The issue of national security has become an important element of the re-ordering of apex powers as they continue to decouple their economies and set up their own post-global imperiums. For example--even as the liberal democratic camp seeks to extend the reach of its normative projects respecting human rights and sustainability in the context of economic activity through the enactment of mandatory human rights due diligence laws (e.g., France, Germany and soon the E.U.) or more specifically targeted due diligence to reporting compliance regimes (e.g. Canada (forced and child labor); U.K. and Australia (modern slavery)), competitor imperiums have sought to invoke national security to make it much more difficult for such compliance regimes to penetrate territories or production chains they control. The impulse, however, extends as well to the operations of non-state sector market driven economic activity.
Information has, in effect, been transformed into a public asset--property that is either public or which can serve a public purpose. It follows that the generation, control, and use of such regulatory assets is now increasingly understood not only as state property (in Marxist-Leninist systems) but also as regulatory assets (in liberal democratic systems). In both senses, then, such assets can be understood as elements essential to the operation of compliance based governance systems increasingly at the core of state managerialim across political ideology. While one might speak about these assets in terms of ownership, one can also understand their emerging character as assets subject to control by public bodies (administrative organs and their officials)--through regimes of regulation, approvals, supervision, disclosure, and review.That impulse appears to serve as a point of convergence in the regulatory appetites of liberal democratic and Marxist Leninist states, though starting from quite different points and serving quire different ends. (Discussed at Due
Diligence and Mandatory Human Rights Due Diligence Disjunctions:
Liberal Democratic Markets-Compliance Based Legalities Versus
Marxist-Leninist Constitution of Information as State Regulatory
In China, for example, national regulation, including data protection and national secrets laws, have been used to investigate consulting companies and others in the business of supplying information. The recent raid of Capvision in Hong Kong (purveyors of industry intelligence; more here) provides a recent case in point. "The unusually public nature of the investigation reinforced a message from Beijing that has been growing in volume in recent months: Information about China is a valuable resource and a matter of national security, and revealing it to foreigners could land you in jail." (Dan Strumpf and Selina Cheng, "'Expert Networks' in China Face Scrutiny," Wall Street Journal 12 May 2023, p. B1). Reporting on recent investigation of Bain & Co.'s Shanghai offices, the rad on the Beijing offices of Mintz Group, cyber reviews of Micron Technology, Inc., and the detention of a Japanese employee of Astellas Pharma, Inc., suggests a broader purpose.
Business executives who have consulted with Chinese authorities said the government aims to limit the information collected by foreign companies such as auditors, management consultants, and law firms that could influence how the outside world views China. That has worried the Western business community, which relies on credible information and professional services to assess risks in China. (Lingling Wei, "China Ratchets Up Pressure Campaign on Foreign Firms," Wall Street Journal 28 April 2023, p. A1; A10).
That use of national security as a shield against the projection of foreign political authority into competitor host states has also been invoked by the liberal democratic camp against their Chinese counterparts. The greatest sensitivity has been focused on the tech sector. Starting almost a decade ago, there appeared to be a growing concern with hardware and software products that could be used as a source of spying or data gathering--including for example and perhaps most famously with Huawei products. "Most recently in the United States, a group of senators has urged the Biden administration to impose sanctions on Huawei Technology’s Cloud unit, Alibaba Cloud, and other Chinese cloud service providers." (Joe Panettieri, Huawei Banned and Permitted in Which Countries? (27 April 2023)).
Currently, the focus is on the sweeping of data from popular platforms--principally Tiktok (and its operating company Bytedance, Inc. (Delaware).
Lawmakers and regulators in the West have increasingly expressed concern that TikTok and its parent company, ByteDance, may put sensitive user data, like location information, into the hands of the Chinese government. They have pointed to laws that allow the Chinese government to secretly demand data from Chinese companies and citizens for intelligence-gathering operations. They are also worried that China could use TikTok’s content recommendations for misinformation. (Sapna Maheshwari and Amanda Holpuch , "Why Countries Are Trying to Ban TikTok," The New York Times (26 April 2023))
States have required that the App be deleted from government devices and legislation is being considered to ban the App within the United States (ibid.). Of course, the issue is not the App itself, but the transmission of data through it.
