S. politicians Oregon senator Ron Wyden who sits on the senate intelligence and finance committees just sent a letter to the director of national intelligence asking for an investigation into ticktock's data collection practices amidst concerns that the app could be funneling user data to the Chinese government. The letter read ticktock reportedly censors materials deemed politically sensitive to the Chinese Communist Party, shapes users' feeds based on the Chinese government's preferred version of the world and its promotion of hashtags referring to regions including Xinjiang and Hong Kong is concerning.
It's not just Wyden, senators Marco Rubio and Chuck Schumer are also raising concerns. The bipartisan pair wrote to the director of national intelligence and the FBI director requesting they investigate the national security risks connected to China's acquisition of US firms such as ticktock. The letter notes that by acquiring US user data, the Chinese government could potentially blackmail or extort Americans while also stealing intellectual property and compromising US infrastructure.
The stakes are high. If ticktock's forced to sell off its US operations, it could lose the valuable user data and algorithms that make it unique, as we heard in episode 4, and it could impact Zhang's dream of creating a global technology giant that can take on the likes of Facebook and Google. Zhang knows he needs to act quickly but he's not sure what his options are. He can't see a path forward where it would be feasible to divest of tiktok's US operations but if the president makes good on his threats, it may be the only way forward.
Ticktock is in a race against time as it tries to define its governance structure before the president's deadline. Zhang has to find a solution fast before Washington shuts down the app in America for good. From wondering, this is business wars. We hope you enjoyed this episode. Please subscribe on Apple podcast, Spotify, Google podcast, Stitcher, iHeartRadio, radio.com, or wherever you get your podcast. You'll find a link on the episode notes, simply tap or slide over the cover art. You can also support the show by subscribing to wondering plus. You'll find some links in the episode notes to do that too. I'm your host David Brown. Elizabeth Koehler wrote this story. Karen Low is our senior producer and editor. Donna Heller is our producer. Our executive producer is Marshall Louis. Created by Eric Gurney for wondering.
On July 29th, 2020, Menlo Park, Mark Zuckerberg is sitting in his office on the Facebook campus, staring straight into a webcam. He's dressed formally in a navy suit and light blue tie. He's been called before lawmakers again to defend Facebook and Instagram. Zuckerberg smooths the creases on his pants and stares to the chairman of the house's antitrust committee at the center of the screen.
The who's who of the tech world are also on the call to testify; Jeff Bezos of Amazon, Tim Cook of Apple, and Sundar Pichai of Google. Lawmakers say the companies are too powerful and inhibiting competition. But Zuckerberg offers a different spin, and it echoes President Trump's. If anything, Zuckerberg suggests American tech companies are under siege from a growing threat- China.
In many areas, we're behind our competitors. The most popular messaging service in the U.S is iMessage, the fastest-growing app is TikTok, and if you look at where the top technology companies come from, a decade ago, the vast majority were American. Today, almost half are Chinese. Once again, Zuckerberg throws TikTok under the bus to distract lawmakers who criticize Facebook and Instagram.
From his home in Beijing, Zhang is watching the hearing. He calls up Kevin Mayor, TikTok's new CEO. Zhang poached Mayor from Disney in May. "Kevin, Mark is trying to smear us. I know we need to go on the attack. I'm already preparing a blog post." Zhang hangs up. A few hours later, Mayor sends in the statement. Zhang reads it aloud to one of his deputies.
The entire industry has received scrutiny, and rightly so. Yet we have received even more scrutiny due to the company's Chinese origins. This is ByteDance's way of saying, "Hey, no fair, don't single us out." That's good, that's good, and then we get into how much we're helping Americans in the next part, our new fund, etc. The statement highlights the company's new two hundred million dollar creator fund, which gives money to American TikTokers to encourage their work.
And then there are the ten thousand new jobs TikTok is expected to create in the U.S this year. Next, the statement sticks it to Facebook. "Okay, this is where we go on the attack. Listen to this. To those who wish to launch competitive products, we say bring it on. Facebook is even launching another copycat product after their other copycat Lasso failed quickly." Facebook recently shut down its Lasso app after it tanked. It allowed people to upload short-form videos just like TikTok.
