TikTok & The ‘Unholy Alliance’ between Big Tech and China [Chris Castle]

As TikTok continues to fight bans worldwide, Chris Castle critically examines its backers and where all the money it generates goes.

by CHRIS CASTLE from Music Tech Policy

Give me a nickel, brother, can you spare a dime?
Money can drive some people out of their mind…
For the Love of Money, written by Leon Huff, Kenneth Gamble, and Anthony Jackson

The clock is ticking for TikTok.  In case you haven’t been following the play by play, the app was banned in India for national security reasons back in 2020 (along with 58 other China-based apps), and has also been banned on government issued devices in Australia, Belgium, Canada, Denmark and the European Union.  

TikTok is also banned on all US government issued devices and on devices issues by 34 states and counting, all for national security reasons following recommendations by the Intelligence Community.

On the music side, TikTok has failed for years to create a royalty reporting infrastructure that tracks views or streams of songs, sound recordings, or other copyrights and has operated under what is essentially an agreement not to sue with record companies and music publishers.  These “blind check” agreements allow TikTok to pay a fee and have unlimited use of recordings and songs resulting in a pathetic per-view/per-stream rate that is actually worse than Spotify.  

Universal Music Group was the first major label to reach the end of its patience with TikTok which actually tried to pay Universal even less on a renewal.  Universal terminated their “blind check” deal and are now taking down their recordings and songs.  

And bravo for Universal—TikTok should never have been allowed to use the copyrights in the first place and basically pawned off “promotional” value and “exposure” without ever drawing a connection between activity and sales.  Or as Coach Wooden might say, don’t confuse activity with achievement.

So why is TikTok getting all this access to the U.S. Congress, and in particular the U.S. Senate?  Or even more particularly, Senator Chuck Schumer who may not even allow the Senate to vote on the bill that overwhelmingly passed the House of Representatives that would force TikTok parent Bytedance to divest itself of TikTok.

In a word, money.  

Or more particularly, Big Tech’s money starting with TikTok’s chief lobbyist, Michael Beckerman formerly head of the Internet Association and Kool-Aid drinker in chief.

There is quite the unholy alliance between Big Tech and the government of the People’s Republic of China, that is the Chinese Communist Party.  Let’s take Sequoia Capital as an example.

MTP readers will remember Sequoia Capital as the Silicon Valley venture fund behind both Google and Ad Bright, the original two online advertising platforms that monetized Megavideo (according to the Megavideo indictment).  So we know right away that Sequoia is not on our side.

Sequoia’s portfolio includes Google, YouTube, WhatsApp, Instagram, Airbnb, Stripe, Dropbox, LinkedIn, and more.  Sequoia has offices in India and of course in China.  Sequoia has long made profitable investments in China-based companies that benefited the CCP’s military to the disadvantage of America due to the CCP’s “military/civil fusion” strategy. You can find a deeper dive here, but just to give you the idea about “military/civil fusion,” the U.S. State Department currently describes it as:

Military-Civil Fusion is a national strategy of the Chinese Communist Party (CCP) to develop the People’s Liberation Army (PLA) into a “world class military” by 2049. Under MCF, the CCP is acquiring the intellectual property, key research, and technological advances of the world’s citizens, researchers, scholars, and private industry in order to advance the CCP’s military aims. The CCP is systematically reorganizing the Chinese science and technology enterprise to ensure that new innovations simultaneously advance economic and military development. PRC President and CCP General Secretary Xi Jinping personally oversees the strategy’s implementation. He chairs the CCP’s Central Military Commission and the Central Commission for Military-Civil Fusion Development.

Investor Neil Shen

The politics and cosmetics of Sequoia’s investment in the People’s Liberation Army came to a head in 2023 when Sequoia spun off its investments in the Peoples Republic under the brand Hongshan Capital managed by the Chinese-born Sequoia executive Neal Shen.

Neil Shen is a well-known tech investor from China and is now the managing partner of Hongshan/Sequoia China.  Crucially, Shen has invested in companies like Meituan (kind of a Yelp meets Amazon meets Groupon), Pinduoduo (sister company to Temu The Obnoxious, need I say more), and of course Bytedance and TikTok.  What’s common among all three of these selections?  Tracking.  They track every breath you take.

So it should not be a surprise that Mr. Shen reportedly is an active member of the Chinese Communist Party. Neither should it be a surprise that Sequoia China/Hongshan has invested in companies linked to the CCP’s activities such as DJI, a drone maker sanctioned for enabling repression in Xinjiang (home to China’s persecuted Uyghur population), DeepGlint, whose facial recognition technology aids in controlling the Uyghur population in what the BBC characterizes as possible genocide,  EverSec, a Chinese company developing AI for the People’s Liberation Army’s (PLA) warning platforms, and 4Paradigm, a Chinese company building AI for PLA battlefield programs.

You can see that there’s a lot more going on behind the scenes with TikTok than meets the eye and certainly than is belied by their “lost lamb” charm offensive on Capitol Hill and in advertising campaigns.

As I’ve been saying for years now, TikTok uses music as a honeypot for tracking and data scraping.  When people say TikTok hands over the data to the CCP’s Ministry of State Security, they are not being paranoid—that’s the law in China.  The MSS probably doesn’t even ask nicely, just ask Hong Kong publisher Jimmy Lai.  It’s no wonder that Universal wants out of that relationship and it’s no wonder that Congress wants to separate TikTok in the US just like the PRC separates them in China.  (And don’t forget Kevin Mayer, remember him?  He got out early and never got that subpoena about the Foreign Agents Registration Act.)

Remember – TikTok is not available in China.  It’s PRC counterpart called Douyin is, though.  But Douyin is not available in the US and all TikTok content is blocked in China just like all PRC content is blocked on TikTok.

If you want to see a good dance video, watch the TikTok CEO avoid explaining to Congress why that is.