TikTok is Part of China's "Cognitive Warfare" on the US

Show Notes

The revelations about China’s “cognitive warfare on America found in Peter Schweizer’s newest book, “Blood Money,” continue to spur action in Washington.

In the past week, the House Government Oversight Committee has announced an investigation into China’s ongoing efforts to infiltrate and influence the US. And the full House just overwhelmingly passed a bill that would force the owners of TikTok to divest the online app or be banned in the US. That bill moves to the Senate where its prospects are less certain.

Republican Sen. Rand Paul (R-KY) Paul has come to the company’s defense, arguing ByteDance’s ownership isn’t actually Chinese at all. Paul said that “60% are internation investors, while 20% is owned by the two software engineers who created the app, and the remaining 20% is owned by its employees, many of whom are Americans.

Sen. Rand Paul

On the most recent episode of The Drill Down, Schweizer comments on the opposition to the bill by Sen. Rand Paul (R-KY). “Sen. Paul is flat out wrong here. What he’s doing is superimposing what American corporate ownership looks like, but trying to apply it to a Chinese context,” Schweizer said.

“There are international investors. The problem is they are not controlling shareowners. They don’t vote on decisions that are made about the app and where it’s going,” Schweizer pointed out. The second thing [reported by Forbes and others] is that those international investors are subject to an agreement when they bought into ByteDance that, if they disparage or criticize the company publicly, their shares can be confiscated by the company. All those shareholders he wants to praise and take money from are under gag orders… There’s no agreement like that with any US company in America.”

And, even by Chinese standards, ByteDance is deeply connected to the regime. The book points out that most of the senior editorial people working at ByteDance previously worked for the state Ministry of Information.

Schweizer further noted that, as documented in his book, the algorithm driving TikTok’s “For You” recommendations is not only a company secret but was designated by the Chinese Communist Party as a state secret. Co-host Eric Eggers noted that TikTok also participates in research into manipulating people online with the Chinese Intelligence services.

Former president Donald Trump has also come out against the bill, claiming TikTok would be bought up by Facebook’s Mark Zuckerberg. Schweizer doubts that. “There is no way that would pass antitrust laws,” he said. “Zuckerberg already owns the #2 and #3 biggest social media platforms. There is no way regulators would approve his buying the #1 platform.”

While Sen. Paul is known for his free market principles, he neglects to mention that his biggest financial backer, billionaire Jeffrey Yass, is a major investor in ByteDance. Yass co-founded the Philadelphia-based trading firm Susquehanna International Group, which owns a 15% stake in TikTok’s China-based parent company. Yass’ personal share is 7%, worth roughly $21 billion.

Yass, a founder of the right-leaning “Club For Growth” group of political funders, has funneled some $23 million to Rand Paul’s campaigns for Senate and for president since 2015, Schweizer points out.