Bipartisan legislation has finally been introduced to ban TikTok as Senator Marco Rubio and other sponsors announced yesterday (12/13) according to Reuters. Of course, what’s funny about this is that China has essentially banned TikTok–CNN reported long ago that China’s version of the app was quite a bit more restrictive than the export version.
Well, you heard it here first. July 2020 we published “Why is TikTok being banned? China’s National Intelligence Law.” As we explained then:
There’s an easy answer to why TikTok has been banned in so many places and may well yet get banned in the US: China’s “National Intelligence Law.”
China’s National Intelligence Law was enacted on June 27, 2017 and came into effect in July 2017. The National Intelligence Law is part of a portfolio of statutes (including the Cybersecurity Law) that gives the authoritarian Chinese Communist Party statutory authority that is unique in the world. The statute is an actual legal requirement for all Chinese companies and citizens to cooperate with China’s massive intelligence agencies.
The reason for the concern about TikTok is that the National Intelligence Law has broadly drafted and poorly defined provisions that create gaping exposure for U.S. and other foreigners doing business or studying in China, as well as their Chinese business partners, employees and colleagues.
Two parts of the Intelligence Law are particularly concerning, Article 7 and Article 14. Article 7 mandates that “any organization or citizen shall support, assist, and cooperate with state intelligence work according to law” and Article 14 empowers State Security officials to demand this cooperation, stating that “state intelligence work organs, when legally carrying forth intelligence work, may demand that concerned organs, organizations, or citizens provide needed support, assistance, and cooperation.”
The point of the many posts including a panel I moderated at the Music Business Conference was to explain how artists and music were being used as human shields to gather data on music fans as young as four years old at the instructions of the Chinese government. On top of it all, TikTok was, and still is, a massive infringement machine that has snowed their way into what Tim Ingham calls “blind check” deals:
The concern that all three of these companies shared with me was this: TikTokcurrently does not pay out to record companies and artists in the same way that Spotify, Apple Music, or indeed YouTube does.
As things stand today, TikTok is paying music companies what I would term ‘blind checks’. Others might call these payments ‘advances that are uncoupled from consumption on the platform’.
One person I spoke to called them ‘buy-outs’ because Tiktok is effectively buying out music licenses every year or two.
Let’s be clear that another way that Tik Tok differs from a monopoly DSP like Spotify is that TikTok does not pay for plays by users because TikTok has chosen not to build the same kind of tracking systems as Spotify. Instead, Tik Tok pays based on the number of times a track is embedded in a TikTok video. So if your recording is embedded in a TikTok video that is itself played a million or a billion times, that TikTok video counts as one for royalty purposes.
So on top of this cheesy “blind check” royalty system that simply covers up for TikTok’s decision not to track usage for royalty purposes–it’s not that they can’t it’s that they won’t–TikTok operates as an arm of the Chinese government and ships data back to some government agency in China as required under the National Intelligence Law.
Despite the denials by TikTok that they cooperate with the Ministry of State Security, anyone who has looked about an inch under the hood at TikTok can tell you that if masses of consumer data is not being transferred back to the data-hungry artificial intelligence operations in China, Google doesn’t begin with a G.
So the real question that will come up for enablers in the music business is going to be how much liability they have for this fraud. Maybe none–but maybe some. And we may be finding out what the contours of that liability looks like because the issue has finally bubbled up to bi-partisan federal legislation banning TikTok.
India long ago banned TikTok and recently several state governments followed India with a ban of the app on state owned devices including Alabama, Maryland, South Dakota, Texas and Utah.