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After US President Joe Biden and the Committee on Foreign Investment in the United States (CFIUS) spent years trying to work out a deal with TikTok that could address national security concerns, Biden seems to have given up. Yesterday, TikTok confirmed that the Biden administration issued an ultimatum to the app’s China-based owners to either divest their stakes or risk a TikTok ban in the US, Reuters reported .

Biden’s demand comes just one week before TikTok CEO Shou Zi Chew is scheduled to testify before the House Energy and Commerce Committee. The Wall Street Journal confirmed that Chew is already in the US and is working with “experienced Washington advisers” to help him defend TikTok against its harshest critics in Congress next Thursday.

Chew told The Journal that forcing a sale does not address national security concerns any better than the deal that TikTok had already worked out with the CFIUS. Under the deal that Biden seems to be shrugging off now, TikTok has already invested billions in moving its US users’ data to US servers and hiring independent monitors to ensure that Americans’ TikTok feeds can’t be manipulated and that their data can’t be accessed by China authorities.

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As Congress prepares to vote on a nationwide TikTok ban next month, it looks like that ban may already be doomed to fail. The biggest hurdle likely won’t be mustering enough votes, but drafting a ban that doesn’t conflict with measures passed in the 1980s to protect the flow of ideas from hostile foreign nations during the Cold War.

These decades-old measures, known as the Berman amendments, were previously invoked by TikTok creators suing to block Donald Trump’s attempted TikTok ban in 2020. Now, a spokesperson for Representative Michael McCaul (R-Tex.), the incoming chairman of the House Foreign Affairs Committee, told Ars that these measures are believed to be the biggest obstacle for lawmakers keen on blocking the app from operating in the United States.

Yesterday, The Wall Street Journal reported that lawmakers’ dilemma in enacting a ban would be finding a way to block TikTok without “shutting down global exchanges of content—or inviting retaliation against US platforms and media.” Some lawmakers think that’s achievable by creating a narrow carve-out for TikTok in new legislation, but others, like McCaul, think a more permanent solution to protect national security interests long-term would require crafting more durable and thoughtful legislation that would allow for bans of TikTok and all apps beholden to hostile foreign countries.

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Following an internal investigation, TikTok owner ByteDance today confirmed reports from this fall that claimed some of its employees used the popular app to track multiple journalists, including two in the US. The ByteDance employees’ goal? To identify anonymous sources who were leaking information to the media on the company’s ties to the Chinese government, according to The New York Times .

Forbes reported that multiple reporters from its own publication were “part of this covert surveillance campaign.” A Buzzfeed reporter and UK-based Financial Times journalist Cristina Criddle were also surveilled, FT reported . ByteDance employees reportedly accessed reporters' TikTok accounts to obtain IP and user data, assessing whether there was any overlap with pings from known locations of ByteDance employees suspected of leaking. ByteDance confirmed that these tactics became so broad that the employees also monitored the data of some of the journalists’ associates.

According to Forbes, ByteDance fired Chris Lepitak, the chief internal auditor responsible for the company’s Internal Audit and Risk Control department. ByteDance confirmed Lepitak's team was behind the surveillance campaign. In October, Forbes reported that Lepitak was also seemingly seeking information on the “location and details of the Oracle server that is central to TikTok’s plans to limit foreign access to personal US user data.” That server is key to the Biden administration’s ongoing discussions with TikTok over national security concerns , with the US increasingly wary of China-based ByteDance employees gaining access to US-stored data.

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China-owned TikTok’s been living rent-free in many American lawmakers’ minds all year. Some lawmakers—who have been monitoring US tensions with China and coping with growing concerns that TikTok in its current form shouldn’t be trusted with millions of Americans’ data—reached a breaking point this December. In the past few weeks, many state and federal agencies introduced and passed various laws , campaigning hard to remove the popular short-video app from US devices.

It looks like the US could end up following through on Donald Trump’s thwarted 2020 plan to ban TikTok nationwide.

Possibly the only thing potentially keeping TikTok operating in the US has been an elusive deal that President Joe Biden’s administration is discussing with TikTok—a deal that just days ago, The New York Times reported , included terms that were “unlikely to satisfy anyone.” Now, Reuters has released an exclusive report , revealing new details about the terms of Biden’s deal and providing the first glimmer of hope for Americans increasingly worried that their TikTok access might soon be revoked.

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In September, President Joe Biden announced that TikTok would remain accessible in the US once a deal could be worked out to assuage national security concerns. At that time, Biden said it would take months for his administration to weigh all the potential risks involved in inking the deal. Among detractors of the brewing deal, Senator Marco Rubio (R-FL) and Congressman Mike Gallagher (R-WI) emerged, alleging in a Washington Post op-ed that any deal that Biden arranged with the Chinese-owned social media platform “would dangerously compromise national security.”

Now, Marco and Gallagher have teamed up with Congressman Raja Krishnamoorthi (D-IL) to introduce new bipartisan legislation in the Senate and House of Representatives, formally calling for a ban on TikTok. It’s the only way, lawmakers feel, that TikTok can truly be stopped from collecting sensitive data on Americans for the Chinese Communist Party (CCP) and censoring content to influence elections, sow discord, or potentially even "indoctrinate" users.

“The federal government has yet to take a single meaningful action to protect American users from the threat of TikTok,” Rubio said in a press release . “We know it’s used to manipulate feeds and influence elections. We know it answers to the People’s Republic of China. There is no more time to waste on meaningless negotiations with a CCP-puppet company. It is time to ban Beijing-controlled TikTok for good.”

