TikTok is having a bit of a moment.
Coinciding with its raging popularity, TikTok’s CEO has been facing a US congress hearing over security concerns stemming from its Chinese parent company, Bytedance. We’ve already seen countries like New Zealand, France and the UK banning TikTok from government devices. Yesterday, Australia also joined in banning the app from government devices. The US government though is considering banning TikTok entirely unless it sells its American arm of the business, despite around 100 million Americans using the app every month.
Government officials say the app is feeding propaganda to American citizens and could be sharing sensitive information with the Chinese government. TikTok says it isn’t. Realistically, we don’t know the answer. But here’s the thing – TikTok may just be the tip of the iceberg. There are a number of other Chinese-made apps that are fast growing in popularity. In March, four of the top five downloaded apps in the US were Chinese.
Today Darcy and Sascha ask – if we ban TikTok, will we need to ban all Chinese developed apps?
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Sascha: [00:00:03] I'm Sascha Kelly and welcome to the Dive, the podcast that asks whoever said that business news needs to be all business. TikTok is having a bit of a moment coinciding with its raging popularity. Tik-tok CEO has been facing a US Congress hearing over security concerns stemming from its Chinese parent company, Bytedance. It was the most downloaded app in the world in 2022, but now in a bid to avert a US ban. Tik-tok CEO has fronted a heated five hour hearing in Washington, DC. We've already seen countries like New Zealand, France and the UK banning TikTok from government devices. But the US government is now considering banning TikTok entirely unless it sells its American arm of the business. Despite around 100 million Americans using the app every month, government officials say the app is feeding propaganda to American citizens and could be sharing sensitive information with the Chinese government. TikTok It says it isn't. And realistically, we don't know the answer. But here's the thing. Tiktok might be just the tip of the iceberg. There are a number of other Chinese made apps that are fast growing in popularity. And in fact, in March, four of the five top downloaded apps in the U.S. were Chinese made. It's Wednesday, the 5th of April. And today I want to know, is Tik Tok just the beginning? Are there other Chinese apps to investigate? To talk about this today, I'm joined by my colleague here at Equity Mates is Darcy Cordell. Darcy, a welcome to the Dive.
Darcy: [00:01:48] Hi, Sascha. Thanks for having me.
Sascha: [00:01:49] Have you been on Tik Tok today?
Darcy: [00:01:51] Not yet, but I'll certainly be on at the start today?
Sascha: [00:01:54] Not yet. That is definitely alluding to the fact that you will spend some time on Tik Tok every day. So addictive, isn't it?
Darcy: [00:02:02] It is. It. It's a real killer.
Sascha: [00:02:05] And aside from being highly addictive, it's also been in the news recently over these security concerns. 41% of Americans support a nation wide ban on TikTok. But that does leave a majority of the population who don't support the ban. And many of them would be those 100 million TikTok users. Can you fill us in briefly on the concerns that surround Tik Tok?
Darcy: [00:02:30] Yeah, the concerns can be broken into two areas. The first is what we're seeing on Tik Tok. And the second is what Tik Tok is collecting. And a major concern is the fact that there are two versions of Tik Tok. There's the version that we have here that you and I use, and that's the same for the rest of the world. And then there's China's own version called Douyin, and both are owned by Bytedance. But analysts comparing the two have said it's like opium versus spinach.
Audio Clip: [00:02:58] In their version of Tik-tok. If you're under 14 years old, they show you science experiments you can do at home. Museum exhibits, patriotism videos and educational videos. And they also limit it to only 40 minutes per day. Now, they don't ship that version of Tik-tok to the rest of the world. So it's almost like they recognise that technology's influence in kids development and they make their domestic version a spinach version of Tik-tok while they ship the opium version to the rest of the world. [00:03:28][29.8]
Darcy: [00:03:29] And the second concern, Sascha, is that sensitive information is being collected and passed on to the Chinese government through a Tiktok. Tiktok automatically captures our location data and our browsing and search histories. And if this information did get into the hands of the Chinese government, it could pave the way for China to track their locations of government employees, build dossiers to blackmail and conduct corporate espionage even. So for that reason, it's been banned from government devices in a lot of countries, and Australia is looking into doing so as well. [00:04:02][32.6]
Sascha: [00:04:02] Tiktok CEO Shu Chu has been facing hearings in the U.S. trying to allay all these fears. It's important to be clear that Tiktok denies any wrongdoing and says it really has nothing to do with the Chinese government. At this stage, it really is a they said they said between Western lawmakers and Tiktok executives. But, Darcy, there's another story here, one that I talked about in the intro. Tiktok is just one of the five most downloaded apps in the U.S. in March, and all but one were developed in China. So this conversation that's so focussed on Tiktok alone might need to be broadened and very quickly. So let's start with the apps themselves. What are they?
