Missouri Republican Sen. Josh Hawley on Wednesday urged the Federal Trade Commission to investigate an app with alleged ties to the Chinese Communist Party that he believes operates like a “pyramid scheme” to drive competitors off the market.
Federal regulators must open a probe into video-sharing app Zynn over concerns that the Chinese app is driving competitors out of the market and is orchestrated by a Beijing-based tech company with ties to the CCP, Hawley wrote in a letter Wednesday to the FTC.
Zynn operates nearly identically to competitor TikTok, another app that the Missouri Republican urged the government to investigate.
Hawley explained in the letter how Zynn operates: “[U]sers are not only permitted to use the app for free, but are actually paid to watch video content,” he said before suggesting the app operates “just like a traditional pyramid scheme” in which users receive higher payouts if they convince other people to download Zynn.
“The more devices on which Zynn is installed, the more money early adopters can make,” Hawley said. That model “smacks of a textbook predatory-pricing scheme, one calculated to attain immediate market dominance for Zynn by driving competitors out of the market,” Hawley said. (RELATED: ‘To Serve Their Bosses In Beijing’ — Sen. Josh Hawley Rips TikTok For Aggressive User Monitoring)
Zynn’s parent company is Kuaishou, a Chinese corporation specializing in providing a platform for users who want to produce short-form video content. Kuaishou censors content on behalf of the CCP, and suppresses criticism of the communist party, according to Hawley. The Missouri senator cited articles by the EpochTimes and SupChina to make his case.
The video sharing apps also could be used to gather data on U.S. citizens, Hawley suggested.
“By design, video-sharing apps like TikTok empower Chinese leadership to pry into the private affairs of Americans by hoovering up enormous amounts of information on individuals’ daily lives,” Hawley said.
“There is good reason to suspect that Zynn may not be abiding by the requirements of the Children’s Online Privacy Protection Act (COPPA),” Hawley wrote, referencing a law signed in 1998 to protect children online. “Americans have a right to know that their data — and their children’s data — is being fully protected and not simply sold to the highest bidder.”
TikTok has been on the receiving end of Hawley’s ire for the past several months.
Hawley warned in March that TikTok’s parent company “includes Chinese Communist Party members in leadership,” adding in a statement that “TikTok has admitted that it has sent user data to China.”
TikTok announced in March that it would stop using China-based moderators to monitor overseas content, but said that representatives could not testify before Congress because its employees were based in China. A spokesman for TikTok claimed in May that the Beijing-based company is not Chinese-owned because it was incorporated in the Cayman Islands.
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