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Several years after Facebook-owner Meta acquired WhatsApp and Instagram, the Federal Trade Commission launched an antitrust lawsuit that claimed that through these acquisitions, Meta had become a monopoly. A titan wielding enormous fortune over smaller companies, the FTC said Meta began buying or burying competitors in efforts that allegedly blocked rivals from offering better-quality products to consumers. In this outsize role, Meta stopped evolving consumer preferences for features like greater privacy options and stronger data protection from becoming the norm, the FTC claimed. The only solution the FTC could see? Ask a federal court to help them break up Meta and undo the damage the FTC did not foresee when it approved Meta’s acquisitions initially.

To investigate whether Meta truly possesses monopoly power, both Meta and the FTC have subpoenaed more than 100 Meta competitors each. Both hope to clearly define in court how much Meta dominates the market and just how negatively that impacts its competitors.

Through 132 subpoenas so far, Meta is on a mission to defend itself, claiming it needs to gather confidential trade secrets from its biggest competitors—not to leverage such knowledge and increase its market share, but to demonstrate in court that other companies are able to compete with Meta. According to court documents, Meta’s so hungry for this background on its competitors, it says it plans to subpoena more than 100 additional rivals, if needed, to overcome the FTC’s claims.

Enlarge / The Oculus Quest 2.

A recent media release from market research firm IDC predicts that Meta (the parent company of Facebook) may not be able to compete in the mixed-reality business in the long run if its strategy remains unchanged.

The media release offers a bird's-eye view of the virtual reality hardware marketplace. In the release, IDC research manager Jitesh Ubrani said that, while "Meta continues to pour dollars into developing the metaverse, [the company's] strategy of promoting low-cost hardware at the expense of profitability isn't sustainable in the long run."

A similar concern was raised by tech industry analyst Ming-Chi Kuo late last month. Kuo predicted that Meta would make moves to scale down investment in virtual reality, creating an opening for Apple and other competitors. He also wrote that Meta's practice of selling VR headsets at a loss is unsustainable.

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, TikTok, currently the world’s hottest social media app, welcomed the new decade by publishing its first transparency report as it encounters rising scrutiny from regulators around the world.

TikTok tries to demystify

The report, which arrived weeks after it tapped a group of corporate lawyers to review its content moderation policy, is widely seen as the short video app’s effort to placate the U.S. government. The Committee on Foreign Investment in the United States, or CFIUS, is currently probing the app for possible national security risks.

TikTok is owned by Beijing-based tech upstart ByteDance and has been rapidly gaining popularity away from its home turf, especially in the U.S. and India. As of November, it had accumulated a total of 1.5 billion downloads on iOS and Android devices, according to data analytics firm Sensor Tower , although how many materialized into active users is unknown.

The transparency report reveals the number of requests TikTok received from local regulators during the first half of 2019. Such orders include government requests to access user information and remove content from the platform. India topped the list with 107 total requests filed, followed by the U.S. with 79 requests and Japan at 35.

The numbers immediately sparked debates over the noticeable absence of China among the list of countries that had submitted requests. This could be because TikTok operates as a separate app called Douyin in China, where it claimed to have more than 320 million daily active users (in Chinese) as of last July.

TikTok has taken multiple measures to ease suspicions of international markets where it operates, claiming that it stores data of U.S. users in the U.S. and that the app would not remove videos even at the behest of Beijing’s authority.

Whether skeptics are sold on these promises remains to be seen. Meanwhile, one should not overlook the pervasive practice of self-censorship among China’s big tech.

“Chinese internet companies know so well where the government’s red line is that their self-regulation might even be stricter than what the government actually imposes, so it’s not impossible that [the TikTok report] showed zero requests from China,” a person who works at a Chinese video streaming platform suggested to me.

It’s worth revisiting why TikTok has caused a big stir on various fronts. Besides its nationality as a Chinese-owned app and breathtaking rise, the app presents a whole new way of creating and consuming information that better suits smartphone natives. It’s been regarded as a threat to Facebook and compared to Youtube, which is also built upon user-generated content. However, TikTok’s consumers are much more likely to be creators as well, thanks to lower barriers to producing and sharing videos on the platform, venture capitalist David Rosenthal of Wave Capital observed . That’s a big engagement driver for the app.

Another strength of TikTok, seemingly trivial at first sight, is the way it displays content. Videos are shown vertically, doing away the need to flip a phone. In a company blog post (in Chinese) on Douyin’s development, ByteDance recounted that most short-video apps budding in 2016 were built for horizontal videos and required users to pick from a list of clips in the fashion of traditional video streaming sites. Douyin, instead, surfaces only one video at a time, full-screen, auto-played and recommended by its well-trained algorithms. What “baffled” many early employees and interviewees turned out to be a game-changing user experience in the mobile internet age.

Douyin’s ally and enemy

A recent change in Douyin’s domestic rival Kuaishou has brought attention to the intricate links between China’s tech giants. In late December, video app Kuaishou removed the option for users to link e-commerce listings from Taobao, an Alibaba marketplace. Both Douyin and Kuaishou have been exploring e-commerce as a revenue stream, and each has picked its retail partners. While Kuaishou told media that the suspension is due to a “system upgrade,” its other e-commerce partners curiously remain up and running.

Left: Douyin lets creators add a “shop” button to posts. Right: The clickable button is linked to a Taobao product page.

Some speculate that the Beijing-based company could be distancing itself from Alibaba and moving closer to Tencent, Alibaba’s nemesis and a majority shareholder in Kuaishou. Yunfeng Capital, a venture firm backed by Alibaba founder Jack Ma, has also funded Kuaishou but holds a less significant equity stake. That Douyin has long been working with Alibaba on e-commerce might have also been a source of discordance between Kuaishou and Alibaba.