TikTok, Huawei - Tech War or National Security?
The technology war is in full swing and TikTok is catching up with Huawei Technologies on that front.
ByteDance-owned TikTok, the international version of China's Douyin, is much more than the world's No. 1 social video app. The unicorn is apparently loaded with geopolitical worth, having been banned in India, banned on certain companies' corporate devices and government-issued smartphones, and facing more bans – in the United States and Australia.
Last week, White House economic adviser Larry Kudlow proposed a way out for TikTok. Coming as no big surprise, the suggestion was similar to how popular gay app Grindr was forced to transfer ownership from Beijing Kunlun Tech to a U.S. investment firm over the summer. To retain its millions of U.S. fans, TikTok has to operate under U.S. standards.
"I think TikTok is going to pull out of the holding company, which is China-run, and operate as an independent American company," Kudlow told CNBC.
The company responded to Kudlow's suggestion with a "no speculation" comment to Fox Business, but added that "ByteDance is evaluating changes to the corporate structure of its TikTok business."
If TikTok refuses to play along with the Trump administration's threat, it may lose its North America market same as it was shut off for another Chinese giant, Huawei. U.S. firms are forbidden to do business with the smartphone company and the ban extends to exports. Thus, even Taiwan's chipmaker TSMC, with facilities in the United States, is ending the relationship with its long-time chip buyer.
The concerns with both Huawei and TikTok are based on national security, or so the Trump administration has said. The roots lead to the 2017 Chinese law that every business comply with Beijing's request for intelligence. And who would take Huawei's word on the non-sharing of any information with the Communist Party, which it allegedly has ties to?
Naturally, TikTok has said that it has not shared information of any Indian users with Beijing when New Delhi banned it and 58 other apps on the grounds they "were "engaged in activities which is prejudicial to sovereignty and integrity of India, defense of India, the security of state and public order." It nevertheless lost its largest user base reportedly counting 120 million.
Now, the massively popular social video app is deciding on the location of its international headquarters. CNBC cited an unnamed source Monday, saying the London possibility remains, yet other media say Dublin is the more likely alternative. The SiliconRepublic.com said the halt on the U.K. talks could be interpreted as a response to the country's recent anti-Huawei move. The British government is to rid of Huawei's 5G network over the next few years, though, according to a Bloomberg report, that decision may be reverted as it was done under pressure from the U.S.
Some, including Huawei, argue that the Trump administration aims to hinder China's progress right as the company is surpassing its global peers in 5G, and there is no lack of competitors where a niche is found. When India banned TikTok, tons of clones popped up in the country, including some dangerous ones – and officials have outright spurred domestic initiative, the "self-reliance plan." In the United States, competition is no less fierce, with Zuckerberg at the heels of an opportunity. While Facebook is reportedly giving up on Lasso, its TikTok-wannabe, it is testing an alternative – Instagram Reels – and plans to release it next month, according to USA Today. And if you still think Facebook or Instagram don't collect user info – or don't share it with Beijing – just remember Facebook's data-sharing partnerships with Chinese companies and its collecting data even when users were logged out.
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