yes, this post will be populated with crocodile/pirate gifs from various iterations of Peter Pan. Missed me?

So, for everyone not playing along at home, Trump has attempted to ban US companies from doing business with Tencent, the company that owns WeChat and a sizable chunks of many gaming companies, and Bytedance, the company that owns TikTok, the viral app your teen is probably working on a dance challenge for right now. The caveat of that ban is that if the companies are sold to an American multi-national in the next 25ish days, they’ll be able to remain in-market. The USA has also described a bizarro “definitely not Great Firewall” Clean Network initiative, which is mostly trash with jingoistic sprinkles, excuses to funnel money to domestic firms.

As Foreign Policy reminds us, Trump can’t outright ban TikTok, but the US government has many weapons to use to mute its presence here. One of the easiest ways to end-run around the constitutionality/monopoly/emolument concerns would be to simply have Google & Apple de-list TikTok from their app stores

Vox has a reasonable look at the “How would this work and is this legal” angle, but The Verge reminds us that we’ve never actually had a tech company be converted into nation-based component parts before. So we are absolutely in uncharted waters. But before we swim out any further, we have to ask a few related, but not totally intertwined questions:

1. Has TikTok shown bias in favor of a single political party or presidential candidate?

2. More broadly, what data is TikTok collecting, and has TikTok verifiably done anything that could be seen as using American data to enhance the global dominance of the CCP/China?

3. Could TikTok do things using American data, in the future?

In answer to #1, in true 2020 head-ass fashion, TikTok has been shown to have a political bias, and it is in favor of conservatives. Surprise! Moving on to #2, here’s a non-bullshit look at the TikTok app’s logs and what data it actually grabs, with screenshots, for those interested. Turns out, the data capture and privacy requirements from the app are not too different than what’s asked for by say, Facebook’s app. While this could change for Android users, as TikTok could change the permissions or data collection practices remotely without us knowing, Apple/iOS users would be protected from that kind of change.

What TikTok can do is filter what you’re seeing much more effectively than other apps, both automatically, and by region. The main story in my previous Factual Dispatch about TikTok involved region/country-specific moderation & censorship practices that were discovered. So why would people use it? Because it’s a better mouse trap for a lot of different dystopian rodents. Ben Thompson, who is a must-read on this topic, outlines why TikTok dominated this year, and the insanely well-funded and promoted Quibi, fell flat on its face:

The big difference here is that Facebook is beholden to data requests from the US Justice Department & Law Enforcement, while Bytedance would be beholden to data requests from the CCP in China. Sarah Jeong gets at the crux of the issue for The Verge, introducing the concept of “information-nationalism:”

So, this brings us to #3, which the answer becomes somewhat worrying when you dig into. Because TikTok is able to produce personalized media streams, at global scale, without local competence, they potentially solve the “scale turns your platform into a swamp” problem that Twitter & Facebook has been paralyzed by. Eugene Wei summarizes this concern in such a fantastic way, I want to force him & Ben Thompson to do a podcast on this idea:

TikTok produces a hyper-efficient matching system based on interests and aspects of your watch history, not your social network or engagement with friends. This means that they could probably produce targeted ads, culture, music, art, and product structures that are much better than even Facebook’s micro-targeting capabilities. So now you can see why some people in Silicon Valley are worried their clocks are ticking.

This aligns neatly with the executive order targeting Tencent in addition to Bytedance. Requiring Tencent to shape-up-or-ship-out is much more problematic, given the volume of Chinese Americans who use WeChat to communicate with their relatives in China. And their investment stakes in companies all over the world, not just the company that owns Fortnite, the game your other teen is playing upon time of print.

While a number of companies like Cisco might be retaliated against by China because of this, the clear front-runner for winner looks to be Microsoft. So why Microsoft? For this answer, Financial Times documented the surprisingly deep connections between Microsoft and the Chinese tech scene. Because it’s paywalled, I’ll summarize:

• Microsoft had a research lab in China in the 90s/2000s that helped nurture a lot of the nascent talent that is currently leading their tech scene. They worked with universities including the military-controlled National University of Defense Technology.

• Microsoft essentially had their pick of the best CS PhD talent in the country, and those who worked there went on to build huge things. This includes founders of companies you might have heard of like Xiaomi (phones) and Megvii (facial recognition). They also foster a durably loyal alumni network, building a defacto set of connections across Chinese tech.