Darcy: [00:04:47] Let's do a countdown. This data comes from the Wall Street Journal and Sensor Tower. So coming in at number five in the most popular apps of March is Facebook. Wow. It's pretty impressive that they have so many users. But the social media giant is the only. On Chinese app in the top five. A number for fast fashion retailer Shane. Shane has over 75 million active users and it's a platform that connects dozens of factories in China directly with customers all over the world. The way that they test and manage lines, it brings a whole new meaning to the term fast fashion. They can literally produce clothing at a fraction of the price of competitors around the world.
Sascha: [00:05:28] And a little cross primer apps a lot of Tik Tok uses. The teenagers are creating content, which is all about their Shane Hall, so just encourages more fashion to be bought.
Darcy: [00:05:38] Yeah, exactly. Sascha. So number three, my favourite Tik tok.
Sascha: [00:05:45] Yeah.
Darcy: [00:05:45] The most downloaded app in the world last year. It's available in 150 countries. It has over a billion users and it's been downloaded over 210 million times in the US alone. We both thought Sascha Tiktok's algorithm is its strength. It's incredibly addictive. It just works out the content you want to say or the content that keeps you scrolling. And it does it like no other platform does.
Sascha: [00:06:10] Yeah, mine is F1. All the drive is at the moment after it knows that I was there on the weekends and it's just serving it up to me at the moment.
Darcy: [00:06:19] So coming in at number two for the most popular apps in March is cut. Now this is Tiktok's video editing app, and the fact that it's number two just shows how popular Tik Tok is. This is also owned by Bytedance, the owner of Tik Tok.
Sascha: [00:06:33] This one was a new one to me, but it is incredibly powerful. Free editing software.
Darcy: [00:06:39] And finally, the most downloaded app in the US in March was online shopping platform tomorrow.
Sascha: [00:06:45] I'd never heard of it.
Darcy: [00:06:46] I haven't heard of it either. And it's only seven months old, but has been installed by 50 million people since it launched in September last year. And even with that late 2022 launch, it managed to become the eighth most downloaded shopping app in the US last year. Timo and Shein are part of this wave of e-commerce platforms that connect shoppers looking for cheap goods in the US with China's manufacturers. And they offer these really low prices by cutting out the middleman.
Sascha: [00:07:13] All right. Darcy So in a minute, let's dig into these other apps and answer whether they all do have the same concerns that Western lawmakers have about Tik-tok. And you've also brought this intriguing idea to my attention, and that is the dumb phone movement. I have so many questions about what that is.
Darcy: [00:07:32] I'll tell you about it after the break.
Sascha: [00:07:34] Sascha, it's a deal. Welcome back to the dive. Look, I've got a really quick favour to ask you. Can you give us a five star review just right there in your podcast, player? Pause what you're doing. Pick up your phone, click five stars right off you nice words and hit submit. It makes all the difference to us. So a huge thank you from all of us here, the Equity Mates team to you for listening and being a supporter. Today we're talking about the growing Western popularity of Chinese made apps like Tik Tok Tamer and Shane. Tik Tok at the moment is under heavy scrutiny for its ties to the Chinese government and many countries have security concerns. So Darcy, is it the same for all the other Chinese apps?
Darcy: [00:08:19] Both Shane and Tamer have deliberately moved to avoid the scrutiny that Tik Tok is under by distancing themselves from their Chinese roots? Back in 2021, Shein changed its parent company from a Hong Kong registered firm to a Singapore Incorporated entity. Timo It's actually based in Boston and it runs its US business through a Delaware based company. At the moment, public awareness of their links to the Chinese government, it's just not as strong. But having said that, the same treatment could easily spread to other Chinese apps, including these two. The Special Competitive Studies project, specifically name Shane, Tamer Cathcart and WeChat as apps that could pose similar challenges to TikTok.
Audio Clip: [00:09:03] When I speak to experts about the functional difference between how Tik Tok operates now other social media companies operate, they really can't name any big difference. And yet this one is falling under especially intense scrutiny. I mean, the CEO of YouTube has never appeared before Congress in spite of it being a very functionally similar platform and being full of the same sort of content lawmakers decried this week. Now, the difference, of course, here is Chinese ownership and the geopolitical moment we are in.
Sascha: [00:09:31] Have intelligence agencies raised the same questions? Have governments told their staffers to delete these apps?
Darcy: [00:09:38] Yeah. In countries like the US, UK, New Zealand, Norway and the Netherlands, Tik Tok has been banned from government devices. The Dutch government said it discouraged the use of all apps on phones distributed by the government from countries with an aggressive cyber program. Now it didn't mention Tik Tok by name, but the intelligence agency warned that apps from countries including China, Russia, North Korea and Iran carried a heightened risk of espionage.
Sascha: [00:10:07] You can read between the lines there a little bit. You.
