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TikTok vaguely disputes report that it’s making a US-only app

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Exploring a different route —

TikTok has spent months separating code for US-only algorithm, insiders claim.

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TikTok vaguely disputes report that it’s making a US-only app

TikTok is now disputing a Reuters report that claims the short-video app is cloning its algorithm to potentially offer a different version of the app, which might degrade over time, just for US users.

Sources “with direct knowledge” of the project—granted anonymity because they’re not authorized to discuss it publicly—told Reuters that the TikTok effort began late last year. They said that the project will likely take a year to complete, requiring hundreds of engineers to separate millions of lines of code.

As these sources reported, TikTok’s tremendous undertaking could potentially help prepare its China-based owner ByteDance to appease US lawmakers who passed a law in April forcing TikTok to sell its US-based operations by January 19 or face a ban. But TikTok has maintained that the “qualified divestiture” required by the law would be impossible, and on Thursday, TikTok denied the accuracy of Reuters’ report while reiterating its stance that a sale is not in the cards.

“The Reuters story published today is misleading and factually inaccurate,” the TikTok Policy account posted on X (formerly Twitter). “As we said in our court filing, the ‘qualified divestiture’ demanded by the Act to allow TikTok to continue operating in the United States is simply not possible: not commercially, not technologically, not legally. And certainly not on the 270-day timeline required by the Act.”

It remains unclear precisely which parts of Reuters’ report are supposedly “misleading and factually inaccurate.” A Reuters spokesperson said that Reuters stands by its reporting.

A TikTok spokesperson told Ars that “while we have continued work in good faith to further safeguard the authenticity of the TikTok experience, it is simply false to suggest that this work would facilitate divestiture or that divestiture is even a possibility.”

TikTok is currently suing to block the US law on First Amendment grounds, and this week a court fast-tracked that legal challenge to attempt to resolve the matter before the law takes effect next year. Oral arguments are scheduled to start this September, with a ruling expected by December 6, which Reuters reported leaves time for a potential Supreme Court challenge to that ruling.

However, in the meantime, sources told Reuters that TikTok is seemingly exploring all its options to avoid running afoul of the US law, including separating its code base and even once considering open-sourcing parts of its algorithm to increase transparency.

Separating out the code is not an easy task, insiders told Reuters.

“Compliance and legal issues involved with determining what parts of the code can be carried over to TikTok are complicating the work,” one source told Reuters. “Each line of code has to be reviewed to determine if it can go into the separate code base.”

But creating a US-only content-recommendation algorithm could be worth it, as it could allow TikTok US to operate independently from the China-based TikTok app in a manner that could satisfy lawmakers worried about the Chinese government potentially spying on Americans through the app.

However, there’s no guaranteeing that the US-only version of TikTok’s content-recommendation algorithm will perform as well as the currently available app in the US, sources told Reuters. By potentially cutting off TikTok US from Chinese engineers who developed and maintain the algorithm, US users could miss out on code updates improving or maintaining desired functionality. That means TikTok’s popular For You Page recommendations may suffer, as “TikTok US may not be able to deliver the same level of performance as the existing TikTok,” sources told Reuters.

TikTok vaguely disputes report that it’s making a US-only app Read More »

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ByteDance unlikely to sell TikTok, as former Trump official plots purchase

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ByteDance unlikely to sell TikTok, as former Trump official plots purchase

Aurich Lawson | Getty Images Pool

Former US Treasury Secretary Steven Mnuchin is reportedly assembling an investor group to buy TikTok as the US comes closer to enacting legislation forcing the company to either divest from Chinese ownership or face a nationwide ban.

“I think the legislation should pass, and I think it should be sold,” Mnuchin told CNBC Thursday. “It’s a great business, and I’m going to put together a group to buy TikTok.”

Mnuchin currently leads Liberty Strategic Capital, which describes itself as “a Washington DC-based private equity firm focused on investing in dynamic global technology companies.”

According to CNBC, there is already “common ground between Liberty and ByteDance,” as Softbank—which invested in ByteDance in 2018—partnered with Liberty in 2021, contributing what Financial Times reported was an unknown amount to Mnuchin’s $2.5 billion private equity fund.