The impetus for further action may be significantly affected by a lawsuit filed by a former ByteDance employee, Yintao Yu, against his employer. The complaint has has a long history. The initial complaint was filed pro se by Mr. Yu on November 11, 2022 in the Superior Court for the County of San Francisco (CGC-22-603019); it was removed to the Federal Court for the Northern District of California by defendant Bytedance by Notice of Removal filed 16 February 2023 (Case No.: 3:23-cv-707). It was subsequently dismissed by the federal court without prejudice for failure to prosecute on 20 April 2023. On 1 May 2023, Mr. Yu, now represented by counsel, filed another complaint in the Superior Court for the County of San Francisco (CGC-23-606246), which roughly contained the same allegations in the earlier complaint. That 1 May 2023 Complaint alleged wrongful termination of the plaintiff, in the course of the explanation of the circumstance of which Mr, Yu alleged as follows:
10. Shortly after beginning his employment, Mr. Yu became aware that ByteDance had for years engaged in a worldwide scheme to steal and profit from the copyrighted works of others. The effort involved the use of software to strip intellectual property from competitor’s websites — chiefly, Instagram and Snapchat — and populate its own video services with these videos in an effort to make its own services appear more popular to end users. These actions were taken without the permission of the content creators and represented an unlawful effort to gain an edge against entrenched online video hosting websites.
11. Upon learning of this program, Mr. Yu was troubled by ByteDance’s efforts to skirt legal and ethical lines, not to mention the tremendous liability that intellectual property theft of this magnitude could create for the company. It was his understanding that taking material from competitors’ websites without the creator’s permission violated the law. Mr. Yu raised these concerns with Wenjia Zhu, formerly Senior VP of Engineering and current CEO of Toutiao, numerous times, as early as October 2017 and again in February and March 2018. Mr. Zhu reports directly to ByteDance’s CEO Yiming Zhang. When informed of Mr. Yu’s concerns with the program, Mr. Zhu was dismissive of them, and the intellectual property infringement continued unabated. (Yu v. Bytedance, Inc. (CGC-23-606246), supra, ¶¶ 10-11).
More interesting still, it was reported by the New York Times (and thereafter widely reported see, e.g., here, here) that another filing was made by Mr. Yu on 12 May 2023, with far more interesting allegation (Tom Fuller and Sapna Maheshwari, "Ex-ByteDance Executive Accuses Company of ‘Lawlessness’:The former executive sued ByteDance, which owns TikTok, for wrongful termination and accused the company of lifting content from rivals and “supreme access” by the Chinese Communist Party," New York Times (12 May 2023).
Among the most striking claims in Mr. Yu’s lawsuit is that ByteDance’s offices in Beijing had a special unit of Chinese Communist Party members sometimes referred to as the Committee, which monitored the company’s apps, “guided how the company advanced core Communist values” and possessed a “death switch” that could turn off the Chinese apps entirely. “The Committee maintained supreme access to all the company data, even data stored in the United States,” the complaint said. (Ibid.)
These allegations appear to be in addition to earlier claims of stealing content from Snapchat and Instagram. "Yu alleges the company was driven by a “culture of lawlessness” that focused on growth at all costs.“He was surprised by the brazenly unlawful conduct within the company, which was euphemistically excused as ‘entrepreneurship,’” according to the complaint." (Joel Rosenblatt and Bloomberg, "TikTok parent ByteDance sued by former California executive alleging China had ‘supreme access’ to all data", Fortune (13 May 2023). Mr. Yu also "claimed that the company was "responsive" to the CCP's requests to share information and to "elevate or remove" content at their request. For instance, Yu saw the company promote content that "expressed hatred for Japan," the suit says." (Sareen Habeshian, "Ex-ByteDance exec claims CCP "maintained" access to U.S. data," Axios (13 May 2023)). One has here all the elements of the central post-global contradiction--dual purpose informationas an economic commodity and a state asset; the role of information as both a regulatory means and a markets ends; the tensions between sovereign autonomy, borderless markets, and the use of markets as a means of projecting public power (or advancing state interests). In a sense, the only difference between the E.U., Canada, the U.K. and China are the ideological ends for which they seek and use information derived from the market activities.
The allegations, if proven (though to some extent it might be enough to have been made and with respect to which discovery may be anticipated), presents another instance of the citical turn in the public character of information. It also suggests the increasing difficulty of distinguishing between information as a market asset (subject to regulatory protections in markets) and information as state assets the (mis)use of which trigger blocking or retaliatory measures under the national security exception. What has become clear, though, is that the public character of information--(1) as vital to the operation of compliance based frameworks for managing the human rights and sustainability effects of economic activity; (2) as the foundation of regulatory action and (3) as inherently tinged with national security characteristics to the extent information could be used to protect foreign objectives into host states--will significantly complicate both the construction of compliance cultures in liberal democratic states, and accelerate the detachment of information based operations by foreign entities operating in China. The key unknown remains substantially unexplored--the effect of the embrace of either approach by states along the production chains managed or controlled by entities whose home states have embraced this regulatory character of information principle.
I will post the new complaint when it is made available through the courts.