The National Security Angle With TikTok Is Bogus. This Is Industrial Policy

Authored by John Tamny via RealClearMarkets,

“Let many ideas flourish as industrial policy doesn’t work.” Those are the words of the excellent Andy Kessler in his latest Wall Street Journal opinion piece.

Policymakers should embrace Kessler’s logic, all the while applying it to their shameful attempt to force a TikTok divestiture. And yes, the demand from politicians (and upheld last week by the D.C. Circuit court) is industrial policy.

Seriously, what else could the anti-freedom and anti-freedom of speech battering of TikTok by the U.S. political class be? It couldn’t realistically be related to how TikTok “scoops up data on its 170 million monthly users in the U.S.,” and that the latter puts it in the position “to track federal employees or to conduct blackmail or corporate espionage.” If limiting information flow about Americans were the goal, politicians would be demanding the closure of all social media sites that are popular stateside, and that possess voluminous information about their users that they already sell. In short, “China” and/or the “CCP” don’t need TikTok to gather information on the American people, its corporations, federal employees, or all three.

The embarrassing treatment of TikTok similarly couldn’t be related to how “TikTok is a tool of Chinese Communist propaganda.” Sen. Tom Cotton has made the previous point, and excuses his own authoritarian actions with the communist angle. How we know this excuse is bogus can be found right inside China itself. The country is dense with American signage representing the best and brightest of U.S. corporations. Translated, the Chinese people are conducting a passionate love affair with all things American, yet we’re supposed to believe the CCP can use TikTok to convince the American people to hate America?

After that, policymakers might in a moment of introspection list even one “tool” of authoritarian governments that has proven popular in a marketplace marked by so much competition. Insert pun here: Tick tock, tick tock…

Moving on from the unrealistic to the possible, maybe the attacks on TikTok are quietly rooted in antitrust? If so, it’s easy to point out that nailbiting politicians and frightened-of-an-app pundits needn’t worry. So-called “market power” is the picture definition of ephemeral. The Wall Street Journal’s Holman Jenkins has made this point with great regularity for decades, and did so once again two weeks ago. As he put it so powerfully, “Antitrust has become perhaps government’s least useful and productive endeavor, so vastly does today’s dynamic, liquid economy differ from the economy of 1890 when the Sherman Act was passed.” Precisely.

It insults TikTok not one iota to remind readers that the present in the world of commerce is a lousy indicator of the future. Change is so quick. Kessler instructs well here. In his words, “What is astounding is the rate of acceptance” of new entrants to the internet space. In particular, Kessler notes how “OpenAI’s ChatGPT had a million users within five days of its late 2022 release. Five days!” Again, the business landscape changes quickly. Kessler adds that two years after ChatGPT’s astoundingly quick rollout, it now “has 300 million weekly users.”  

What’s important is that the rate of acceptance with regard to ChatGPT hardly won’t stop with ChatGPT, or for that matter, TikTok. Precisely due to the speed with which users have adapted to the former, investment into the AI space has been soaring as the intrepid look for ways to build market share in what could be an enormous market. What’s true about ChatGPT is similarly true about TikTok and its leap from unknown to arguably the world’s most popular social media site. In other words, if politicians really are fearful of TikTok, then they should get out of the way. So long as its usage and value continue to soar, so will investment meant to compete away its enormous popularity.

What’s important is that neither government force nor government investment are the answer when it comes to generating competition for TikTok. As Kessler has written, “inventing the future is always about staring over a large precipice, with no idea how to get across.” About this, government most certainly has no ability to invent the future, but in attacking TikTok it’s picking TikTok’s competition over the corporation most capable up to now when it’s come to discovering what’s ahead.

Which means the U.S. political class isn’t just blurring the commercial future with its odious attempts to force a sale of TikTok from those who made it great, it’s once again embracing industrial policy. The problem is that per Kessler, industrial policy doesn’t work.

John Tamny is editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His latest book, released on April 16, 2024 and co-authored with Jack Ryan, is Bringing Adam Smith Into the American Home: A Case Against Homeownership.