Five Takeaways From TikTok’s Congressional Hearing

Kristin Snyder

Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.

Shou Zi Chew talking about TikTok on TikTok
Shou Zi Chew via TikTok

A few days ago, TikTok CEO Shou Zi Chew made his debut on the app he runs. Today, he made his debut before congress with an abysmal hearing before the House Energy and Commerce Committee. Without resorting to the obligatory “the clock is ticking on TikTok” joke, his efforts to convince representatives that TikTok is trustworthy only sowed further doubt about the app’s future in America.

Chew failed to distance TikTok from China

Evident throughout the hearing was the fact that every committee member was already convinced that TikTok poses a threat. Multiple people jokingly thanked Chew for uniting the committee in a bipartisan front. The uniting factor, it seems, was TikTok’s connection to its Chinese-based parent company, ByteDance.

Rep. Randy Weber derided TikTok as the Chinese Communist Party’s method of “indoctrinating our children with divisive, woke propaganda.” While Chew said that ByteDance is a private company, Rep. Anna Eshoo said she does not believe China has a private sector free of the government’s influence—which puts TikTok under their power. As such, she deemed his assertion that the Chinese government has not requested TikTok’s data to be “preposterous.” Coupled with the fact that Chew’s legal counsel also works with ByteDance, any lingering doubts that ByteDance and TikTok are entwined were quickly laid to rest.

People don’t have faith in Project Texas

In his opening remarks, Rep. Frank Pallone said that Project Texas, which is TikTok’s initiative to store American data via the software giant Oracle, is not acceptable protection against China’s influence. Chew met any questions regarding international access to US data with the fact that Project Texas will create a defensive “firewall” between the American databases and the Chinese side of the business.

Across the board, there was significant skepticism toward the plan’s efficacy. Pallone, and many others, shared sentiments that “the Beijing Communist government” would still be able to access information and influence the company. And, of course, the Texans in the room took offense to the project being linked to their state. Once meant to be the app’s saving grace, it's clear that Project Texas is unlikely to be a sufficient solution for these lawmakers.

Child safety was considered equal to data security

TikTok has often come under fire for promoting content that fosters mental health issues, promotes eating disorders and facilitates drug deals. Committee chair Rep. Cathy Rodgers began the hearing by saying that she wants to ensure that “TikTok doesn’t harm our innocent children.”

Chew responded to these questions with the apps’ safety measures, such as not allowing teens to livestream or send direct messages. But it was clear that no one was convinced. And pointing to the 60-minute time limit for teens led to multiple lawmakers claiming that their own children have been able to bypass these measures. Rep. Gus Bilirakis said the app is “literally leading to death.”

As Chew noted multiple times, these issues are not unique to TikTok. And here’s where lawmakers who focused on this argument failed—none of TikTok’s competitors have faced serious consequences for their impact on mental health issues, particularly amongst young people. While there are valid concerns about data privacy, TikTok shouldn’t be the sole company to be punished for harming children. Honestly, the idea that some committee members view kids ignoring their bedtime to scroll through TikTok as an important use of the government’s time is laughable. Critics have pointed to these types of questions as hypocritical when the government hasn’t meaningfully regulated content hosted by American platforms.

Many showed a half-baked understanding of technology

Throughout the hearing, there were numerous blunders that undermined the lawmaker’s understanding of how the internet works. Sure, some, such as Rep. Jay Obernolte, had detailed questions that reflected a baseline understanding of technology. But that wasn’t seen across the board.

In trying to demonstrate that TikTok pushes content that promotes suicide, Bilirakis showed a series of TikTok videos that do just that. One of those clips, however, was from hit TV show “The Bear.” Altogether and unsurprisingly, the reel took away from any genuine understanding of how the app can worsen mental health concerns. Rep. Richard Hudson appeared to be confused about how the app uses in-home wi-fi. And Rep. Buddy Carter seemed to think that TikTok wants to collect data about users’ eye dilation. Of course, not understanding something fully hasn’t stopped lawmakers from voting on a topic in the past. And teens making fun of them online likely won’t sway them in TikTok’s favor. Still, this embarrassing trend, a staple of big tech hearings, often works against lawmakers and their credibility.

Section 230 discussions aren’t going anywhere

Earlier this month, the Supreme Court heard oral arguments for two cases that could alter Section 230 of the Communications Decency Act, which prevents social media companies from being sued over user-generated content. There’s significant doubt over whether or not these particular cases have legs. But multiple people brought up Section 230 throughout today’s hearing, with Rep. Robert Latta from Ohio saying that TikTok’s amplification of potentially harmful content is a “perfect example” of why the law must be changed. So even if the Supreme Court doesn’t make any changes to the existing law or if TikTok survives this episode, people can expect some sort of legislative crackdown on Section 230 in the near future.

In all, this was a bad look for TikTok. Sure, its proponents are calling this “the most boomer hearing.” But that’s nothing compared to the political beating Chew took. Whether it actually leads to a TikTok ban or sale remains to be seen. What we do know is that TikTok lost a key battle in its quest to be seen as independent from the whims and fancies of the CCP.

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🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

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