{"id":5960,"date":"2020-08-03T20:03:03","date_gmt":"2020-08-03T20:03:03","guid":{"rendered":"https:\/\/aviancetechnologies.com\/blog\/blog\/how-tiktoks-owner-tried-and-failed-to-cross-the-u-s-china-divide\/"},"modified":"2020-08-03T20:03:03","modified_gmt":"2020-08-03T20:03:03","slug":"how-tiktoks-owner-tried-and-failed-to-cross-the-u-s-china-divide","status":"publish","type":"post","link":"https:\/\/aviancetechnologies.com\/blog\/how-tiktoks-owner-tried-and-failed-to-cross-the-u-s-china-divide\/","title":{"rendered":"How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide"},"content":{"rendered":"<p>\u00a0\u00a0 <\/p>\n<p>[responsivevoice_button rate=&#8221;1\u2033 pitch=&#8221;1.2\u2033 volume=&#8221;0.8\u2033 voice=&#8221;US English Female&#8221; buttontext=&#8221;Story in Audio&#8221;]<\/p>\n<h2>How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide<\/h2>\n<p><\/p>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">The Chinese entrepreneur behind TikTok took ample precautions when he set out to straddle the tech world\u2019s most treacherous divide: the one separating China\u2019s tightly controlled internet from the rest of the planet.<\/p>\n<p class=\"css-158dogj evys1bk0\">He made TikTok unavailable in China so the video app\u2019s users wouldn\u2019t be subject to the Communist Party\u2019s censorship requirements. He stored user data in Virginia and Singapore. He hired managers in the United States to run the app and lobbyists in Washington to fight for it on Capitol Hill.<\/p>\n<p class=\"css-158dogj evys1bk0\">None of that counted for much in the end. With TikTok now negotiating a sale to Microsoft under intense pressure from President Trump, who said on Monday that he was giving the go-ahead to such a deal, the digital wall between China and the United States is proving to be higher than ever at this moment of widening conflict between the two countries.<\/p>\n<p class=\"css-158dogj evys1bk0\">Only this time, it is the U.S. government, not China\u2019s, that is putting up the barricades \u2014 an escalation that could foretell an even more restrictive time for companies in both nations.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">ByteDance, the eight-year-old Chinese social media giant behind TikTok, is China\u2019s first truly global internet success story. The company\u2019s founder, Zhang Yiming, 37, began pushing to expand overseas early on, believing that only a company with worldwide reach could remain on the technological edge.<\/p>\n<p class=\"css-158dogj evys1bk0\">But TikTok ended up resonating with American teenagers when even a platform for short viral videos is subject to political scrutiny. Under China\u2019s leader, Xi Jinping, the Communist Party has emphasized <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/www.nytimes.com\/2018\/12\/18\/world\/asia\/xi-jinping-speech-china.html\" title=\"\" rel=\"noopener noreferrer\">its ultimate authority over Chinese people and businesses. Suspicion never dissipated that TikTok \u2014 no matter how many non-Chinese executives it put in charge \u2014 might be unable to withstand pressure from Beijing to surrender user data or manipulate content.<\/p>\n<p class=\"css-158dogj evys1bk0\">Similar doubts already hang over many other Chinese tech companies. TikTok\u2019s sudden change of fortune could force them to re-evaluate their own international ambitions.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">Chibo Tang, a partner in Hong Kong at the venture capital firm Gobi Partners, said that, increasingly, his advice to Chinese tech companies was to steer clear of the United States when expanding overseas \u2014 to follow instead the Chinese government\u2019s diplomatic overtures and investments in places such as Southeast Asia, the Middle East and Africa.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">\u201cIf you want to go out and tackle more difficult markets, sure, but obviously there\u2019s consequences and additional costs,\u201d Mr. Tang said. \u201cGoing forward, Chinese entrepreneurs in these tech companies should be aware of that.\u201d<\/p>\n<p class=\"css-158dogj evys1bk0\">One unnamed entrepreneur put ByteDance\u2019s position in even starker terms to <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/m.huxiu.com\/article\/373071.html\" title=\"\" rel=\"noopener noreferrer\">the Chinese tech blog Huxiu on Monday: \u201cOnce the U.S. business is lost, half of the space for thinking about globalization has vanished.\u201d<\/p>\n<p class=\"css-158dogj evys1bk0\">As uncertainty swirled on Sunday about whether Mr. Trump would allow Microsoft to continue negotiations with TikTok, ByteDance issued a late-night statement in China reiterating its commitment to going global.<\/p>\n<p class=\"css-158dogj evys1bk0\">\u201cIn the process, we are facing all kinds of complex and unimaginable difficulties,\u201d the company said. The statement cited the tense geopolitical environment, culture clashes and, in an unusually direct jab at a competitor, \u201cFacebook\u2019s plagiarism and smears.