Zhang and Mayor know Facebook is about to strike again with a new Instagram feature called Reels. Zhang continues reading aloud. But let's focus our energies on fair and open competition in service of our consumers, rather than maligning attacks by our competitor, namely Facebook, disguised as patriotism and designed to put an end to our very presence in the U.S..s
Zhang eaming is in his home office watching the news. It's been three weeks since Trump first threatened to ban TikTok. Ever since Zhang has been desperately trying to figure out what to do. And while he's been casting about for a solution, a competitor called Triller has seized on the opportunity.
Zuckerberg is at his home office waiting to hear some important news. It's Adam Mcci. Mcci has replaced Kevin Cisteram as the CEO of Instagram. "Hey, Barg, why don't you give me an update? Reels just launched." Zuckerberg clicks on the Instagram app on his phone.
Then on August 6th, President Trump signs an executive order to block TikTok in the US if Bite Dance doesn't sell it within 45 days, a near impossibility given the complexity of such a deal. It's a death sentence for TikTok and a life raft for Instagram.
Meanwhile, Oracle has expressed interest. Its founder, Loren's Ellison is tight with Trump but hasn't elaborated on how he would handle privacy issues. There's no easy out for Jang. He sighs and rubs his temples then he picks up the phone and calls Nadella, the CEO of Microsoft.
TickTock begins moving forward with Oracle. The perspective deal between the two companies that emerges is a complicated one. Oracle brings in Walmart to create a new US company called TikTok Global.
It's a relief for Jang when President Trump gives his approval. Even though all the principles are on board, they still don't have a signed deal. There are only days left before TikTok must sell or be banned from the US. Jang needs to slow things down. He asks the government for an extension and it grants a 30 day delay.
On November 12th, 2020, Zuckerberg uses the opportunity to push Instagram Reels into prime position. He's feeling stoked as he waits to hear from Moussari.
Zhang quickly scans it. He stares in disbelief. The Department of Commerce is backing down. It's announced it won't enforce Trump's executive order. TikTok will get to keep operating in the US.
As the government appeals the court's decision and the oracle deal hangs in the balance, the political landscape of the United States has changed radically. President Trump, the locomotive trying to derail TikTok, has lost his bid for re-election. As 2021 approaches, Zhang is uncertain how President-elect Joe Biden will respond. Biden has signaled his desire to deescalate international tensions, and Zhang is hoping for a reprieve.
TikTok's competitors aren't standing still. Zuckerberg was hoping to dunk on the troubled app, but another powerful contender leaps onto the court. In October 2020, Snapchat adds music to its videos. A month later, it takes the ball from Zuckerberg and launches a TikTok lookalike feed called Spotlight. It's stuffed with short videos just like on TikTok. It's too early to say whether this will convert TikTok-loving teens into Snapchat users.
Meanwhile, Triller is growing and waiting for its moment. And in early December, calls to break up Facebook grow louder. 48 attorneys general from across the nation sue the company for using its "monopoly power" to crush rivals. The same day, the FTC also sues the company. It says Facebook stifled competition through its acquisitions, like the purchase of Instagram. The FTC is calling for Facebook to unwind the Instagram deal and spin the app off into a separate company — a demand that could upend its battle against TikTok.
Everyone from tech giants to political leaders is trying to steal the ball. It's uncertain where this ends, though some things are clear. On this technological battleground, digital data and access to users could be ammo for all of them, and tech supremacy could be just one brilliant algorithm or viral dance craze away.
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From Wondery, this is the fifth and final episode of TikTok versus Instagram for Business Wars. A quick note about recreations: you've been hearing in most cases, we can't know exactly what was said. Those scenes are dramatizations, but they are based on historical research.
I'm your host David Brown. Natalie Robomet wrote this story. Caran Low is our senior producer and editor. Edited and produced by Emily Frost. Sound designed by Kyle Randall. Kate Young is our associate producer. Our executive producers are Jenny Lour Beckman and Marshall Louis. Created by Hernan Lopez for Wondery.