The Estonian Foreign Intelligence Service reminds that China has set the course to "export" its digital standards and create dependency on them and that the global proliferation of Chinese technology is not solely the result of talent and entrepreneurship, but of the strategic planning.

"It is part of China's strategic efforts to enhance its political influence alongside exporting its standards," the report states. "China aims to reach a point where integrated technological solutions cannot be replaced by Western technology due to both incompatibility and deep interconnection."

TikTok ownership

Chinese IT businesses' state connections is a serious problem. China hides firm background information, citing data security concerns.

The Chinese video hosting service TikTok and its owner ByteDance are discussed separately. "TikTok is a classic example of combining an obscure background with data collection for the purpose of developing new capabilities," the report states.

"TikTok's parent company, ByteDance, is registered in the Cayman Islands, its actual headquarters are in Beijing, where ByteDance has registered another entity, Douyin Co., Ltd. However, Douyin, with no employees, essentially serves as a shell company for the Cayman Islands-registered entity."

Douyin Co., Ltd., in turn, owns Beijing Douyin Information Service Co., Ltd., which has 1,947 employees and serves as ByteDance's actual headquarters. Located in the AVIC Plaza building in the Haidian district of Beijing, this subsidiary maintains a complex ownership structure, with a 1 percent stake held by the National Computer Network Emergency Response Technical Team/Coordination Centre of China (CNCERT/CC), a Chinese state entity. CNCERT/CC operates under the Central Cyberspace Affairs Commission, which answers to the CCP Central Committee. The Central Cyberspace Affairs Commission formulates and executes China's cyberspace policies and decisions. This arrangement raises questions regarding the significance of the 1 percent ownership stake.

In a US Congress debate on March 23, 2023, TikTok CEO Shou Zi Chew confirmed that data collected globally via the video app is forwarded to Beijing Douyin Information Service in China. This includes Chinese Douyin app data.

This means CNCERT/CC has access to data collected both within China through Douyin and internationally through TikTok.

ByteDance can use this data to develop artificial intelligence. China needs access to visual and behavioral data from people of all backgrounds in order to develop globally competent artificial intelligence.

Data collected only from China does not provide such an opportunity because Chinese people's appearance and behavior patterns differ greatly from those in many other regions of the world.

Data collected by the program may be used in other ways as well.

"TikTok extensively gathers information about the device and its user, including contacts, calendars, other applications, Wi-Fi connections and location. Such information can be valuable for intelligence gathering, extortion and cyberattacks, as it can be used to craft convincing phishing emails tailored to a specific individual or their employer. This is especially concerning when the user's employer is an institution or company that could be of strategic interest to China," the report states.

Douyin Co., Ltd also owns an entity and brand called Toutiao. Both Toutiao and Beijing Douyin Information Service share the same legal representative, which means there is a close connection between TikTok and Toutiao.

Toutiao offers personalized news feeds based on user activity patterns, making it unique in China. "Essentially, using TikTok means assisting a company with ties to an authoritarian state, which aims to reshape Western security architecture, in developing artificial intelligence."

The Foreign Intelligence Service released to the public its ninth annual yearbook, "International Security and Estonia 2024", in which it assessed external security threats affecting Estonia over the past 12 months.

The full yearbook is available in English here.

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