TikTok has made no indication that it would consider a sale should the legislation be enacted. Instead, TikTok CEO Shou Zi Chew is continuing to rally TikTok users to oppose the legislation. In a TikTok post viewed by 3.8 million users, the CEO described yesterday’s vote passing the law in the US House of Representatives as “disappointing.”

“This legislation, if signed into law, WILL lead to a ban of TikTok in the United States,” Chew said, seeming to suggest that TikTok’s CEO is not considering a sale to be an option.

But Mnuchin expects that TikTok may be forced to choose to divest—as the US remains an increasingly significant market for the company. If so, he plans to be ready to snatch up the popular app, which TikTok estimated boasts 170 million American monthly active users.

“This should be owned by US businesses,” Mnuchin told CNBC. “There’s no way that the Chinese would ever let a US company own something like this in China.”

Chinese foreign ministry spokesperson Wang Wenbin has said that a TikTok ban in the US would hurt the US, while little evidence backs up the supposed national security threat that lawmakers claim is urgent to address, the BBC reported. Wang has accused the US of “bullying behavior that cannot win in fair competition.” This behavior, Wang said, “disrupts companies’ normal business activity, damages the confidence of international investors in the investment environment, and damages the normal international economic and trade order.”

Liberty and Mnuchin were not immediately available to comment on whether investors have shown any serious interest so far.

However, according to the Los Angeles Times, Mnuchin has already approached a “bunch of people” to consider investing. Mnuchin told CNBC that TikTok’s technology would be the driving force behind wooing various investors.

“It would be a combination of investors, so there would be no one investor that controls this,” Mnuchin told CNBC. “The issue is all about the technology. This needs to be controlled by US businesses.”

Mnuchin’s group would likely face competition to buy TikTok. ByteDance—which PitchBook data indicates was valued at $223.5 billion in 2023—should also expect an offer from former Activision Blizzard CEO Bobby Kotick, The Wall Street Journal reported.

It’s unclear how valuable TikTok is to ByteDance, CNBC reported, and Mnuchin has not specified what potential valuation his group would anticipate. But if TikTok’s algorithm—which was developed in China—is part of the sale, the price would likely be higher than if ByteDance refused to sell the tech fueling the social media app’s rapid rise to popularity.

In 2020, ByteDance weighed various ownership options while facing a potential US ban under the Trump administration, The New York Times reported. Mnuchin served as Secretary of the Treasury at that time. Although ByteDance ended up partnering with Oracle to protect American TikTok users’ data instead, people briefed on ByteDance’s discussions then confirmed that ByteDance was considering carving out TikTok, potentially allowing the company to “receive new investments from existing ByteDance investors.”

The Information provided a breakdown of the most likely investors to be considered by ByteDance back in 2020. Under that plan, though, ByteDance intended to retain a minority holding rather than completely divesting ownership, the Times reported.

ByteDance unlikely to sell TikTok, as former Trump official plots purchase Read More »

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Bill that could ban TikTok passes in House despite constitutional concerns

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Bill that could ban TikTok passes in House despite constitutional concerns

On Wednesday, the US House of Representatives passed a bill with a vote of 352–65 that could block TikTok in the US. Fifteen Republicans and 50 Democrats voted in opposition, and one Democrat voted present, CNN reported.

TikTok is not happy. A spokesperson told Ars, “This process was secret and the bill was jammed through for one reason: it’s a ban. We are hopeful that the Senate will consider the facts, listen to their constituents, and realize the impact on the economy, 7 million small businesses, and the 170 million Americans who use our service.”

Lawmakers insist that the Protecting Americans from Foreign Adversary Controlled Applications Act is not a ban. Instead, they claim the law gives TikTok a choice: either divest from ByteDance’s China-based owners or face the consequences of TikTok being cut off in the US.

Under the law—which still must pass the Senate, a more significant hurdle, where less consensus is expected and a companion bill has not yet been introduced—app stores and hosting services would face steep consequences if they provide access to apps controlled by US foreign rivals. That includes allowing the app to be updated or maintained by US users who already have the app on their devices.

Violations subject app stores and hosting services to fines of $5,000 for each individual US user “determined to have accessed, maintained, or updated a foreign adversary-controlled application.” With 170 million Americans currently on TikTok, that could add up quickly to eye-popping fines.

