The State Of TikTok
TikTok is a rebranding of the popular app called Musical.ly. An app focused on pairing social media video posts with songs, and shared with massive audiences. As of July 2020, some estimates put the monthly active users at 800 million, with over 2 billion downloads. It is consistently the most downloaded app in both the Apple app store and the Android store.
Beyond that, Q1 of 2020 saw an additional 500 million downloads alone. The popularity is only increasing, and in a big way. The US in particular is seeing adoption rates that are only surpassed by India and China. 130 million total downloads in the US in fact.
TikTok is big! And only getting more so.
A Sea Apart, An Ocean Of Tension
The United States and China have been at odds over concerns of espionage, data and intellectual property theft, and politically for years. Technology is a hidden warfront that has been ramping up, including this article we did a while ago about Huawei and the banning of their phones from US markets. This has also included being kicked out of building the world’s 5G infrastructure, with the UK, US, and Canada taking action against Chinese tech firms.
Many recent examples can be found of the unease between the two countries, in particular when it comes to the data aspect of them. Now enter TikTok, with its massive footprint, as well as a demographically sensitive audience, the 16 – 24 market.
The Clock Runs Out
In the span of a few days, the United States government proposed bans of TikTok, as well as multiple places asking their workers to remove TikTok for fear of Chinese spying on the data it creates. And it creates tons of it.
TikTok has had a troubled past with censorship in relation to global affairs and the visibility of ideas and people. TikTok suppressed posts by “poor, ugly, and disreputable decorations”. Choosing instead to only promote those who would get them more subscribers.
The line that was crossed seemed to be a slow boil, culminating in the events of this week.
TikTok On The Auction Block
Microsoft mentioned they were in talks with the company ByteDance for the acquisition of TikTok. With the recent banning in India, followed by a proposed ban in the United States, the company has been open to an American purchase. Microsoft is working on a short timeline to get this, undoubtedly, multi-billion dollar deal done. Politically, there is much more incentive to sell than there is to ride out this storm.
China responded, saying they would not be deterred and would retaliate if the US went ahead with its proposed ban. Calling the move a blatant “smash and grab” of TikTok by Chinese state media.
Fuel To The Fire From President Trump
September 15 is the deadline for TikTok to find a US buyer, or shut down the app in the country. For the first time that I can recall, Trump also said any deal would also have a “substantial amount of money” coming to the US Treasury. “Right now they don’t have any rights unless we give it to them. So if we’re going to give them the rights, it has to come into this country,” Trump said. “It’s a great asset, but it’s not a great asset in the United States unless they have approval in the United States.”
Never before has a company been told to sell or get out of the country. Many corporations set up American based headquarters to better facilitate their American presence and personnel. But this takes it to an entirely new level.
This forces a very profitable company to sell or be banned. Calling into question all overseas and out of country companies and their right to do business here.
Too Big To Regulate
The proposed sale comes after testimony to Congress about influence tech giants Facebook/Amazon/Google/Apple have on the industry. These companies seem to have gotten off lightly so far in their antitrust inquiries. This did highlight the disproportional power they wield. And to further strengthen Microsoft’s position in yet another market seems to be the opposite effect.
Where Does It End?
What if the government decided that if BMW wanted to continue to sell cars in America, they must sell to Ford or GM. How is this poaching sustainable?
Does TikTok have any recourse they can take? Should they be able to submit their source code, and verify how data is handled/stored?
Can there be anything any Chinese based company can do to re-earn the trust that has been damaged by years of political influence and high profile examples of abuse?
Could all of this tension reach a breaking point that ends with a wide schism between a Chinese based internet/users and the rest of the world?
Clearly we don’t have all the answers, but this is as good a case study as we are going to get for the upcoming digital trade wars between two superpowers.