Darcy: [00:10:09] Yeah, I think I think so, Sascha. Also, the French government recently banned the use of recreational apps, including Tik Tok, but also Netflix and Instagram on the work, fines of two and a half million civil servants. And the government said it was to ensure the cyber security of their officials.
Sascha: [00:10:27] I mean, Darcy that feels like two birds one stone that right the cybersecurity fact but also they might just want their employees to use their work phones to work. There's not many business cases for watching Netflix on the job.
Darcy: [00:10:39] No there's not. But the takeaway is in some places this banning of apps is not just limited to Tik Tok or Chinese apps.
Sascha: [00:10:47] The Chinese app's just being accused of what American apps have been doing for years. Isn't this just a case of like if we do it, it's data collection for advertising purposes, but if you do it, it's spying?
Darcy: [00:11:00] Yeah, it's a very valid question. Sascha, we know Facebook has been heavily criticised for its collection of users data and it says that is for advertising purposes. Same story with Google, WhatsApp, Instagram, the list goes on. All these apps collect some level of data from us, whether it be location or search history. But the key difference arguably is that the US government needs to go to court and request a warrant if it wants to access users data. They don't have the power to access data through backdoor channels, which the Chinese government potentially does. There's a legitimate national security concern about what happens to US user data once it is inside China's borders. And the Chinese government has been developing a legal framework for protecting personal data, but that's focussed on holding private companies accountable, not restricting what data the government gets from those companies or what it does with that data. And there are things companies like Bytedance can do to address the concerns. Bytedance has vowed to store and process US data only in the US, but there are still reports that company engineers in China are accessing US user data and the US wants Bytedance to sell off its American operations to allay fears.
Sascha: [00:12:17] All right, Darcy, put a bow on this for me. As a smartphone user, I am not doing anything that foreign governments are going to be interested in. How should I be approaching this story? What should I be doing?
Darcy: [00:12:29] Well, first of all, you need to accept that your data is being collected by it by an American tech company, a Chinese tech company. Or a European tech company.
Sascha: [00:12:38] This is so clear. My friend adopted a dog a couple of weeks ago. I talked to her about puppy training and now that's all my Instagram really is. How to train a puppy. I don't have a puppy.
Darcy: [00:12:48] Yet, but it doesn't seem like there's too much appetite from lawmakers to challenge the collection of all the data. Instead, they're more focussed on which apps can collect the data. There's a proposal in America for a blanket ban on a broad range of Chinese technology apps. So your first choice, Sascha, if you're worried about who is collecting your data, would be to limit the apps you download. And trust me, you'll probably save a lot of procrastination time by deleting Tiktok.
Sascha: [00:13:16] Absolutely. You just open it up and it's like you enter a vortex with a sizeable amount of time passes before you come back to the real world.
Darcy: [00:13:24] But as we've said, Instagram is collecting very similar information and there are few things you can do to stop all apps collecting information. You can turn off your location services and opt out of sharing data when prompted. If you have an iPhone, but that's really only playing around at the edges. If you are really worried about the data that is being collected, you could join the growing dumb phone movement. Did you ever own one of those old Nokia brick phones?
Sascha: [00:13:51] Yeah, I did. Darcy was first phone I ever got. I was 16 and a bit. Got a Nokia 310. It was my mom's hand-me-down and it was a brick. It was absolutely unstoppable.
Darcy: [00:14:04] Right. I said, Well, you'll remember that there's really nothing you can do on those phones other than call or text.
Sascha: [00:14:09] You can play snake, you can play Snake, Darcy. And that's a great game.
Darcy: [00:14:13] So that phone does not collect much data from you, and they also massively cut down your screen time. So there's been a genuine movement of people moving back towards these phones to protect their data and their screen time. I love the idea.
Sascha: [00:14:26] Yeah, I might go back and dig mine out of my parents cupboard when I'm back home. Luke Darcy, thanks so much for that wrap up today. I think we're going to leave it there, but we've actually got a related topic that we're dropping this week. On Friday, we're doing an interview with a journalist who's been writing about new reports about the decline in our mental health as a result of some of these addictive apps that have really increased our screen time. So I'm looking forward to digging into that topic on Friday. Darcy, I'll speak to you then.
Darcy: [00:14:55] Looking forward to it. Thanks, Sascha.
Sascha: [00:14:58] My team. A quick little postscript to this story today. Just an hour after we put this recording to bed, we got a news alert that said the Albanese government is banning Chinese owned Tiktok on government issued devices as it looks at the measures to tackle national security concerns and protect the social media data of Australians. Australia is joining its Five Eyes allies, a reminder that's the US, Canada, New Zealand and United Kingdom in banning Tik Tok on government devices. And the European Commission has announced a similar edict. So. So there you go. Business use moves fast. Thanks for joining us today.