Canadians, parents shouldn't worry about TikTok security review: industry minister

Anja Karadeglija, BNN Bloomberg

The federal industry minister says Canadians shouldn’t worry about using TikTok, despite an ongoing national security review of the company.

Minister François-Philippe Champagne was asked at a press conference Friday whether Canadians using the app, including parents whose kids are obsessed with TikTok, should be worried. 

"The answer is no. And I think Canadians and parents should be happy to see that we were ahead of the curve," he said about launching the review six months ago.

Champagne was asked later why the government kept its review a secret if there was nothing for parents to worry about.

He said that when he spoke about whether they should be "concerned," he was referring to "actions being taken with respect to the company." 

Anything that happens as a result of the review would be "directed at the company and not the users," he said.

The federal Liberals ordered the national security review of TikTok in September 2023 but did not disclose it publicly until this week.

The revelation came after the U.S. House of Representatives passed a bill Wednesday to ban TikTok unless its China-based owner sells its stake in the business.

Champagne said the government would follow that bill carefully. He noted it "still has some way to go before it would become law," referring to the need for it to pass in the U.S. Senate.

TikTok is a wholly owned subsidiary of Chinese technology firm ByteDance Ltd.

The concern driving the U.S. bill is that because of Chinese national security laws that compel organizations to assist with intelligence gathering, the Chinese government could demand access to the data of TikTok's American consumers.

Champagne's office has asserted that the six-month-old Canadian review is not related to the U.S. bill.

The minister said Friday the Canadian probe should come as no surprise because the government issued a new policy earlier this month on foreign investment in the Canadian digital media sector. 

He said that policy was "explicit that we would be putting foreign investment in respect of interactive digital media under intense scrutiny."

That policy statement says "hostile state-sponsored or influenced actors" could use investments to spread disinformation or manipulate information in a way that harms Canada's national security.

The government has said that a business expansion triggered the review under the Investment Canada Act. It hasn't stated which one, but a government database shows a notification of new business from TikTok in June 2023.

The database says Network Sense Ventures Ltd. in Toronto and Vancouver would engage in "marketing, advertising, and content/creator development activities in relation to the use of the TikTok app in Canada."

The Investment Canada Act allows the government to launch a review when it believes a foreign investment might harm national security. 

Cabinet can take measures like making investors sell parts of the business or sell shares, or allow them to continue operating as long as they agree to conditions.

The federal government banned TikTok from its mobile devices in February 2023 following the launch of an investigation into the company by federal and provincial privacy commissioners.

Champagne said the Investment Canada Act doesn't allow him to disclose details about the review.

He said once the review is completed, "we'll be informing Canadians about any action, if any, that we decide to take with respect to that particular company."

A TikTok spokesperson said the company is cooperating with the government's review, and the company remains "committed to ensuring the safety and security of the platform for the millions of Canadian creators, artists and small businesses who rely on TikTok to earn a living, find community and create jobs."

This report by The Canadian Press was first published March 15, 2024.

Federal government reveals it ordered national security review of TikTok in September

Anja Karadeglija, The Canadian Press

The federal Liberals ordered a national security review of popular video app TikTok in September 2023 but did not disclose it publicly.

"This is still an ongoing case. We can't comment further because of the confidentiality provisions of the Investment Canada Act," a spokesperson for Industry Minister François-Philippe Champagne said. 

"Our government has never hesitated to (take) action, when necessary, if a case under review is found to be injurious to Canada's national security."

The revelation comes after the U.S. House of Representatives passed a bill Wednesday to ban TikTok unless its China-based owner sells its stake in the business.

"We're watching, of course, the debate going on in the United States," Prime Minister Justin Trudeau said Thursday when asked whether Canada would pursue a similar move.

In response to the same question, Champagne's office said that the Liberal cabinet "issued an order for the national security review of TikTok Canada" on Sept. 6. 

It said the review was based on the expansion of a business, which it said constituted the establishment of a new Canadian entity. It declined to provide any further details about what expansion it was reviewing. 

The office said the cabinet order was not accessible online, as is routine, because the information is protected and confidential under the Investment Canada Act. 

Champagne's office indicated TikTok would be subject to "enhanced scrutiny" under the act under a new policy on foreign investments in the interactive digital media sector released by the government earlier this month.

That policy statement says "hostile state-sponsored or influenced actors may seek to leverage foreign investments in the interactive digital media sector to propagate disinformation or manipulate information in a manner that is injurious to Canada's national security."

The Canadian review is not related to the proposed U.S. bill, which is driven by concerns that the company's current ownership structure is a national security threat.

"As you know, Canada made the determination that no government phones or devices can have the TikTok app. That’s a matter of security and safety," Trudeau said Thursday. 

"I can't comment on national security reviews."