If the bill becomes law, app stores and hosting services would have 180 days to limit access to foreign adversary-controlled apps. The bill specifically names TikTok and ByteDance as restricted apps, making it clear that lawmakers intend to quash the alleged “national security threat” that TikTok poses in the US.

House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.), a proponent of the bill, has said that “foreign adversaries like China pose the greatest national security threat of our time. With applications like TikTok, these countries are able to target, surveil, and manipulate Americans.” The proposed bill “ends this practice by banning applications controlled by foreign adversaries of the United States that pose a clear national security risk.”

McMorris Rodgers has also made it clear that “our goal is to get this legislation onto the president’s desk.” Joe Biden has indicated he will sign the bill into law, leaving the Senate as the final hurdle to clear. Senators told CNN that they were waiting to see what happened in the House before seeking a path forward in the Senate that would respect TikTok users’ civil liberties.

Attempts to ban TikTok have historically not fared well in the US, with a recent ban in Montana being reversed by a federal judge last December. Judge Donald Molloy granted TikTok’s request for a preliminary injunction, denouncing Montana’s ban as an unconstitutional infringement of Montana-based TikTok users’ rights.

More recently, the American Civil Liberties Union (ACLU) has slammed House lawmakers for rushing the bill through Congress, accusing lawmakers of attempting to stifle free speech. ACLU senior policy counsel Jenna Leventoff said in a press release that lawmakers were “once again attempting to trade our First Amendment rights for cheap political points during an election year.”

“Just because the bill sponsors claim that banning TikTok isn’t about suppressing speech, there’s no denying that it would do just that,” Leventoff said.

Bill that could ban TikTok passes in House despite constitutional concerns Read More »

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Female ex-exec told she lacked “docility and meekness” sues TikTok

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Female ex-exec told she lacked “docility and meekness” sues TikTok

One of TikTok’s senior-most female executives, Katie Ellen Puris, is suing TikTok and its owner ByteDance, alleging wrongful termination based on age and sex discrimination.

In her complaint filed Thursday, Puris accused ByteDance chairman Lidong Zhang of aggressively forcing her out of the company because she “lacked the docility and meekness specifically required of female employees.” She also alleged experiencing retaliation after reporting sexual harassment to the company.

Puris joined TikTok in December 2019 as managing director and US head of business marketing. Previously, she’d led global marketing initiatives for Google and Facebook. TikTok appeared to value this experience and promoted her within two months to lead its global business marketing team. In this role, she launched TikTok for Business and meaningfully shaped how businesses interact with the platform.

Amid this success, Puris allegedly discovered that she had a target on her back.

According to her complaint, by early 2021, Beijing-based ByteDance executives, including Zhang, “began reasserting more control over TikTok’s day-to-day operations.” These executives, Puris said, required bi-monthly meetings with senior executives to report on their teams’ progress in hitting company targets.

“Despite its attempts to appear independent, TikTok’s day-to-day management and business decisions came directly from ByteDance’s top-level management in China,” Puris’ complaint alleged.

During one of these bi-monthly meetings, Puris met Zhang for the first time during a presentation where she “celebrated her team’s successes and achievements.” Allegedly, Zhang was put off by Puris’ presentation because “women should always remain humble and express modesty.”

“Essentially, Lidong Zhang believes women should be quiet,” Puris’ complaint alleged.

Puris believes that because she “did not fit that stereotypical gender mold,” Zhang refused to ever meet with her again and placed her on a “kill list” of employees who he wanted terminated.

According to Puris, Zhang began pressuring her supervisors to review her performance negatively. He allegedly cast a wide net and sought negative comments from employees whom Puris rarely worked with. His alleged “animosity” was so evident that one of Puris’ supervisors allegedly sought to protect her by removing her from Zhang’s oversight.

At the same time, Puris, who was approaching 50, alleged that other executives “made it clear” that they would prefer to hire “hungry” younger, less experienced workers “believed to be more innovative and pliable” and “desperate for approval” than older workers like Puris. She claimed that a supervisor regularly referenced her age during performance reviews that became increasingly negative and without clear feedback or comments substantiating her poor reviews. Requests for feedback were repeatedly rejected.

