TikTok is just the beginning

Fully Charged
Bloomberg

Hi all, it's Zheping in Hong Kong. It's not just TikTok that could be in trouble with the U.S. government. If the Trump administration follows through with its threats to block the video-sharing app, a long list of Chinese social media companies could be next.

TikTok has become a political lightning rod in recent weeks. President Trump has run ads promoting a ban on the app that's become central to many American teenagers' online lives, citing national security concerns. At the same time, TikTok faces inquiries from the U.S. Federal Trade Commission and the Justice Department.

That's prompted its parent company, China's ByteDance Ltd., to spend a record $500,000 lobbying the U.S. government in the second quarter. ByteDance has largely divorced TikTok's operations from its Chinese headquarters while looking at ways to advance its claims of being a global business, including potentially hiring 10,000 workers in the U.S. And it's repeatedly insisted that American citizens' data will never fall into Beijing's hands—not even at President Xi Jinping's personal request.

But it still appears that there's little ByteDance can do to help its case amid escalating Chinese-American tensions. Even its worst-case scenario of selling TikTok to a U.S. competitor (or U.S. investors, as tech site The Information has speculated) might not be enough. The idea was derided last week by Trump's trade adviser Peter Navarro. "If TikTok separates as an American company, that doesn't help us," Navarro said in an interview with Fox News. "Because it's going to be worse—we're going to have to give China billions of dollars for the privilege of having TikTok operate on U.S. soil."

ByteDance's issue is a fundamental one: At the end of the day, it's a Chinese company playing by China's rules. It's the same problem that's shared by all of the country's would-be international giants. Beijing is fast becoming a liability for its tech companies.

TikTok is the first Chinese-made internet service that's succeeded globally, but there are a host of other companies close behind. TikTok's rival video apps Zynn and Likee are just starting to get traction in the U.S., and sooner or later their Chinese ownership will pose a problem. Likee, owned by Joyy Inc., plays a card similar to TikTok's by stressing it operates from outside China. While Zynn, created by Tencent Holdings Ltd.-backed startup Kuaishou, tried not to reveal its China affiliation for as long as it could.

Tencent itself is the latest to make a foray into the American social media market. The world's largest game publisher is quietly testing a mobile-focused streaming network via an affiliate in the U.S. under the brand of Trovo Live. The new service closely resembles Amazon's Twitch in its appearance and functionality, but has a privacy policy stating that China-based teams will have access to user information. Tencent's WeChat—which has 1.2 billion global users, including some in the U.S.—has also become a target for Washington scrutiny.

Chinese tech companies' political woes aren't just tied to the U.S., either. India has already banned dozens of Chinese mobile apps including TikTok, WeChat and Likee. And Australia is reportedly looking at similar options.

Over the years I've settled for a life in China without Facebook Inc. or Twitter Inc.—as the use of virtual private networks to get around Beijing's elaborate censorship machines has gotten harder and harder. Soon, the rest of the world may have to settle for a life without TikTok or WeChat. As tech's largest markets throw up their own firewalls, the internets of the world are starting to look more different than ever. Zheping Huang

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