TikTok: U.S. officials need 'to move forward based on national security,' FCC Commissioner says

FCC Commissioner Brendan Carr joins Yahoo Finance Live to discuss the path forward for TikTok following leaked internal information in Beijing of U.S. users and Elon Musk’s Twitter takeover.

Video transcript

SEANA SMITH: Here, in the US, we know TikTok has really soared in popularity. There's been over 200 million downloads of the app. Pew Research, 67% of US teens say that they have used TikTok in the past. We've heard about the growing popularity, what that means for other US tech giants.

Here, Laura Martin of Needham, she was on Yahoo Finance a few weeks ago, Rachelle, saying that Meta is losing a lot of user time to one of its rivals, and the big one being TikTok. We know it's owned by ByteDance, a Chinese company. So of course, the larger concern here or the national security concerns clearly has been calls to ban TikTok, something that Congress has considered.

CFIUS is working out potentially an agreement here with ByteDance about what that could look like in terms of TikTok's future here in the US. But a lot needs to be discussed and exactly what the risk is here and what that means for US users.

RACHELLE AKUFFO: And TikTok even drawing the scrutiny of a lot of regulators in Europe, a company official admitting for TikTok, admission that European data is being accessed by China's based employees. That's according to Politico. So a lot of questions about where the data is being stored, how the data is being used, and the sort of influences that are coming about as a result of this. So I don't think the scrutiny is going away any time soon for sure.

SEANA SMITH: Yeah, certainly is not. Well, we want to bring in someone who has been very critical of TikTok, actually calling for TikTok to be banned in the US. For that, we want to bring in FCC commissioner, Brendan Carr. Commissioner, it's great to have you. Thanks so much for joining us. So we know that the SEC doesn't have authority to regulate TikTok directly, but your opinion has clearly been very influential with Congress in the past. So I'm curious, though. I guess let's just start with why you don't think there's a path forward, other than a ban of TikTok.

BRENDAN CARR: Yeah, well, you're right. This isn't an issue like Huawei or China Mobile or ZTE, where there's a direct regulatory role for the FCC, but I do have some experience in working in those cases, having to do with companies with deep ties back into communist China, as well as maligned data flows. And so I'm happy to bring that to bear here. As you pointed out in the main, I think this is Treasury. The CFIUS process will be looking at this.

There was a rumor a couple of weeks ago in "The New York Times" that Treasury had a preliminary deal in place with TikTok already to allow some continued data flow. The reason why I just don't see a path forward to cutting any sort of deal at this point has to do with the trust in TikTok. The whole basis for the deal with CFIUS has to do with something called Project Texas, which has to do with locating more and more data and Oracle servers here in the US.

But there's a report just about 10 or 14 days ago that had a TikTok official in LA meeting outside of business hours, offsite, with another TikTok employee, asking very unusual, detailed questions about the location and other details of those Oracle servers.

Similarly, there was leaked internal communications that had a TikTok official in DC saying that at the end of the day, once this Project Texas has stood up, it remains to be seen if product and engineering, meaning Beijing, can still get access because at the end of the day, these are technology tools they built in China. So if TikTok officials aren't sure that a CFIUS deal can protect America's national security, then I think we should believe them.

SEANA SMITH: And Commissioner, we actually asked one of our guests last week, Michael Wolf-- he's the CEO and founder of Activate Consulting. He was on sharing his predictions for the tech sector at large in 2023. But we specifically asked him about a TikTok ban. I want to play what he said and then get your reaction to this.

MICHAEL WOLF: TikTok is a disruptive force, not just in social media, but across all technology and media. Given the popularity of this, it's a huge mistake for the government to try to regulate it. What ends up happening is when you don't allow people to have a legitimate reason to access something in technology and media, they find an illicit way of doing it. So it'll be a huge mistake, and it's hard to enforce.

SEANA SMITH: Commissioner, what's your reaction to that?

BRENDAN CARR: Well, I agree that it's immensely popular. I mean, millions and millions of kids are on this application. At the same time, it's not a direct analogy, but when we dealt with Huawei and ZTE, those were immensely popular products in the enterprise business market. But at the end of the day, we've got to move forward based on national security. And I think the tide is moving out on TikTok at this point, whether it's action through Congress, action through CFIUS. I think there's something that we have to do here.