Puris’ efforts to report alleged age and sex discrimination did not result in corrective action, her complaint said. Even when a TikTok advertising partner allegedly drunkenly sexually harassed her at an off-site event, Puris alleged that her complaints were not taken seriously. Puris said that TikTok continued inviting the advertising partner to events, causing her to withdraw from attending.

Rather than sincerely investigate her complaints, Puris’ complaint said that “after Ms. Puris made protected complaints, her team was substantially reduced, she received a devastatingly low-performance review, she was denied her annual bonus, she was moved out of her position, and she was ultimately unlawfully terminated.”

Female ex-exec told she lacked “docility and meekness” sues TikTok Read More »

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TikTok requires users to “forever waive” rights to sue over past harms

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Or forever hold your peace —

TikTok may be seeking to avoid increasingly high costs of mass arbitration.

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TikTok requires users to “forever waive” rights to sue over past harms

Some TikTok users may have skipped reviewing an update to TikTok’s terms of service this summer that shakes up the process for filing a legal dispute against the app. According to The New York Times, changes that TikTok “quietly” made to its terms suggest that the popular app has spent the back half of 2023 preparing for a wave of legal battles.

In July, TikTok overhauled its rules for dispute resolution, pivoting from requiring private arbitration to insisting that legal complaints be filed in either the US District Court for the Central District of California or the Superior Court of the State of California, County of Los Angeles. Legal experts told the Times this could be a way for TikTok to dodge arbitration claims filed en masse that can cost companies millions more in fees than they expected to pay through individual arbitration.

Perhaps most significantly, TikTok also added a section to its terms that mandates that all legal complaints be filed within one year of any alleged harm caused by using the app. The terms now say that TikTok users “forever waive” rights to pursue any older claims. And unlike a prior version of TikTok’s terms of service archived in May 2023, users do not seem to have any options to opt out of waiving their rights.

TikTok did not immediately respond to Ars’ request to comment, but has previously defended its “industry-leading safeguards for young people,” the Times noted.

Lawyers told the Times that these changes could make it more challenging for TikTok users to pursue legal action at a time when federal agencies are heavily scrutinizing the app and complaints about certain TikTok features allegedly harming kids are mounting.

In the past few years, TikTok has had mixed success defending against user lawsuits filed in courts. In 2021, TikTok was dealt a $92 million blow after settling a class-action lawsuit filed in an Illinois court, which alleged that the app illegally collected underage TikTok users’ personal data. Then, in 2022, TikTok defeated a Pennsylvania lawsuit alleging that the app was liable for a child’s death because its algorithm promoted a deadly “Blackout Challenge.” The same year, a bipartisan coalition of 44 state attorneys general announced an investigation to determine whether TikTok violated consumer laws by allegedly putting young users at risk.

Section 230 shielded TikTok from liability in the 2022 “Blackout Challenge” lawsuit, but more recently, a California judge ruled last month that social media platforms—including TikTok, Facebook, Instagram, and YouTube—couldn’t use a blanket Section 230 defense in a child safety case involving hundreds of children and teens allegedly harmed by social media use across 30 states.

Some of the product liability claims raised in that case are tied to features not protected by Section 230 immunity, the judge wrote, opening up social media platforms to potentially more lawsuits focused on those features. And the Times reported that investigations like the one launched by the bipartisan coalition “can lead to government and consumer lawsuits.”

As new information becomes available to consumers through investigations and lawsuits, there are concerns that users may become aware of harms that occurred before TikTok’s one-year window to file complaints and have no path to seek remedies.

However, it’s currently unclear if TikTok’s new terms will stand up against legal challenges. University of Chicago law professor Omri Ben-Shahar told the Times that TikTok might struggle to defend its new terms in court, and it looks like TikTok is already facing pushback. One lawyer representing more than 1,000 guardians and minors claiming TikTok-related harms, Kyle Roche, told the Times that he is challenging TikTok’s updated terms. Roche said that the minors he represents “could not agree to the changes” and intended to ignore the updates, instead bringing their claims through private arbitration.

TikTok has also spent the past year defending against attempts by lawmakers to ban the China-based app in the US over concerns that the Chinese Communist Party (CCP) may use the app to surveil Americans. Congress has weighed different bipartisan bills with names like “ANTI-SOCIAL CCP Act” and “RESTRICT Act,” each intent to lay out a legal path to ban TikTok nationwide over alleged national security concerns.

