The facts: Days after China’s ByteDance and Oracle and WalMart of the US announced a deal to keep TikTok up and running in the US, the future of the video app is still up in the air. The state-backed English-language newspaper China Daily warned on Wednesday that Beijing had no rea-son to approve a “dirty and unfair” deal and described US government moves against TikTok as “almost the same as a gangster” would use. The Chinese government late last week said it had expanded the list of technologies subject to export controls to include “personalized information recommendation services based on data analysis”.
US President Donald Trump had wanted to ban downloads of TikTok in the US this week, but the deadline has been postponed to September 27, pending a deal with US investors. The problem with that is that Oracle and WalMart have said TikTok Global will be majority US-owned, while ByteDance has maintained it will retain an 80 percent stake in the new company.
What to watch: Currently the key issues to watch are who will own TikTok Global and control its content-recommendation algorithm that has made the app so popular. Beijing might be able to accept ByteDance retaining a roughly 80 percent stake in TikTok and refrain from using export controls to threaten the deal. But the US President has insisted that US companies take over ma-jority control. China appears to have revised its export controls quickly to be ready for any TikTok deal.Current draft legislation on data security and export controls, if adopted, would give Beijing more tools to retaliate against US measures targeting Chinese businesses. Many Chinese social-media users have been calling on the country to fight back against what they perceive as incendi-ary US behavior.
MERICS analysis: “The resolution of the TikTok issue will shed light on how the US will manage China-related data security issues under a second Trump administration – and quite possibly even a first Biden presidency,” says MERICS expert John Lee. “The Chinese side, on the other hand, has nothing to lose and much to gain from ramping up pressure on the US actors to conclude a deal that leaves Bytedance with a controlling corporate stake, control of the algorithm or both..”
Media coverage and sources:
This short analysis first appeared in the September 24 issue of MERICS China Briefing.