The federal government banned TikTok from its mobile devices in February 2023 after federal and provincial privacy commissioners launched their own investigation into the platform. 

A TikTok spokesperson said the company continues "to co-operate with the government’s review of TikTok’s investment in Canada."

The spokesperson said the company remains "committed to ensuring the safety and security of the platform for the millions of Canadian creators, artists and small businesses who rely on TikTok to earn a living, find community and create jobs." 

TikTok is a wholly owned subsidiary of Chinese technology firm ByteDance Ltd. 

U.S. lawmakers contend ByteDance is beholden to the Chinese government, which could demand access to the data of TikTok's U.S. consumers, given Chinese national security laws that compel organizations to assist with intelligence gathering.

The bill must still pass the Senate, where lawmakers have indicated it will undergo a thorough review. U.S. President Joe Biden has said if Congress passes the measure, he will sign it.

Nearly 30 per cent of Canadian respondents to an October 2022 survey by Toronto Metropolitan University said they were on TikTok.

For many Canadian creators who make TikTok content, the U.S. market is paramount, said Scott Benzie, executive director of Digital First Canada. The organization advocates for digital creators, and has in the past received funding from TikTok.

"If a ban actually goes through in the U.S., Canadian careers on TikTok are over," he said. 

In addition to losing audience reach, for creators who earn money through sponsorships, "obviously most of those brands want to connect with U.S. audiences, and if that's not a possibility then that money just goes away."

Nathan Kennedy, a personal finance content creator from Hamilton, Ont., said he’s "pretty calm" about the situation, noting threats to ban TikTok have been around for years.

TikTok is his biggest platform, and the majority of his audience is in the United States. He became a full-time content creator two-and-a half years ago. 

"You kind of just have to be even-keel about the whole thing … I literally cannot do anything. It's not even in my country," he said.

He said it's hard to believe a ban will actually happen that causes TikTok to exit the U.S. 

But if the hypothetical worst-case scenario does happen, Kennedy said he would turn to other platforms.

"People are going to be watching content. That's not going to change. It's where they watch their content that might change over time," he said.

"I don't want to sound like I'm being very nonchalant here. But it's one of those things that you have to accept, that it's not your platform, it's not your business. And you kind of have to go to where the attention is."

This report by The Canadian Press was first published March 14, 2023. 

With files from The Associated Press.

 

Kevin O'Leary offers to purchase TikTok despite 'uncertainty' following U.S. bill

Daniel Johnson , BNN Bloomberg

Kevin O'Leary says his interest in purchasing TikTok stems from the millions of small businesses using the platform but thinks its valuation has fallen ahead of a potential ban of the platform in the U.S.

O'Leary, the chairman of O'Leary Ventures, took to LinkedIn Wednesday offering to buy assets from TikTok’s owner ByteDance Ltd. to form a new U.S. company. His comments came after the U.S. House of Representatives passed a bill that could lead to a ban on the platform if its Beijing-based owner doesn’t sell its stake. 

“So a lot of moving parts on this deal, (it’s) really complicated, but a very interesting business with about 170 million users… But more importantly, five million small businesses use it to acquire customers, sell goods and services and advertise on it. That's where I'm focusing,” O'Leary said in an interview with BNN Bloomberg on Thursday. 

Despite the vast number of small businesses using the platform, he said there are also valuation metrics to consider. 

“Whatever it was worth two days ago, it’s worth 50 to 60 per cent less today. There's so much uncertainty around this asset, particularly what the covenants are going to be post-sale,” O'Leary said. 

“This is going to be a highly regulated industry at some point. And really the headline focus will be on TikTok because of all of the controversy around collection of user data.” 

He said his interest in potentially buying the social media platform began in 2020, and noted that the company has been “up for sale multiple times” with previous interest from Walmart, Oracle and Microsoft. 

“It's been a well-known issue regarding national security, but this time it's different because this bill is a bipartisan bill that has passed its first step in the House. It now moves on to the Senate. It's just a timing issue,” O'Leary said. 

The bill was passed in a 352-65 vote in the U.S. House and will now go to the Senate. U.S. President Joe Biden has stated he will sign the legislation if Congress passes the measure. 

O'Leary outlined in his initial LinkedIn post that issues regarding data on the platform “won’t go away.” He added that Tiktok “leaks data” to the Chinese Communist Party and needs to be sold. 

“I’m proposing purchasing these assets into a new American company,” O'Leary said in the post. 

“I’ll guarantee the servers are on American soil. I guarantee we’ll close the Chinese back doors in the code. I’ll guarantee it’s safe for users, small businesses and large businesses. It will be an American company!” 

As O'Leary angles to buy the popular video platform, others have also expressed their interest. On Thursday, former U.S. Treasury Secretary Steven Mnuchin said he is going to put together a group of investors to purchase TikTok. 

With files from the Associated Press.