• The founder of Bytedance, Zhang Yiming, worked at Microsoft very briefly before he left to join a start-up. A former Microsoft exec said Mr Zhang was close friends with former Microsoft vice-president Harry Shum, whose protégé Ma Wei-Ying was head of artificial intelligence at ByteDance until last month.

• Bing is the only foreign search engine allowed in China, as they provide a localized/censored version. Microsoft also owns Github & LinkedIn, the only two foreign social networks allowed in China as well.

• Even though Microsoft software is widely used across China, Microsoft has only received payment for a tiny fraction of licensing of Windows and Office within China, and only makes up 1.8% of global revenue.

Given all this, it’s easy to see why they got the call when Trump started yelling about TikTok needing to be sold to an American company. (Pictured below: Microsoft when they heard they’d get to buy TikTok)

Hank Green, who is much closer to what the kids are into, jotted down some notes on what Microsoft or whoever ultimately buys TikTok should actually do once the sale is complete. So they don’t lose 100% of their audience immediately upon uttering “How do you do, fellow kids?” the first time. He sees, correctly, that the biggest TikTok stars will be fine no matter how the chips fall, but there’s still an entire raft of creativity from younglings that could be crushed if TikTok disappears and they don’t diversify. TikTok & Bytedance are fighting back, suing the administration, while quietly avoiding discussing the hard national security questions Chinese tech companies serving global consumers pose. As the point remains that Bytedance can’t credibly claim that they’d refuse a data request from the Chinese government, and if TikTok data is replicated in home servers in China, even if their main hosting is in the USA, it will be just as accessible to the CCP.

While all of this is happening, WestTech is racing to catch up. Reels, the TikTok killer from Instagram, can be found in 50 countries now. We shall see if Instagram can make lightning strike twice, slaying TikTok the way it neatly removed the head of Snapchat. Somewhat hilariously, the closest competitor to TikTok right now, Likee, is also Chinese-owned/hosted, bringing us back to square one. And this all isn’t going down without Microsoft looking a bit of a Trump-enabler, going along with what increasingly feels like a government shaking down a company. Which might not turn out so well for them in the end if the winds of change start blowing in the other direction. Scott Galloway (I think correctly) predicts that China will defend its valued assets and go after anyone who tries to take its treasure.

I’ll leave you with the best reaction to news that Trump is attempting to ban TikTok, via Garbage Day:

Royal Sampler

Free Speech Fights Have Historically Targeted the Left (Teen Vogue) Once again for the people in the back, for all of the clucking about “cancel culture,” the consequences are disproportionately suffered by people on the Left. Not just in the present, but over our history. Here’s Judd Legum of Popular Information unraveling another faux canceling showcased by Fox News.

Washington Media is Starting to Treat Trump Like a Clown (The New Republic) I cannot endorse this more heartily. Every single member of the media should treat Trump like the object of ridicule he is.

America’s First Female Recession (19th) Deep look at the first recession that’s impacting women not just differently than men, but in more problematic ways.

Illegal Parties Keep Happening in Manhattan (Gothamist) If you’re throwing a social-distancing-violating party in NYC and pretending it’s “underground” or “outlaw” instead of “disease-ridden” or “plague-inducing,” I hate you and you’re what’s wrong with parties.

Can Cocomelon Become the First Billion-Dollar YouTube Business? (Bloomberg) I almost forgot about the previous aggregator class on YouTube who tried to make it. This round might be different.

The Trolley Problem Problem (Aeon) I hate trolley problems, so I’ll crow about this until the cows come home…and are hit by a runaway trolley manned by a philosophy grad student.

Metal Gear Solid V Players Achieved Universal Nuclear Disarmament (Vice) In a truly perplexing example of large-group teamwork, the Metal Gear Solid V online PVP community universally disarmed all of their base-defending nuclear weapons. Five years after the game was released, they triggered a secret cut-scene reinforcing the central anti-nuclear/anti-overarming message of the series.

Song of the Dispatch: Instead of sardonic jokes or takes clipped in bad faith, I’m going to end with better quality things, like music and art. For this dispatch, UK singer/songwriter Raleigh Ritchie, better known as Grey Worm in Khaleesi’s army in Game of Thrones.

Yours,

T

P.S. Take the survey!