US Politicians Urge the Department of Justice to Investigate TikTok, Zoom

July 31, 2020 6:36 am

Beijing (PingWest)—Democratic Senator Richard Blumenthal and Republican Senator Josh Hawley wrote to the US Department of Justice on Thursday, saying that Zoom and TikTok should be investigated for violating Americans' civil liberties and their close ties with China.

“We believe that it is imperative that the Department of Justice investigate and determine whether Zoom and TikTok’s business relationships, data handling practices, and operational connections to China pose a risk to Americans”, they wrote.

The two senators stated that Zoom and TikTok have sought to conceal their meaningful connections with China and hold themselves out as American companies.

Chinese American entrepreneur Eric Yuan, San Jose-headquartered Zoom has a big presence in China. It employs over 500 people across multiple R&D centers in China, which accounts for roughly 30% of its total workforce and 70% of its non-US-based employees.

Thanks to the lower personnel costs in China, Zoom spent $33 million on R&D, or just 10% of total revenue, which is a much smaller share than other business software makers. “Our product development team is largely based in China, where personnel costs are less expensive than in many other jurisdictions,” The videoconferencing company disclosed in its IPO prospectus.

Currently, Zoom is speeding up hiring DevOps engineers, IT personnel in India, and plans to open a new tech center in Bangalore.

TikTok, the globally popular social media app among younger generations, is under attack as tensions between China and the US intensify. The Trump Administration is considering banning the app and India has already taken it off app stores.

In order to distance the short video app from its Chinese ownership, ByteDance appointed former senior Disney executive Kevin Mayer as CEO of TikTok in May, and separated TikTok operationally from its other apps through dedicated teams.

In a blog post published Wednesday, TikTok CEO Kevin Mayer said, "We are willing to take all necessary steps to ensure the long-term availability and success of TikTok."

The parent company is reportedly advancing structural changes, which may include a new holding company for TikTok and an independent board. 

ByteDance has received a proposal from some of its investors, including Sequoia Capital and General Atlantic, to transfer majority ownership of TikTok to them, Reuters reported, citing sources familiar with the matter.

In order to dispel the US government's concerns about data security and user privacy, TikTok committed to disclosing its algorithms, moderation policies, and data flows to the regulators.