Yahoo Finance Live's Akiko Fujita and Brian Cheung detail a probe into TikTok by multiple state attorneys general investigating concerns on the social media platforms impact on youth.

Video Transcript

BRIAN CHEUNG: I want to shift gears now to some news on the social media front with a bipartisan coalition of states, including California, Florida, and New Jersey investigating TikTok. It's been a while since we talked about that company, but TikTok for how they target children on the app. The state attorneys general want to look into whether or not practices to engage young users raises the risk of physical and mental harm.

And Akiko, this is very different than the data privacy and intelligence concerns that you had covered closely. It was very much a 2019 story. We remember when TikTok was temporarily banned here in the United States. But notable that a number of states want to look into TikTok now this time for a different reason.

AKIKO FUJITA: Well, and also Brian, speaks to just how huge the app now is, just the explosive growth it has seen. You mentioned those eight states that are now investigating TikTok. Well, these are the same states that went after Facebook's Meta and concerns around how that app, specifically Instagram, was affecting the mental health of the younger users. So in some ways, you could argue this isn't TikTok specific. This is the same states sort of looking across the board here on social media companies. They're specifically looking at user engagement techniques, the risk that platform could have on younger users.

And, you know, Brian, we heard President Biden sort of single out the social media companies during the State of the Union speech, saying specifically that there needs to be greater accountability of tech platforms who are conducting what he described as a national experiment on our children for profit. So something to watch here about what, in fact, this will mean, if TikTok has to change their algorithm in some way. You mentioned this is-- the regulation story around TikTok and concerns about national security is very much a 2019 story.

But there's another thread for the app that I've been tracking. And that is the Commerce Department looking at potential additional tools that would allow for increasing oversight on apps that are owned by, in their words, foreign adversaries. And of course, they don't single out TikTok per se, but TikTok falls right into that. Specifically, they're looking at potential auditing tools.

So essentially, the company would have to share maybe their source code or maybe additional data that's gathered. So what's happening on the state front, the attorney general's, that's happening in parallel with the national security concerns that continue to swirl around TikTok. It's not headline news yet. But that's something to be watched really closely.

BRIAN CHEUNG: Yeah, and that's kind of the weird threat here, is that weirdly, because of the fact that TikTok is foreign-owned, and in many cases, maybe it's the government that actually has more ability to clamp down on the more social concerns surrounding these social media apps than they would have with domestic firms, like, for example, Instagram, where the same concerns about how they kind of hook children onto the app and then kind of really get them viewing content that, in some cases, can drive them to mental and physical harm. That's very much a valid concern.

I think it remains to be seen on a state level, though, what capabilities they have, because as you mentioned, I mean, the types of foreign-related links that they have here in terms of policy to clamp down on TikTok are not necessarily the same tools that are available to the state attorneys general-- I always mix that up-- state attorneys general in this case. And I think that's very much an open question, but again, just flagging that this is definitely a case, maybe just from a publicity standpoint, trying to discourage people from regularly using the apps. Very important to watch that story as it develops, Akiko.

AKIKO FUJITA: Yeah, and TikTok has really been out front, at least publicly, talking about some of the changes that they have made to the platform. They say they designed their app with the younger users in mind. Of course, we've heard that from other social media companies, too. But a number of headlines to continue watching around that app, which has really become one of the top competitors, if not the top competitor, to Meta's Facebook and Instagram.