Impact of TikTok Ban on China's Tech Goals and Global Digital Gap
As TikTok grapples with an uncertain future in the US, China's tech aspirations face a significant setback. Failure to divest the app within a year may lead to its prohibition in the largest market, exacerbating the worldwide digital inequality.
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TikTok is currently in a critical situation in the United States. If the app's Chinese owner does not sell it within the next year, there is a risk of it being banned in its largest market.
This deal would not only damage China's tech goals but also widen the gap between the digital realms of the two leading economic powers.
On Tuesday, Congress passed a law that might force ByteDance to sell TikTok or risk a nationwide ban. President Joe Biden is likely to sign the bill tomorrow, while TikTok has announced plans to contest the law in court.
Beijing strongly opposes a forced sale of TikTok and has updated its export control rules to block a sale on national security grounds. This limits ByteDance's options to secure TikTok's future in the US, its largest market with 170 million users.
According to Alex Capri, a research fellow at the Hinrich Foundation and lecturer at the National University of Singapore’s Business School, a forced sale of TikTok in the US would result in a downgrade of the app. The Chinese government would not approve the sale of its algorithms, further complicating the situation.
"If TikTok is banned in the US, people will start questioning ByteDance's future in other democratic countries," he explained.
If ByteDance is not allowed by the Chinese government to hand over TikTok's algorithm, the sale could be completely blocked. On the other hand, there is a possibility that the sale could proceed without the algorithm, which is a key factor in its popularity.
A ban on TikTok in the US, or a toned-down version of the app, could benefit YouTube, Google, Instagram, and other competitors of TikTok. Many TikTok users might switch to these platforms, according to Capri. This decision could also significantly impact ByteDance's global expansion plans.
TikTok's headquarters in Culver City, California
TikTok's headquarters in Culver City, California
Ringo Chiu/AP
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If the US bans TikTok, it would be a blow to ByteDance's plans for global growth. This move would signal that China prioritizes algorithm security over the company's financial success and worldwide expansion. Richard Windsor, a tech industry analyst and founder of Radio Free Mobile in the US, expressed this concern.
The ideological struggle in the technology industry is expected to intensify even further. According to Capri, a ban on TikTok could speed up the division of the global tech industry into two main groups: one based in the US and the other supporting technology from China.
The US crackdown on TikTok is seen as a move towards creating a divide between Chinese and Western app platforms. This trend reflects a larger split in the global tech industry. Ownership and operation of data centers, internet satellites, undersea cables, and semiconductors are all part of this growing divide.
The TikTok ban in the US could actually benefit Beijing in some ways. According to Capri, the ban could lead to increased efforts to expand China's digital presence in Southeast Asia and other developing markets globally.
Growing challenges for Chinese apps
The TikTok legislation was included in a wide-ranging foreign aid package meant to support Israel, Ukraine and Taiwan.
Once President Biden signs it into law, ByteDance will have a year to sell TikTok or risk being banned from the platform.
US officials and lawmakers have been worried about TikTok's security risks, fearing that it may share data with China or control the content shown on the app. Despite these concerns, TikTok has denied these allegations.
"The divestiture bill was influenced by Silicon Valley venture capitalists linked to US tech companies who could gain from the China threat narrative promoted by the bill's supporters," according to Paul Triolo, partner at Albright Stonebridge Group specializing in China and Technology Policy.
A batch of cars is being prepared for export overseas at the container terminal of Taicang Port in Taicang, China, on January 12, 2024. According to statistics released by the General Administration of Customs on the same day, the total value of China's import and export of goods in 2023 was 41.76 trillion yuan, marking a 0.2% increase from the previous year. (Photo by Costfoto/NurPhoto via Getty Images)
A batch of cars is currently being readied for export overseas at the container terminal of Taicang Port in Taicang, China, on January 12, 2024.
According to statistics that were released by the General Administration of Customs on the same day, the total value of China's import and export of goods in 2023 amounted to 41.76 trillion yuan. This marked a slight 0.2% increase from the previous year. (Photo by Costfoto/NurPhoto via Getty Images)
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Chinese companies and apps in the US are encountering increasing difficulties, according to him.
The Biden administration is strengthening a new office within the Commerce Department to implement regulations from a rule established during the Trump administration. This rule focuses on safeguarding US information technology supply chains, particularly connected apps, and may lead to additional limitations.
Triolo mentioned that it is unlikely for Congress to target another Chinese company like TikTok with a specific bill. However, he pointed out that the Commerce IT supply chain rule could potentially be utilized in the future to restrict Chinese companies and apps from accessing certain parts of the US market.
As a result, the question arises: will there be any retaliation from Beijing?
China’s Commerce Ministry has promised to take all required actions to safeguard its interests following the passing of an earlier version of the TikTok bill by the House of Representatives last month. However, no further details were provided.
In response to a question from CNN’s Marc Stewart on Wednesday, Wang Wenbin, a spokesperson for the Foreign Ministry, mentioned, “We have already expressed our stance on the TikTok issue clearly, and I have nothing new to add today.”
Most American social networking apps have already been banned in China. Beijing blocks most US social media platforms, such as Google, YouTube, Instagram, WhatsApp, and Facebook. This is because these apps do not comply with the Chinese government's rules on data collection and content shared.
According to Triolo, Beijing is not likely to have a strong reaction to the US ban on TikTok.
Beijing opposes any forced sale of TikTok US from Bytedance, with a main focus on the technology transfer. Generally, Beijing is more concerned about US technology controls than a social media company.
US President Joe Biden (R) and China's President Xi Jinping (L) meet on the sidelines of the G20 Summit in Nusa Dua on the Indonesian resort island of Bali on November 14, 2022. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images)
US President Joe Biden and China's President Xi Jinping met at the G20 Summit in Nusa Dua, Bali on November 14, 2022. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images)
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The export ban imposed by the Biden administration is hindering China's tech ambitions. According to experts, Beijing is expected to strongly retaliate against any new US export controls. Additionally, it is unlikely that China will respond in a similar manner if the US decides to ban Tiktok US in the future.
Beijing recently instructed Apple to remove social messaging apps WhatsApp, Signal, and Telegram from the China app store. However, there has been no significant action taken against virtual private networks, which are commonly used by tech-savvy Chinese to connect with friends overseas through these messaging platforms.
According to Triolo, this move was likely intended to demonstrate that China will continue blocking apps deemed as national security threats. It is worth noting that the banned apps have a much smaller user base in China compared to the approximately 170 million TikTok users in the US.
— CNN’s Wayne Chang and Marc Stewart contributed reporting.
Editor's P/S:
The TikTok saga is a complex intersection of national security, technology, and global power dynamics. The US government's concerns over data sharing and content control, coupled with China's strict export regulations, have created an impasse that could have significant consequences. A forced sale of TikTok or its ban in the US would not only damage ByteDance's business but also exacerbate the already growing divide between the digital realms of the two superpowers.
The ideological struggle in the technology industry is intensifying, with the potential for a split into two distinct ecosystems, one led by the US and the other supported by China. This divide extends beyond app platforms to include critical infrastructure like data centers, undersea cables, and semiconductors. While the US ban on TikTok could benefit competitors like YouTube and Instagram, it could also accelerate Beijing's efforts to expand its digital presence in other global markets. The outcome of this situation will shape the future of global technology and the relationship between the US and China.
