TikTok went all out to defend itself in a court hearing last Monday, to block a law that could force TikTok to be sold or banned in the United States. That included using one surprising strategy: to bring other Chinese apps down with it.
Earlier this year, the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA), which aims to prevent national security threats from apps like TikTok, took less than two months to pass both the House and the Senate, before it was swiftly signed by President Joe Biden in April. It caught almost everyone by surprise, including TikTok. The law requires TikTok to find a US buyer to take over its operation soon, or face being banned in the US. TikTok promptly sued the government over it.
At the Court of Appeals in Washington, DC, on September 16, Andrew Pincus, a partner at law firm Mayer Brown acting for TikTok, argued that the law unfairly targets the social media app for the speech on the platform and that it violates the First Amendment. Specifically, Pincus said the law exempts other Chinese apps that could have been doing worse on the concern of data security protection.
“There are very significant ecommerce sites based in China and other places that collect much more data than TikTok does. Very sensitive data,” Pincus said. At another point in the hearing, he narrowed down the targets to “two Chinese, two e-commerce sites that would certainly meet all of the other criteria in the law.”
Pincus did not name-drop the two sites in his statements, but a TikTok court filing from August 15 cited the privacy policies of Shein and Temu—two ecommerce companies linked to China—to make the same argument Pincus made. The filing also cited research from April 2023 on the data risks of these two companies, collated by the US–China Economic and Security Review Commission.
Shein and Temu came from China’s fiercely competitive ecommerce industry and were able to take over the world by storm by shipping low-cost apparels and goods globally. Each boasts tens of millions of customers around the world, and they are often compared to TikTok as the rare examples of Chinese tech companies that have truly succeeded in the US.
TikTok, however, claims there’s an exemption clause in the PAFACA Act that essentially protects Chinese companies like Shein and Temu but not TikTok. When defining what companies are covered, the Act has only one exclusion: companies and products “whose primary purpose is to allow users to post product reviews, business reviews, or travel information and reviews.”
To be fair, the clause that TikTok highlighted was a bewildering inclusion from the beginning. Even some lawmakers claimed they weren’t sure why it was necessary to put in place such an exception.
But TikTok is seizing this opportunity to argue that, because the clause would likely protect Shein, Temu, and similar ecommerce sites that also have significant presence in the US and collect a wealth of privacy data, the Act is narrowly tailored to punish TikTok. It went as far as to claim that the clause shows Congress favors topics like products, business, and travel instead of politics, religion, and entertainment, making it a First Amendment infringement. The DOJ has denied this characterization in written court briefs.
It is a valid legal strategy, Alan Rozenshtein, an associate professor of law at the University of Minnesota Law School, explains to WIRED, as the First Amendment can consider a law unconstitutional “if the law hinges on solving a particular problem, does so in an extremely limited way, and leaves the law unsolved.”
But the judge didn’t seem to buy the argument. “It’s a rather blinkered view that the statute just singles out one company,” said Judge Douglas Ginsburg during the hearing. “It describes a category of companies, all of which are owned by or controlled by adversary powers, and subjects one company to an immediate necessity because it’s engaged in two years of negotiation with that company, held innumerable hearings, meeting after meeting after meeting, [and] an attempt to reach an agreement on a national security arrangement which failed.”
The DOJ also replied to TikTok’s problem with the exclusion clause, saying in a court brief that if the clause were to be found problematic, the right solution would be to simply take out that clause about excluding businesses, instead of invalidating the whole law.
In recent years, data security concerns have become one of the main friction points in tech policies in the US and China. While the Chinese government passed a law that regulates cross-border data transfers, the US government has taken a more piecemeal approach, investigating risks posed by products like TikTok and Chinese-made smart cars.
Some experts and lawmakers advocate for a more comprehensive legal framework to solve this issue. “This bill not only fails to solve the problem, but also jeopardizes the free speech and livelihoods of 170 million Americans who use the app. Instead, Congress should pass a bill to prevent apps, whether it’s TikTok or any other social media platform, from collecting or transferring data and make foreign interference in social media algorithms illegal,” said Representative Ro Khanna in an emailed statement. Khanna voted no on the PAFACA bill.
For now, Chinese ecommerce sites like Shein and Temu have faced much less scrutiny around data security than TikTok. But TikTok’s legal strategy of highlighting the alleged data security risks of other Chinese companies will no doubt put more pressure on them. If TikTok fails its legal challenge and is banned from operating in the US unless it is sold, it’s not hard to imagine that lawmakers might turn their attention to other prominent Chinese tech companies.
“There might be some kind of legal strategy behind this, but in terms of how the public will now perceive TikTok, it has voluntarily opted to be associated with Temu and Shein and has undone a lot of the narrative work it has been trying to do,” says Ivy Yang, the founder of Wavelet Strategy, a strategic PR consultancy who has worked in Alibaba’s PR department.
By comparing TikTok’s data security concerns to Shein’s and Temu’s, the company essentially has labeled itself among a number of Chinese companies considered security risks.
So far, Shein and Temu have not made any statement about the PAFACA bill and its potential implications on their businesses. A Shein spokesperson responded in an emailed statement: “SHEIN has robust data security policies and practices in line with industry standards, and we are committed to only collecting and using the minimum amount of data needed to fulfill orders. SHEIN stores US customer data within Microsoft’s US-based Azure cloud-based solution and within AWS’s US-based cloud-based solution.” Temu and TikTok did not reply to requests for comment.
These ecommerce companies have plenty of problems to deal with at the moment too. A September White House decision to scrap a tariff exemption policy could significantly increase shipping costs for them and harm their profitability. Meanwhile, the two ecommerce companies have been embroiled in a tit-for-tat legal battle in the US since July 2023, accusing each other of monopolistic practices and deceptive marketing.
“What they are doing is basically airing all the dirty laundry,” Yang says about the Shein–Temu court fights. “It’s very much, ‘We are competitors and we have to beat the other party no matter how far we go, even though as a whole it’s a terrible look on Chinese companies.’” The same problem is playing out as TikTok seemingly decided to take down its fellow Chinese companies to save itself in the court.
But TikTok’s gambit may not pay off in the end. Even if it successfully argues that the Congress shouldn’t just target one app for its data security risks, it still needs to refute the government’s other justification for the law—that TikTok could be subject to content and algorithm manipulation by the Chinese government in the future. “The law has used two justifications. [If] one is invalid and the other is valid, the law is still valid,” says Rozenshtein.
There has been no proof—at least not in the nonredacted materials—that the Chinese government is currently interfering with TikTok’s content in the US. But during last week’s hearing, none of the judges seemed interested in discussing this point with TikTok or the government.
“[TikTok] made the best argument they could. Just the argument went very poorly for them,” Rozenshtein says. “I don’t think it’s conceivable that TikTok will win, at least on this level.”
Source : Wired
