Chinese internet firms face dilemma going overseas

By Zhang Hongpei Source: Global Times Published: 2020/7/7 23:38:40

Pompeo vows to ban TikTok in America market

The image of TikTok in India Photo: IC)

As Chinese-funded platform TikTok win a rising number of Internet users in many overseas markets, politicians from some countries are seeking every opportunity to pick fault with the app, citing their data security to set obstacles for its business expansion.

The US is "looking at" banning TikTok and other Chinese social media apps, US Secretary of State Mike Pompeo said Monday. The country has continued its scrutiny of the popular short-video platform in the past years.

"TikTok is led by an American CEO, with hundreds of employees and key executives across safety, security, product, and public policy here in the US. We have no higher priority than promoting a safe and secure app experience for our users," a TikTok spokesperson said. 

"We have never provided user data to the Chinese government, nor would we do so if asked," the spokesperson added.

A person close to ByteDance, the parent company that owns TikTok, told the Global Times that the Chinese firm has been stepping up efforts to make its overseas products and localize operations as much as possible in order to become a truly transnational firm.

Internet analyst Ma Jihua told the Global Times that a main reason why the Chinese unicorn has risen so fast is that it has set a clear-cut demarcation between its Chinese-language Douyin business in China, and TikTok business in overseas markets.

"From employment and content generation to critical data storage, it has paid a lot of attention to this separation," Ma said.

ByteDance in May named Kevin Mayer, the executive who once led the Walt Disney Co's streaming business, as CEO of TikTok, showing its determination to expand on the US market.

With the app's rapid growth in the US, the total number of monthly active TikTok users in the US hits 65 million, according to a report by US agency Wallaroo Media in June. In November 2018, TikTok said it had 20 million monthly active users in the US. 

Users in the US have spent about $86.5 million on the app, making the nation the second most important market for TikTok from a revenue standpoint, data from market research firm Sensor Tower showed.

Apart from the US, other countries are also taking discriminative actions against the app. 

TikTok is facing increasing pressure in Australia, just one month after opening its first local office. The local Herald Sun published comments from an unnamed federal member of Australian Parliament calling for the app to be banned in Australia.

India last week banned 59 Chinese apps, including TikTok, Weibo and Wechat, amid rising border tensions between the two countries. According to App Annie, TikTok was the most downloaded app in India in the first quarter of 2020, surpassing WhatsApp, Facebook and Instagram.

The attention that TikTok has attracted in overseas markets can also prove its influence in some way, said Liu Dingding, a Beijing-based internet analyst.

"The more restrictive measures are placed on Chinese software, the stronger it will become eventually," Liu told the Global Times Tuesday, following from experience gained from the growth of US tech giants like Google and Facebook that have had to operate under tough government regulations for many years. 

For foreign markets like the US that take a protectionist attitude and tend to politicalize business and technological innovation, they will only lag behind, Liu said.

Separately, TikTok has decided to stop operations of the TikTok app in Hong Kong "in light of recent events," a spokesperson from TikTok confirmed with the Global Times Tuesday. Meanwhile, TikTok's Chinese version Douyin will continue to serve its customers in the Hong Kong market, Chief of ByteDance's China business Kelly Zhang Nan said Tuesday.

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