TikTok’s troubles grow as tit for tat trade war focuses on Chinese technologies

Despite efforts to distance itself from Beijing, Chinese youth-focused social media application TikTok could well be the next Huawei Technologies — the Chinese technology group banned from having a place in telecoms networks in a growing number of Western nations.

TikTok was banned in India last month — along with another 58 Chinese applications — and by Australia’s Department of Defence in January, about the same time as the US Defense Department and armed forces enforced restrictions on the app. TikTok is being reviewed by the US government and is under pressure from hawks in Canberra. 

On the face of it, it’s a seemingly harmless ultra-short video making tool. TikTok’s initial user base has been in the 16 to 24 age group, but that is now beginning to expand.

Launched in September 2016 by privately-held Chinese technology group ByteDance, its user base was 800 million active users worldwide as at April 2020 — although this included about 120 million India users. Those numbers make it the seventh-most popular social media network sites ahead of LinkedIn, Twitter, Pinterest, and Snapchat. The most popular are Facebook, YouTube (Google), WhatsApp (Facebook), Facebook Messenger, WeChat and Instagram.

TikTok last week said it would exit the Hong Kong market after Beijing imposed harsh new security measures. It will be replaced in Hong Kong by Douyin, which already has a user base of 100,000 in the city.

Such a move provides insight into the technology decoupling between the US (and other parts of the West) and China, all context for the TikTok stoush.

Security agencies in the West and elsewhere are concerned that the Chinese government is accessing data using both network equipment and applications; they are also increasingly concerned about China accessing and copying proprietary technology. 

At least some of the focus on Chinese technology is something of a tit for tat, as Beijing has been conducting a longer term program of replacing Western hardware and software with local made equivalents.

This is part of  an unprecedented experiment in tech-nationalism with its Made in China 2025 and China Standards 2035 initiatives, It boosted these at the recent National People’s Congress saying it would spend US$1.4 trillion on a digital infrastructure public spending program. 

TikTok, with its stunning growth trajectory, is desperate to avoid being sucked into the tech-decoupling vortex. Last week, there were reports that ByteDance was looking to restructure in an attempt to de-Sinicize. It’s considering moving corporate headquarters outside China or creating  a new management board.

The baseline is access to user data. It’s a fundamental characteristic of China’s political and legal system that the government can order any Chinese company to do its bidding with data being held not just in China but elsewhere. Both Huawei and TikTok have, of course strenuously denied that this is true.

“We have never provided user data to the Chinese government, nor would we do so if asked,” a spokesman for TikTok has said.

Beijing’s decision to ride roughshod over Hong Kong’s independence has only solidified this fear in critics of Chinese technology companies operating outside China. In this context any remedial structural moves by ByteDance would most likely be akin to closing the barn door (or at least appearing to) after the horse has bolted.

In Australia bipartisan political pressure is building, hawkish Liberal Senator Jim Molan claimed TikTok was being “used and abused” by the Chinese government and Labor Senator Jenny McAllister wanting TikTok executives to front the Select Committee on Foreign Interference through Social Media.

Security concerns aside, the immense lobbying power of the Silicon Valley tech giants globally should never be underestimated.

TikTok poses a very real threat to the advertising revenues of Facebook and Google. It is certain that those companies are treading the halls of Washington, Canberra and dozens of other capitals in high revenue countries tipping large buckets over TikTok and ByteDance, in the same way that mobile network groups Ericsson and Nokia did on Huawei.

US firms are playing catch up with Instagram releasing its Reels feature in India over the weekend, YouTube has promised a short video feature coming soon and in India, local wannabes such as Mitron, Chingari, and Bolo Indya are seeing tens of millions of downloads as they quickly fill the void left by TikTok in its biggest market.

Still, whatever the actual situation with Beijing accessing data through Chinese companies, the combination of security agencies fear, increasingly ascendant in Western bureaucracies, and the raw power of corporate money, is something that time and again has proven to be mesmeric to politicians in Australia and the US.