And I think that's the direction that we're largely heading. I mean, look, it is still to be determined exactly what CFIUS does. But there's other alternatives out there as well. There's other short form video applications that exist. So people want an outlet for these highly popular dance videos. There's still a way to do that, but just doing it in a way that this data isn't flowing directly back to Beijing, which also, again, is feeding their AI, feeding their algorithms, training them, improving them. And I think that's a threat to us as well.

RACHELLE AKUFFO: Now, obviously, if you're the Play Store or you're the Apple App Store, and you're wondering, what does this mean for us, how on Earth do you incentivize these companies to remove TikTok from their platforms?

BRENDAN CARR: Well, I wish they would. I wrote a letter back in June or July to Apple and Google, saying, put the national security concerns to the side. I'm not asking you to make that decision, Apple or Google. But you do have rules in place that say if there's nefarious data flows, or data is being used for undisclosed purposes, we apps out of the App Store. I think that's exactly what's been happening here.

In fact, there's a bipartisan group in Congress. A Democrat and Republican just sent a letter to Google and Apple within the last couple of days, making, basically, that exact point, that you hold these app stores out at safe places to get applications, but given the tracking and other undisclosed conduct that's happening with the TikTok app, they suggested-- I read their letter-- at least suggesting that TikTok should reconsider-- Apple and Google should reconsider having TikTok in their app stores.

RACHELLE AKUFFO: And what about the argument that we're not yet clear on what, if anything, China or some of the Chinese workers are actually doing with this data? How do you overcome that argument in trying to get some of these companies to get this off their App Store?

BRENDAN CARR: Well, we do know one thing that's going on. There was a report from Forbes about two weeks ago that had Beijing-based Bytedance TikTok officials using TikTok to surveil persons in the US that were not TikTok officials. So that's very concerning.

We also saw the report in the lead-in segment here from 60 Minutes that talked about the version of the app that ByteDance makes available in China is educational. It shows museum video, scientific experience.

In the US, TikTok is showing to 10-year-old girls blackout challenge videos in which they've been encouraged to suffocate themselves, and in some cases, have died as a result of that. So I think that's deeply concerning in terms of both the data flowing back to China, the surveillance opportunities, as well as the foreign influence campaign from the content that's being sent back to US users.

SEANA SMITH: Commissioner, I want to turn from TikTok to your recent visit to Taiwan. And I bring this up because you were the first ever visit by an FCC official to Taiwan. We know this comes at a time when US relations with Taiwan are really in focus as China-US tensions really have escalated as of late. I guess, what can you tell us about your trip and what you learned from the conversations that you had there?

BRENDAN CARR: Well, that was really important to visit Taiwan coming on the heels of the Communist Party confab just a few weeks ago where Xi and others are increasing the saber rattling when it comes to Taiwan. And I think it's important for all of us. And I'm a very small-time government official, but to show that we are deepening our partnership with our ally and Taiwan because, in my view, a free democratic Taiwan is vital to US economic interests and to our security interests.

Again, if you step back, 90% of all advanced semiconductor chips are made right there on that island in Taiwan. And there's no replacement for that at any point in the foreseeable future. So our security depends on a free, strong democratic Taiwan. And so I think we need to show that. Also I was there meeting with my counterparts, focused on cybersecurity and network resiliency. It's no secret that after Speaker Pelosi's visit, there was an uptick in malign cyber activity. So I think it's important that we continue to collaborate with our counterparts in Taiwan, as they defend themselves from those types of cyber intrusions.

SEANA SMITH: And Commissioner, before we let you go, I have to ask you about what your thoughts are with Twitter and Elon Musk. Certainly a number of changes that have been announced over the last week. One of them, Elon Musk saying that he plans to form a content moderation council for Twitter. What's your perspective just on what we've heard from Musk and what you think Twitter is going to look like under Musk?

BRENDAN CARR: Yeah, I mean, in general, my view is I'm happy that Musk has the opportunity here to bend Twitter's content moderation more towards free speech, to protect a diversity of views on the public town square. But my view also is unchanged, which is I don't think we have to hope that Musk or some other billionaire ends up being benevolent and engages in pro speech reforms.

I think at the federal level, we need to enact some guardrails to protect a diversity of viewpoints. And so I think maybe now, more than ever, we can see some bipartisan support for stepping in with transparency, accountability, anti-discrimination. And I think that's something that we can do, regardless of who owns a particular platform.

SEANA SMITH: Commissioner Brendan Carr, always great to have you. Thanks so much for joining us this afternoon.

BRENDAN CARR: Thanks so much.