So far, TikTok has defeated every attempt to widely ban the app, but that doesn’t mean lawmakers have any plans to stop trying. Most recently, a federal judge stopped Montana’s effort to ban TikTok statewide from taking effect, but a more limited TikTok ban restricting access on state-owned devices was upheld in Texas, Reuters reported.

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Report: Pico to Layoff “hundreds” as Company Shifts Focus to Hardware

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There were rumors circulating late last month that TikTok parent company ByteDance was set to spin down its China-based VR headset company, Pico Interactive. While the company dismissed those rumors, a new Reuters report maintains Pico is soon set to lay off teams focused on sales, videos and platform operations, which could affect “hundreds” of employees.

Citing three people with direct knowledge of the matter, the report maintains the information comes from an internal meeting from earlier this morning wherein it was allegedly revealed Pico is keeping its VR hardware team whilst folding much of its software team back into ByteDance’s own product development team.

Reuters reports Pico’s CEO Zhou Hongwei said at the meeting that “the VR industry remains in a very early stage,” saying the company’s estimation for the industry and market growth was “too optimistic as (real growth) did not go as fast as expected.”

It’s not clear how many Pico employees will be laid off, however the report maintains that “hundreds” of staff are expected to be affected globally. Pico additionally confirmed to Reuters it was restructuring the business to focus more on hardware and core technologies, but declined to comment on possible job cuts.

Acquired by TikTok parent company ByteDance in 2021, Pico was tapped to take on Meta with its growing line of standalone VR headsets. Launched about a year ago, the company’s latest headset Pico 4 offered up some pretty compelling specs alongside what is now around 75 percent of the game library available on Quest.

The company’s long-awaited entrance into the US market has still yet to come though, as Pico has only released its consumer-focused headsets in Europe and East Asia (China, South Korea, Japan, Malaysia and Singapore).

Report: Pico to Layoff “hundreds” as Company Shifts Focus to Hardware Read More »

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Report: TikTok Parent Lays Off Hundreds at VR Subsidiary Pico Interactive, Tencent Scraps VR Plans

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TikTok parent company ByteDance is reportedly laying off what South China Morning Post maintains will be “hundreds of employees” working at its VR headset manufacturing subsidiary, Pico Interactive. A separate report from Reuters also maintains Chinese tech giant Tencent is scrapping its plans to release a VR headset.

According to two people with knowledge of the Pico layoffs, a substantial portion of the VR headset maker is expected to be affected. The report maintains that some teams will see as much as a 30 percent reduction, while some higher-level positions are also expected to be affected.

After being acquired by ByteDance in August 2021, Pico job postings revealed the company was making a sizable expansion into the US to presumably better compete with Meta on its home turf.

Shortly afterwards, the China-based company then released its latest standalone headset, Pico 4, in Europe and Asia to consumers. Seen a direct competitor to Meta Quest 2, Pico 4 still isn’t officially sold in the US; the headset is currently only available across Japan, Korea, Singapore, Malaysia, and most countries in Europe.

It was also reported by Chinese tech outlet 36Kr that Tencent, the massive Chinese multinational, was disbanding it 300-person strong XR unit. The company has since refuted this claim with Reuters, stating instead it will be making adjustments to some business teams as development plans for XR hardware had changed.

Citing sources familiar with the restructuring, Reuters reports that Tencent is abandoning plans to release a VR headset due to a sobering economic outlook.

This follows a widening trend of layoffs which have affected nearly every big name in tech, including Google, Meta, Amazon, and Microsoft. Microsoft recently announced it was shuttering its social VR platform AltspaceVR in addition to its XR interface framework, Mixed Reality Toolkit. Meanwhile, Microsoft has also had trouble fulfilling its end of a US defense contract which uses its HoloLens AR headset as the basis of a tactical AR headset.

It was also revealed late last year that Meta was planning to cut discretionary spending and extend its hiring freeze through the first quarter, alongside a layoff which affected nearly 11,000 employees, or around 13 percent of its overall workforce.

Report: TikTok Parent Lays Off Hundreds at VR Subsidiary Pico Interactive, Tencent Scraps VR Plans Read More »