TikTok’s fall from grace and its hurdles to come

Zhang Yiming, the founder of TikTok’s mother company ByteDance, wanted to make a global Chinese tech company, but he knew what needed to be done to accomplish that. He made TikTok unavailable in China and stored data outside the country.

This kept Chinese censors away from the app and user data, supposedly, out of Beijing’s reach. When Hong Kong’s national security law came into effect in July, TikTok didn’t just move operations out of the territory – it stopped operating there altogether.

A tech geek who repaired computers in college and likes talking about algorithms, Zhang didn’t see himself as running a media platform. “I can’t accurately decide whether something is good or bad, highbrow or lowbrow,” he told Caijing in 2016.

Zhang Yiming, the founder of ByteDance, TikTok’s mother company. Credit: Bloomberg

He even fell foul of Chinese regulators when his company’s humour app Neihan Duanzi was banned in 2018. In his public letter of apology, Zhang said he now realised “that technology must be guided by core socialist values.” His company’s news app Toutiao also started featuring more stories about President Xi at the top of its feed.

But much of Zhang’s efforts to internationalise TikTok have now gone to waste. China’s 2017 national intelligence law still requires companies to comply with intelligence-gathering operations if asked, and President Trump is using this to come down hard on the company.

On August 6, President Trump signed an executive order, giving TikTok until September 15 to sell its US operations or face a ban in the country. Microsoft is currently in talks to buy TikTok’s US operations, as well as its operations in Canada, Australia, and New Zealand, since they were already managed along with the US as a single region under the same executive.

The extraordinary move has cast doubt over the US as a destination for foreign tech companies that wish to globalise. Earlier this month, TikTok’s mother company issued a late-night statement, reiterating its commitment to going global, but in a letter to employees made the tensions out to be more technical than geopolitical.

More trouble to come?

President Trump’s clampdown is just one of many setbacks for TikTok across the world; countries doubling down on the app include:

India

As we covered last month, India has already banned the app. The app had more than 200 million active users in India – its largest market outside of China, making up 30.3% of its total downloads worldwide.

The decision came after 20 Indian soldiers and an undisclosed number of Chinese soldiers were killed in hand-to-hand combat in the contested Galwan Valley region between the two countries. However, authorities say they were responding to citizen concerns of “security of data and breach of privacy.”

European Union

EU data protection chiefs launched an investigation into TikTok’s privacy policies after a Dutch investigation into how the company protects children’s data. France’s privacy watchdog also recently started their own probe.

Turkey

Parliament recently passed legislation that bans foreign social media companies from operating in the country unless they comply with government content moderation. Turkish state media also recently announced that the country’s data protection authority had begun an investigation into TikTok and personal data use.

Australia

The Australian government confirmed it was investigating the app, as well as other social media platforms. However, Prime Minister Scott Morrison has said there is no evidence to suggest TikTok should be banned for now.

Japan

A group of lawmakers from the ruling Liberal Democratic Party are building a case to take to the Japanese government in September to urge officials to look into and place restrictions on Chinese-made apps including TikTok. They fear Japanese user data could end up in the hands of Beijing.

Indonesia

Government relations with Beijing are tense, and TikTok has been banned temporarily in the past for pornographic, blasphemous, and “inappropriate” content. The ban was later lifted, but considering the government’s tough stance on foreign social media, TikTok could likely get into trouble again.

Pakistan

Pakistan’s government issued a “final warning” to TikTok in July over similar concerns to Indonesia’s. It appears close ties with China will not stop it from issuing a ban if its requirements are not soon met.

The world ahead

TikTok has a daunting task ahead. Zhang Yiming says he had previously studied another Chinese company’s globalisation to model TikTok’s on – Huawei. With Huawei facing its own major setbacks from the Trump administration, Zhang will now have to forge his own path.

Earlier this month, TikTok said it plans to build a $500 million data centre in Ireland that will store data of its European users, which is currently stored in the US and Singapore. The company says it had been thinking about setting up the centre “for a long time.”

TikTok’s European headquarters in London. Credit: CNBC

Going forward, TikTok won’t just have to navigate geopolitics. It will also have to face the issues all global social media platforms are facing: how to moderate content, how to justify the algorithms which make content go viral, how to protect user data, and so much more.

In the absence of robust data protection laws in jurisdictions like the US, TikTok could do more to promote data protection legislation and welcome code auditing. Zhan doesn’t need to close up shop to resolve its problems, but adding foreign faces and tweaking legal structures alone won’t quell concerns – data is at the heart of worries after all.

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