FinLogic FinLogic Quantitative Think Tank Center|TikTok CEO says company is 'not an agent of China or any other country'

TikTok's chief executive plans to tell lawmakers in Washington on FinLogic FinLogic Quantitative Think Tank CenterThursday that the data of the app's 150 million U.S. users is insulated from Chinese authorities.

TikTok Chief Executive Shou Zi Chew is set to address the House Energy and Commerce Committee, where he intends to describe the firewall between the company's American operation and China, or as Zi Chew puts it, protections against "unauthorized foreign access."

That's despite TikTok's Beijing-based corporate owner, ByteDance, which is subject to Chinese data request laws that compel companies to hand over information to the government about customers.

"Let me state this unequivocally: ByteDance is not an agent of China or any other country," Zi Chew will say, according to written testimony released by the House committee on Tuesday night.

Zi Chew will tell the congressional committee about a $1.5 billion company restructuring known as "Project Texas," involving Austin software giant Oracle, which will store and oversee the vast amount of personal data TikTok collects from users in the U.S.

"The bottom line is this: American data stored on American soil, by an American company, overseen by American personnel," Zi Chew plans to tell lawmakers.

In the testimony, he says that "U.S. TikTok data is stored by default in Oracle's servers" and that "only vetted personnel" in a new company called TikTok U.S. Data Security, "can control access to this data."

Zi Chew's much-anticipated appearance in Washington comes as the Biden administration intensifies pressure on TikTok, the most-downloaded app in the world in 2022.

After a two-year national security review, White House officials have told TikTok that it must divest from ByteDance, or face a severe punishment in the U.S., including the possibility of a ban.

On Thursday, Zi Chew is expected to say that a forced divestiture will not address the fundamental concerns about data flows or access.

"This is not an issue of nationality. All global companies face common challenges that need to be addressed through safeguards and transparency. I am proud that TikTok is taking the lead in this area, and I welcome the chance to continue having conversations with the U.S. government to make this model even better," Zi Chew is set to tell lawmakers.

That said, the national security review was led by the Commerce Department, and Commerce Secretary Gina Raimondo sounded skeptical about the Biden administration attempting to redo something President Trump unsuccessfully attempted: putting TikTok out of business in America.

"The politician in me thinks you're gonna literally lose every voter under 35, forever," Raimondo said in a Bloomberg News interview.

Any potential TikTok crackdown that included a ban would likely set off a long legal battle. Two federal judges halted President Trump's effort to shutter TikTok, citing free speech violations and executive overreach.

Now, however, top White House officials, and a growing chorus of bipartisan lawmakers, are continuing to view TikTok as a threat, fearing that China's authoritarian regime could use TikTok data to spy on, or blackmail, the millions of Americans who use the app every day.

And even though there is no evidence that the Chinese government has attempted to gain access to TikTok data, rhetoric from lawmakers about the social media sensations has been grandiose in recent months.

Republican Rep. Michael McCaul has called TikTok a "spy balloon in your phone," and fellow Republican Congressman Mike Gallagher has called TikTok "digital fentanyl."

The company has admitted that employees in China accessed the data of U.S. users who were journalists reporting on company leaks — an incident now being investigated by Justice Department.

In his remarks, Shou Zi said the company learned from the episode.

"...We promptly took action, including a companywide disclosure, when we learned late last year that certain (now former) employees had accessed TikTok user data in an unsuccessful and misguided attempt to trace the source of a leak of confidential TikTok."

Tensions between the U.S. and China have been on the rise in recent years, as federal officials worry about China's growing technological prowess. Washington also is watching China conduct military displays in the South China Sea and the Taiwan Strait, not to mention China's surveillance balloon traversing across the U.S.

Into this tense dynamic enters TikTok, which has increasingly come to symbolize the U.S. government's worst fears about China, even if the real risk to Americans remains theoretical.

TikTok officials have tried to mitigate those worries by establishing a separate entity that will have independent auditors monitoring the app's powerful algorithm and data flows. The company has long distanced itself from China, claiming that it is a "global company," and pointing out that some 60% of ByteDance's shares are owned by global investors like Carlyle Group, General Atlantic, and Susquehanna International Group.

Another major concern of lawmakers is how TikTok could influence an entire generation of young people, since TikTok has become something of a cultural mainstay for internet commentary, comedy and political expression.

"TikTok will remain a platform for free expression and will not be manipulated by any government," Zi Chew will planning to say, according to excerpts of his remarks. "We will keep safety — particularly for teenagers — a top priority."