North Dakota Rep. Kelly Armstrong questions TikTok’s potential drain on U.S. resources

Said Armstrong: “You spent $1.5 billion on Project Texas, but you agree that if CFIUS takes on this role, they are going to need a massive influx of dollars in human resources, right?”

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U.S. Rep. Kelly Armstrong, R-N.D. File photo / Forum News Service

North Dakota’s lone member of the U.S. House of Representatives on Thursday engaged in a back-and-forth with the CEO of TikTok, raising concerns about the tech company’s Chinese ownership, the data it collects on U.S. citizens and especially its potential drain on American resources.

It was part of a five-hour meeting during which Shou Chew, CEO of TikTok, met with members of the House Energy and Commerce Committee amid calls by the Biden administration that TikTok be sold or face a ban in the U.S.

TikTok is an online video sharing app used by approximately 150 million U.S. residents. Its ownership company, ByteDance, admittedly collects data on users, which is concerning to many in the U.S. who fear what the information is being used for and whether it presents a threat to national security if accessed by the Chinese Communist Party.

During his administration, President Donald Trump also sought to put TikTok out of business, and in the years since, a number of states — including North Dakota — have banned TikTok from being downloaded on state-owned devices.

In addition to data concerns, Armstrong said others exist, as well, including the expenditure of resources by the U.S. government to watch over TikTok, especially in relation to the company’s plans to enter a partnership called “Project Texas.” The $1.5 billion proposal would see data on U.S. users stored and overseen by a subsidiary company in Texas.


With Project Texas, Armstrong said during Thursday’s hearing, “the core concern is that it proposes unparalleled integration with the U.S government, with a private company, which will require significant government resources. All of that to allow a continued operation of a social media platform that has serious national security implications.”

Armstrong noted the workload for the federal Committee on Foreign Investment in the U.S. — which reviews investments to determine if they pose a threat to national security — already has “dramatically increased in recent years.”

In addition, some members of Congress are proposing an expansion of CFIUS as its duties increase and as security concerns in various business sectors rise.

“Mr. Chew, can you identify any similar corporate arrangement that requires the federal government to expand such resources to monitor and allege data privacy and national security risk?” Armstrong asked.

After Chew answered by saying he’s not an expert on the matter, Armstrong gave an example. He said that in 2010, the United Kingdom created the Huawei Cyber Security Evaluation Center to access Huawei’s technology and to detect malicious activity. Huawei is a Chinese-owned telecommunications company that produces and sells a wide range of equipment and devices.

“That’s worked so well,” Armstrong said of the U.K.’s evaluation center, “that the United Kingdom is now planning on kicking Huawei out of Great Britain.”

Armstrong then asked Chew if ByteDance plans to help offset the costs of the government role in investigating and overseeing TikTok’s expansion plans.

“I need to get back on the specifics, but I can tell you we did spend approximately $1.5 billion on our side,” Chew said.


Said Armstrong: “You spent $1.5 billion on Project Texas, but you agree that if CFIUS takes on this role, they are going to need a massive influx of dollars in human resources, right?”

Chew said he can’t speak on behalf of CFIUS.

Armstrong then asked: “Should the U.S. government expend such resources to create this extraordinary arrangement for TikTok, especially considering alleged data privacy and national security risks?”

Responded Chew: “The idea behind Project Texas is to firewall off U.S. user data, make sure it is stored by an American company overseen by American personnel, and we will invite third-party monitors to monitor this. That in essence, at least as far as I know, is the majority of the costs. It will rely on not just us building the infrastructure but us finding and hiring these third-party monitors who are vetted to come in and monitor this structure.”

Earlier in their exchange, Armstrong questioned whether the TikTok data stored in the U.S. would truly be out of reach of the Chinese government.

“If the (Chinese Communist Party) demanded that ByteDance hand over all of the data that they had on U.S users in their possession and ByteDance refused, I wonder what would happen?” Armstrong asked.

Chew didn’t answer before Armstrong moved on to other questions, although Chew did — during another portion of the meeting — say “it is our commitment to this committee and all our users that we will keep (TikTok) free from any manipulation by any government.”

Korrie Wenzel has been publisher of the Grand Forks Herald and Prairie Business Magazine since 2014.

Over time, he has been a board member of the Grand Forks Region Economic Development Corp., Junior Achievement, the South Dakota Historical Society Foundation, United Way, Empire Arts Center, Cornerstones Career Learning Center and Crimestoppers.

As publisher, Wenzel oversees news, advertising and business operations at the Herald, as well as the newspaper's opinion content.

In the past, Wenzel was sports editor for 14 years at The Daily Republic of Mitchell, S.D., before becoming editor and, eventually, publisher.

Wenzel can be reached at 701-780-1103.
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