Banning TikTok would undermine China’s tech ambitions and deepen the global digital divide

Banning TikTok would undermine China’s tech ambitions and deepen the global digital divide

TikTok is facing an existential crisis in America. If its Chinese owner fails to sell the app in the next year or so, it could be banned in its biggest market.

Not only would that deal another blow to China’s tech ambitions, it would deepen the divide between the two digital worlds centered around rival economic superpowers.

Congress on Tuesday passed legislation that could force ByteDance to sell TikTok or face a national ban. President Joe Biden is expected to sign the bill into law on Wednesday; TikTok has already said it will challenge the law in court.

Beijing has previously said it strongly opposes the forced sale of TikTok, and it has revised its export control rules to give it the power to block sales on national security grounds. That leaves few options for ByteDance to secure TikTok’s future in the US, its biggest market with 170 million users.

“The forced sale of TikTok in the US is tantamount to downgrading the app, because the Chinese government will not approve the sale of its algorithm,” said Alex Capri, a researcher at the Hinrich Foundation and a lecturer at the National University of Singapore’s Business School.

“If TikTok is forced to stop operating in the US, ByteDance’s prospects in other predominantly liberal democracies will come under further scrutiny,” he said.

If the Chinese government doesn’t allow ByteDance to release TikTok’s algorithm, it could block direct sales. Alternatively, it might allow TikTok to be sold without the profitable algorithm that underpins its popularity.

A US ban, or a less powerful version of TikTok, would be a windfall

for YouTube, Google, Instagram and other TikTok competitors, as many of its customers may jump ship, Capri said. And it would be a huge success to ByteDance’s global ambitions.

“It [TikTok ban] will be the end of ByteDance’s global expansion, because it will be a sign that the Chinese state values algorithm security more than ByteDance’s financial prosperity and global expansion,” said Richard Windsor, technology industry analyst and founder of Radio Free Mobile, a company research based in the US.

“The implication is that the ideological battle being fought in the tech industry is going to be even more intense.”

Banning TikTok is also likely to accelerate changes that split the world’s tech landscape into two blocs, one centered in the US, the other encompassing technology from China, according to Capri.
“The move against TikTok in the US is another step towards not only a bifurcated platform economy between Chinese apps and Western apps, but also, more broadly, the bifurcation of the entire global tech landscape,” he said.

“This includes everything from owning and operating data centers, to space-based internet satellites, to submarine cables and, of course, semiconductors.”

In that sense, the TikTok ban has advantages for Beijing.

“A ban in the US will trigger new efforts to spread China’s digital footprint in Southeast Asia, and other mostly developing markets around the world,” Capri said.

Growing challenges for Chinese apps
The TikTok legislation was included in an extensive foreign aid package to support Israel, Ukraine and Taiwan.

Once President Biden signs it into law, ByteDance will have up to a year to complete the sale or face an effective ban on the platform.

US officials and lawmakers have long expressed concerns about TikTok’s potential national security risks, including that it could share data with the Chinese government, or manipulate content displayed on the platform. But TikTok has denied the allegations.

“The new divestment bill is the result of a concerted lobbying effort by Silicon Valley venture capitalists linked to US tech companies that will benefit from the China threat narrative pushed by the bill’s supporters,” said Paul Triolo, partner for China and Technology. Policy Leader at Albright Stonebridge Group.

In general, Chinese companies and applications operating in the US face increasing challenges, he said.

Biden administration officials are ramping up a new office at the Commerce Department to enforce provisions of Trump-era regulations on protecting the US information technology supply chain that cover connected applications and could be used to push for further sanctions.

“It seems unlikely that Congress will single out other Chinese companies like TikTok for a specific bill, but Commerce’s IT supply chain regulations could be used in the future to limit the ability of Chinese companies and apps to have access to US market share. ,” said Triolo.

Will there be retaliation from Beijing?
China’s Ministry of Commerce has pledged to take all “necessary measures” to protect its interests, shortly after the People’s Republic of China passed an initial version of the TikTok bill last month. But it doesn’t elaborate.

On Wednesday, Wang Wenbin, a spokesman for the Foreign Ministry said in response to a question from CNN’s Marc Stewart: “On the matter of TikTok, we have made our position clear, and I have nothing to add today.”

Most American social networking apps are already blocked in China. Beijing currently blocks most US social media platforms — including Google, YouTube, X, Instagram, WhatsApp and Facebook — because they refuse to comply with Chinese government regulations on data collection and the types of content shared.

Triolo doesn’t expect Beijing to respond “strongly” to the US ban on TikTok, though.

“Although Beijing is already on record as opposing any forced divestment of US TikTok from Bytedance, its main concern is the technology transfer involved,” he said. “In general, Beijing cares less about social media companies than it does about US control of technology.”

“Beijing will be more likely to react strongly to the new US export controls, and is unlikely to react in kind to the US effort to ban US Tiktok if it ends up happening,” he added.

Beijing recently ordered Apple ( AAPL ) to remove social messaging apps WhatsApp, Signal, and Telegram from the firm’s Chinese app store. But it has not been followed by a major crackdown on the virtual private network, which many tech-savvy Chinese use to communicate with friends overseas through this messaging app.

“The move is likely timed to show that China will continue to block access to some apps it considers a national security threat, even though the blocked apps have far fewer users in China than TikTok’s 170 million or so users in the US,” Triolo said. .