Bytedance, one of the world’s most valuable start-ups and owner of the short-form video app TikTok, has taken dramatic steps in recent months to establish itself as a credible global company.

In mid May, the Chinese company named Kevin Mayer, the head of Disney’s streaming business, to fill dual roles, serving as TikTok’s chief executive and Bytedance’s chief operating officer. In recent months, the company has gone on a hiring spree to strengthen its overseas business, and has promised to limit access to overseas data for Chinese employees. 

Analysts say that at a time of rising U.S.-China tensions, Bytedance appears to be moving to separate its Chinese operations from TikTok, which is increasingly popular in the U.S. 

“I have yet to be convinced that there is a substantial and significant separation between TikTok and Bytedance headquarters in Beijing,” said Fergus Ryan, an analyst at the Australian Strategic Policy Institute, a Canberra-based think tank. “I suspect it is more cosmetic and a public relations strategy.”

While a spokesperson told The Wire that Bytedance is “significantly increasing” its hiring in the United States, the company denies that the strategy to move its non-Chinese focused business out of China is a recent development. Instead, the spokesperson said, “We have always been focused on hiring senior management in all the markets where we operate.”

Founded nine years ago by Zhang Yiming, a 37-year-old internet entrepreneur, Bytedance has grown into one of the world’s hottest technology startups. While few Chinese companies have gone global, or entered markets overseas, Bytedance did so from the outset, designing apps for the U.S., Indonesia and India. The company operates in 30 countries and employee about 60,000 workers, with plans to add an additional 40,000 by the end of the year. 

TikTok, which is used to make and share short dance videos and memes, has been downloaded 165 million times in the United States, according to Sensor Tower, an app market intelligence firm, and it saw a huge spike in downloads in the first quarter of this year — when people, especially kids and teenagers, were stuck at home because of Covid-19. But as TikTok surges in popularity in the U.S., Bytedance has been caught in the crossfire of recent political tensions between the U.S. and China. The company is facing increased scrutiny from the U.S. government and has been accused of censoring videos addressing issues that are sensitive to the Chinese government as well as improper data storage, which could make Americans vulnerable to Chinese government surveillance.  

In November 2019, for example, TikTok landed in hot water after it suspended a New Jersey teen’s account when she criticized the Chinese government’s treatment of the Muslim Uigher population. TikTok claimed that the video had been removed due to “human moderation error,” and said that the video was reinstated after 50 minutes. This explanation didn’t convince many TikTok critics, however, including Senator Marco Rubio (R-FL), who tweeted shortly after the incident, “This is how China exports its censorship to America.”

Most recently, as protests about George Floyd’s death have swept the U.S., TikTok has been accused of censoring videos with hashtags related to Black Lives Matter. And there have been reports that the app censors videos of pro-democracy protests in Hong Kong. 

Bytedance has said that all content moderation for TikTok is conducted outside of China’s borders, mostly in the United States and Southeast Asia. And in response to concerns about user data, Bytedance has pledged that all U.S. user data from TikTok is stored within the United States, with backup capacity in Singapore.

“Our goal is to minimize data access across regions so that, for example, employees in the APAC region, including China, would have very minimal access to user data from the EU and US,” Roland Cloutier, TikTok’s Chief Information Security Officer, wrote in an April blog post. 

Bytedance shifting some operations overseas sends a strong signal, but whether that actually placates the U.S. government’s concerns is another thing entirely.

Justin Sherman, Fellow at the Atlantic Council’s Cyber Statecraft Initiative

But these internal moves might not be enough, says Justin Sherman, a Fellow at the Atlantic Council’s Cyber Statecraft Initiative. “Bytedance shifting some operations overseas sends a strong signal,” he said, “but whether that actually placates the U.S. government’s concerns is another thing entirely. The U.S. government has made it clear that any connection to China is something that will raise concerns.” 

Indeed, the Committee on Foreign Investment in the United States (CFIUS), an inter-agency body tasked with examining whether transactions including foreign investment threaten national security, has already launched an investigation into Bytedance. The investigation, which began in 2019 and is still in process, focuses on the company’s $1 billion acquisition in 2017 of Musical.ly, an American social media app that also provides a platform for short-form videos. 

Senator Rubio, in a 2019 letter urging a CFIUS review of Bytedance, argued that TikTok’s alleged censorship poses a challenge to American security. “The Chinese government’s nefarious efforts to censor information inside free societies around the world cannot be accepted and pose serious long-term challenges to the U.S. and our allies,” Sen. Rubio wrote. 

But others are skeptical that an entertainment focused app like TikTok poses a national security risk. Graham Webster, the editor-in-chief of the DigiChina Project at Stanford University’s Cyber Policy Center, said, “TikTok is not obviously a national security risk. You have to get pretty imaginative in order to think of situations where it poses a risk.”

Given recent precedent, however, many observers are not optimistic about the results of the TikTok investigation. A 2019 CFIUS decision, for example, blocked a Chinese company, Beijing Kunlun Tech, from buying Grindr, a gay-dating app, apparently on national security grounds.

“In the current landscape, with tension between the U.S. and China, and with this administration, I don’t think CFIUS is going to approve the TikTok deal,” said Thad McBride, who runs the international law practice at a Washington law firm, Bass, Berry & Sims.

If CFIUS does not approve the TikTok acquisition, Mcbride said, they are unlikely to fully unwind the deal. Instead, TikTok may be forced to put in place some mitigation measures to reduce the company’s national security risk, possibly adding an American overseer tasked with ensuring that Chinese government actors couldn’t access the company’s collection of personal data from Americans.

American lawmakers have also introduced legislation aimed at limiting TikTok’s operations in the U.S., including Senator Josh Hawley’s (R-MO) March bill banning federal employees from using or downloading TikTok on devices issued by the U.S. government. Sen. Hawley, a well-known China hawk, argued that this legislation would protect government workers from Chinese surveillance.

Compounding Bytedance’s U.S. problems, TikTok is also facing increased scrutiny from the federal government that is not directly related to its Chinese ownership. In 2019, the Federal Trade Commission (FTC) found that the app was violating the Children’s Online Privacy Protection Act, resulting in a $5.7 million fine and TikTok’s promise to delete all previously stored data from users under 13 year olds and obtain parental consent to collect children’s data going forward. But on May 14th, TikTok was accused again of breaching child privacy laws by twenty advocacy groups. 

According to Josh Golin, the executive director of Campaign for a Commercial Free Childhood, the FTC complaints are related to broader problems that also plague American social media apps, and are not necessarily related to TikTok’s Chinese ownership. 

“I don’t care if TikTok is an American or Chinese company,” Golin said, noting that many social media companies turn a blind eye to the fact that they have users under 13 years old. 

As its U.S. problems mount, then, some analysts say Bytedance is counting on its recent moves to help prove itself as a serious global company. “They don’t want to be pigeon-holed as a Chinese company,” said Matthew Brennan, a Chinese technology expert and managing director of China Channel, which helps international companies develop China marketing strategies.

It remains to be seen, however, if an American executive and a larger U.S. office presence will be accompanied by significant changes within the company and if they will be enough to assuage U.S. fears about Chinese ownership.

“At the end of the day,” said Ryan, of the Australian Strategic Policy Institute, “TikTok is owned by Bytedance, and unless TikTok is completely spun off, then there is no meaningful separation.”

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