Pogo, TikTok and Data Brokers: We Have Met the Enemy and He is Us

For anyone seeking common ground in Washington, the new, divided Congress ensures the scarce real estate will continue shrinking in 2023. That’s what makes Republicans and Democrats intent on curbing TikTok, China’s wildly successful short video app, noteworthy. Just don’t expect the kumbaya comity will matter much when it comes to the security risks posed by China. A multi-billion dollar American data brokering industry is ready to sell Beijing whatever it wants.

The concern over TikTok’s trove of data on Americans isn’t hard to explain. Tensions with Beijing have put China atop Washington’s roster of national security threats. No slouches at reading public opinion, politicians also sense they have a winner in highlighting the app as negative views of social media grow. Add TikTok’s doubletalk on Capitol Hill about its Chinese ties. It’s fair to say the company has strung itself up as a political piñata and handed its critics the bat.

The Chinese company’s extraordinary penetration of the social media market would be an attention-getter even if Washington and Beijing were making nice. TikTok had some 1.8 billion users and $4.6 billion in revenue worldwide last year. These days it’s drawing 140 million active American users. Some 60 percent are in the 10- to 30-year-old range -- in 2021-2022 TikTok was by far the most downloaded app -- making it Gen Z’s favorite, bar none.

That said, ad men spending billions to flog their clients’ goods on TikTok isn’t what’s bothering the Biden administration or Congress. The worry is the massive quantity of personal data TikTok vacuums up as the ‘tweens and 20-somethings watch, click, and swipe. Chinese authorities can repurpose the information to serve multiple goals -- for instance, for intelligence targeting, a propaganda effort, or a tailored political action campaign. More to the point, when the Chinese regime has a mind to do just that, Beijing’s wish is literally TikTok’s command.

The suggestion that TikTok can insulate itself from the dictates of China’s security services belongs in the same category as the idea that Elvis is returning soon. The legal obligations of TikTok and its Chinese employees to the People’s Republic are spelled out in black letter law. China’s Cybersecurity and National Security Laws establish that Chinese companies and citizens “shall support, assist, and cooperate with state intelligence work.” The statutes also make plain they must keep secret whatever they do.

The rules aren’t up for debate or appeal. Start with the power of the security services to enforce the law in an authoritarian regime. Then add the role of China’s Communist Party, and President Xi Jinping’s guidance from on high. Ten years ago Xi began to use security laws and regulators to tighten his grip on the technology sector. Among other things, Xi also defenestrated several tech sector moguls -- they left their CEO roles for the Chinese equivalent of “spending more time with the family” -- to underscore his and the party’s writ.

Presumably because of the controversy in Washington, at ByteDance, TikTok’s parent, the Communist Party is shortening the leash. Like all Chinese companies ByteDance must have a Communist Party cell. Its chief keeps an eye on the business as well as participates in management decisions.  According to the New York Times Magazine, the Chinese government recently took an equity stake and board seat in another ByteDance subsidiary as well. Headquartered outside China or not, TikTok’s bosses doubtless got the message: more oversight is on the way.

In any case, TikTok’s response to rising concerns about its US operations hasn’t been impressive. For example, after news reports in June that employees in China regularly accessed US information, this month a company spokesperson tap-danced, denying TikTok ever shared US data with the Chinese government or Communist Party. The evasion is obvious, as is the real question TikTok’s flack tried to dodge. What happens when the state security ministry’s agents come calling, Chinese laws in hand, to demand TikTok turn over whatever they want?

Finding a fix to TikTok’s threat that works won’t be easy. According to the Wall Street Journal, after two years of negotiations with TikTok the Committee on Foreign Investment in the United States (CFIUS) is divided. Treasury Department officials believe walling off American users’ data in the United States can do the job. Other officials from Defense and Justice reportedly think only TikTok’s forced sale will protect their likes, swipes, and locations from China’s reach. Meanwhile, in Washington as well as a dozen state capitals, senators, governors and assorted officials are speaking out, pushing or adopting bans on the app, and decreeing no-use policies on government devices.

The problem, however, amounts to what isn’t being said. TikTok is the tip of the iceberg. Despite the crowd decrying the Chinese company, few if any in Congress are saying a cross word about data brokers. The Federal Trade Commission defines data brokers as “companies that collect consumers’ personal information and resell or share (it) with other.” It’s a major, unregulated, and rapidly growing industry. The US dominates the $240 billion global, data brokering market. By 2031 forecasts suggest the market will grow to $460 billion world-wide.

Most Americans know little about data brokers, much less the fine-grained details on their lives, including detailed personal profiles, they collect, compile, collate and sell. The technology and financial services giants, such as Google, Facebook, Oracle, and Experian, play a major part. So do advertisers and trade associations that collect and sell information, as well as data miners and web crawlers that scrape public records on arrests, divorces, and home sales. The industry is complex; it’s also opaque and the companies, big and small, want it that way.

Take their lobbying. As political attention to the technology sector and its use of personal data has grown, Big Tech has dramatically increased its spending in Washington. Data brokers have generously added to the pot. Some are outdoing the corporate giants. According to The Markup, 25 companies in the business spent $29 million in 2020 alone. A half-dozen bills that have sought to require consumer consent for sale of personal data, establish a national data broker registry, and set data security standards all have failed. It’s no surprise.

The implications for national security are obvious. Identifying groups and individuals -- for example, by race, gender, income levels, address, political sympathies, and social media preferences -- are the data brokering industry’s meat and potatoes. With vast stores of information on Americans and no obligation to perform due diligence on their clients, data brokers peddle their wares without restrictions here and abroad.

If you’re an intelligence officer in Beijing who wants to target a US government employee or push disinformation to just the right audience online, who needs TikTok? A front company and a checkbook will work just fine.

“Surveillance is the business model of the Internet,” Bruce Schneier, a technologist and lecturer at Harvard’s Kennedy School, told a Boston audience ten years ago. “We build systems that spy on people in exchange for services. Corporations call it marketing.”

Or as Walt Kelly’s Pogo put, “we have met the enemy and he is us.”

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