TikTok ordered to shut down Canadian operation

Briefly: Company behind China-HQ’d short video app fails national security review.

Bob Mackin

Ottawa is pulling the plug on the Canadian arm of the popular Chinese-owned short video app TikTok.

In an afternoon announcement on Nov. 6, the Minister of Innovation, Science and Industry said TikTok Technology Canada Inc. (TikTok Canada) failed a national security review and must wind-up its operations. The announcement did not specify a deadline or what triggered the decision, but said the decision was made in conjunction with intelligence officials, under the Investment Canada Act.

Minister François-Philippe Champagne said the law allows a review of foreign investments “that may be injurious to Canada’s national security.”

TikTok Canada’s Steve de Eyre (Mackin)

“The government applies enhanced scrutiny to investments that fall within the jurisdiction of the Investment Canada Act for a number of business sectors and activities, including the interactive digital media sector,” Champagne said.

Canadians are not blocked from using TikTok, but they are advised to consult the Canadian Centre for Cyber Security for guidance. In February 2023, the federal and B.C. governments banned its workers from using TikTok on government devices for privacy and security reasons. 

TikTok Canada was born in 2016 as Network Sense Ventures Ltd. under Hank Horkoff in Vancouver’s Gastown. It changed its name in August 2020 to TikTok Technology Canada Inc., the week after ByteDance investor relations director Zhao Liu of Hong Kong replaced human resources head Wei Hua of Beijing as a Network Sense director.

The Champagne announcement came, coincidentally, the day after Donald Trump won the U.S. presidential election and almost three weeks after B.C. held a provincial election.

Last April, U.S. President Joe Biden signed a law requiring ByteDance to sell the app or be banned. The Office of the Director of National Intelligence found TikTok accounts run by a People’s Republic of China propaganda arm targeted Democratic and Republican candidates during the U.S. midterm election cycle in 2022.

TikTok parent ByteDance’s operations are headquartered in Beijing, where it also runs the Douyin video app targeted at the Chinese market. TikTok CEO Shou Zi Chew appeared in Vancouver in April 2023 at the TED Conference, where he called questions about whether the Chinese government could use TikTok to interfere in a U.S. election “highly hypothetical.”

TikTok CEO Shou Zi Chew at TED în Vancouver (TED/YouTube)

Chew said that, with the help of third-party monitoring, he was confident that “we can reduce this risk to as low as zero, as possible.”

In July, TikTok Canada held a media presentation in Vancouver. Steve de Eyre, its director of public policy and government affairs, said he had met with B.C. chief electoral officer Anton Boegman and his staff “to make sure that they understand our processes, our rules, and we understand what their concerns are, and most importantly, that there’s a direct line of communication, that if there are content escalations, that they know, they have a backbone.”

De Eyre said that TikTok user data is stored in the U.S., Singapore and Malaysia and denied it takes orders from the Chinese government.

Prof. Benjamin Fung of McGill University’s school of information studies has repeatedly warned about China’s privacy laws that allow the Chinese Communist Party to see deep inside companies, such as ByteDance. Fung said in July that TikTok’s recommender system — the machine learning algorithm that helps decide what the user sees — is the “most-powerful and valuable component” of TikTok.

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Briefly: Company behind China-HQ'd short video app