Senators urge FTC to investigate TikTok over data use

Yahoo Finance’s Alexis Keenan joins the Live show to discuss U.S. Senators urging the FTC to investigate TikTok over heightened concerns that U.S. user data is being breached by the Chinese government.

Video transcript

BRIAN SOZZI: Senators are urging the FTC to investigate TikTok over how it handles user data. Yahoo Finance legal correspondent Alexis Keenan has the details. Alexis.

ALEXIS KEENAN: Hey, Brian. Yes, you have a bipartisan coupling of senators here, asking for the FTC for an immediate investigation into TikTok. Senators Virginia Democrat Mark Warner and Florida Republican Marco Rubio, they penned a letter to the FTC chair, saying that they'd like this investigation, under antitrust laws, to inquire whether the parent company ByteDance has access to US user data, the users in the US who are using TikTok.

Particularly, they say that the company is accessing non-public US data on device info, the identification of those devices, also birthdays and phone numbers. This all comes after a BuzzFeed report said that there were audio leaks wherein TikTok's internal meetings, there were discussions where China-based engineers had unfettered access to this type of information.

Now, the letter says that this all contradicts sworn testimony before Congress of TikTok's executives, as well as public statements that the company has made about how its information in the US is firewalled off from Chinese access. Now, in a letter, the senators go on to say that recent updates to TikTok's privacy policy, which indicate that TikTok may be collecting biometric data, such as face prints and voice prints, heightened concern that data of US users may be vulnerable to extrajudicial access by security services controlled by the Chinese Communist Party.

TikTok, for its part, they say that the company has never shared US user data with the Chinese government, nor would it if it were asked for that information. So, Brian, perhaps the beginning of an investigation here. Not only are the senators asking for the FTC to look into this, but they also say that they would like the cooperation of other parts of US law enforcement to dig in if it's needed.

BRAD SMITH: We also know that European lawmakers, they approved of two new regulation laws. Can you tell us about those and what they mean for Amazon and some of the world's biggest tech giants as well?

ALEXIS KEENAN: OK, so these are two new laws that are now greenlighted. They are going to become law in the EU, though the adoption of these laws and adherence to them-- the enforcement, that is-- won't have to happen until January of 2024. Now, one of these laws is called the Digital Markets Act. And that is an antitrust law. And it's forcing particularly big tech companies. These laws are focused on big tech. They're not focused on little guys. Now, in the US, our laws are more comprehensive, and they go after all companies equally. Now this is about big tech.

And this first Digital Markets Act, it forces the platforms to open up. It forces them into interoperability to adopt that. So for example, let's say you wanted to use WhatsApp and Signal. And you have those two apps on your phone. Now those, right now, cannot go one to the other. You can't exchange messages between those apps. This law will force companies to let those messages between those apps be exchanged.

So the idea is that smaller companies that want to compete head to head with similar services, that they'll be able to get into the markets because the platforms will have to be open, however big they are. There's still questions, though, about whether this law will apply to things like, will a Facebook Messenger have to be able to interoperate with Twitter? Can you send a message from Twitter to Facebook, and vice versa? Some of those questions aren't answered yet, so that's the first part.

Second part is more of a corporate record keeping law. And that one's called the Digital Services Act. Now, that one is about corporate transparency and also about liability. What it is, is reporting, when companies report out, how they're handling their electronic affairs. They need to be open about it.

They need to report criminal activity, for example. They need to say what their processes are for keeping information available to the public. So very much kind of like what's going on, on the other side of the pond here with the SEC wanting more disclosures, whether it's ESG or otherwise, more corporate disclosures about how the companies are handling this information.

BRAD SMITH: Doing-- well, on the first law, it sounds like for the communications and the overlap between different apps and services, it sounds like that's almost the equivalent of having regulations say everybody needs to make sure that users can have a USB-C port, or something of the like, to say, this is what we're using to charge everything from this point forward on that front. That's, at least, what it sounds like. And so does this impact the business model, do you think, for a broader sense for some of these companies who have just retained people using their message apps exclusively to communicate with one another?

ALEXIS KEENAN: Sure, and I think that's a great comparison. Right, you'll be able to use different platforms and still reach the person who might have previously used a different alternative service. And look, these big tech companies, they have capitalized on the idea that they have huge market share.

So it is expected that it will impact the bottom line for these companies, the first law more so than the other-- the reporting law. The big one, the big change for these companies is going to be having to open up their platforms. To what extent will also be quite interesting to see how the EU really defines some of the terms and the requirements to see how broad it will really be in the long run. But we'll watch for it January 2024. They have some time to comply here.

BRAD SMITH: Alexis Keenan, always great insight and breakdown on some of the new regulation that's come forward. Appreciate it.