\u201d<\/p>\n<p class=\"css-158dogj evys1bk0\">Facebook is rolling out a TikTok-like feature called Reels on Instagram, which it owns. The company\u2019s chief executive, Mark Zuckerberg, has also argued that undermining American tech companies with excess regulation could allow Chinese rivals to export their own, very different values to the world. Facebook declined to comment on ByteDance\u2019s statement.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">For Mr. Zhang of ByteDance, TikTok\u2019s run-in with the Trump administration has been an education in government relations, though hardly his first.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">Mr. Zhang falls on the geekier side of the tech founder spectrum. He repaired computers in college, and from past interviews, he appears most at home talking about algorithms and the flow of information. He is not a Communist Party member, <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/www.theatlantic.com\/international\/archive\/2020\/07\/tiktok-ban-china-america\/614725\/\" title=\"\" rel=\"noopener noreferrer\">he told the Atlantic magazine recently.<\/p>\n<p class=\"css-158dogj evys1bk0\">For many years, he echoed Mr. Zuckerberg in saying he ran a tech company, not a media outlet, which meant he should not be imposing his own judgments over content.<\/p>\n<p class=\"css-158dogj evys1bk0\">\u201cI can\u2019t accurately decide whether something is good or bad, highbrow or lowbrow,\u201d he told the Chinese business magazine Caijing in 2016.<\/p>\n<p class=\"css-158dogj evys1bk0\">Mr. Zhang may have thought he was insulating himself in China. But the perils of that technology-driven approach were made clear in 2018 when the Chinese authorities shut down one of ByteDance\u2019s oldest products, a humor app called Neihan Duanzi, for spreading vulgar material.<\/p>\n<p class=\"css-158dogj evys1bk0\">\u201cFor a long time, we put too much emphasis on the role of technology and didn\u2019t realize that technology must be guided by core socialist values,\u201d Mr. Zhang wrote in a public letter of apology.<\/p>\n<p class=\"css-158dogj evys1bk0\">ByteDance\u2019s popular news aggregator app, Toutiao, had also been under fire for saucy content. In response, Toutiao began featuring more stories about Mr. Xi at the top of its feed.<\/p>\n<p class=\"css-158dogj evys1bk0\">By then, ByteDance had already begun expanding in Japan, India, Southeast Asia and beyond. TikTok was released in 2017 as the international edition of Douyin, one of ByteDance\u2019s Chinese video apps.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">TikTok had some early scrapes with foreign governments. In 2018, <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/www.nytimes.com\/2018\/10\/29\/technology\/bytedance-app-funding-china.html\" title=\"\" rel=\"noopener noreferrer\">Indonesia temporarily blocked it for hosting inappropriate content. Despite the challenges, Mr. Zhang said at an event in Beijing that year that going global was the only way to get access to the talent and resources needed for long-term success.<\/p>\n<p class=\"css-158dogj evys1bk0\">He said he had studied another Chinese company\u2019s rapid growth overseas to see how it could be done.<\/p>\n<p class=\"css-158dogj evys1bk0\">Which company? Huawei.<\/p>\n<p class=\"css-158dogj evys1bk0\">His choice was prescient in hindsight, though perhaps not in the way he intended. The Trump administration has for years sought to<span class=\"css-8l6xbc evw5hdy0\">  <\/span>undermine the giant Chinese maker of telecommunications equipment and smartphones. It, too, has been called a national security threat by White House officials, who fear the Chinese government could use Huawei gear for espionage.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">International growth was top of mind when Mr. Zhang began courting Musical.ly, a Chinese-made lip-syncing app that had found success in the United States and Europe. In late 2017, <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/www.nytimes.com\/2017\/11\/10\/business\/dealbook\/musically-sold-app-video.html\" title=\"\" rel=\"noopener noreferrer\">ByteDance agreed to buy Musical.ly for around $1 billion. ByteDance would later merge the app into TikTok, giving it a toehold in the West that would eventually propel it to wider success.<\/p>\n<p class=\"css-158dogj evys1bk0\">According to people with knowledge of the matter, the two parties did not approach the Committee on Foreign Investment in the United States, or CFIUS, to seek its blessing beforehand \u2014 a decision that would later come back to haunt ByteDance.<\/p>\n<p class=\"css-158dogj evys1bk0\">CFIUS (pronounced SIFF-ee-yuss) typically evaluates foreign deals involving an American business for possible national security risks. But it also claims jurisdiction over deals between foreign businesses that have significant American operations.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">As TikTok became a smash hit in the United States, concerns arose about whether the app was <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/www.theguardian.com\/technology\/2019\/sep\/25\/revealed-how-tiktok-censors-videos-that-do-not-please-beijing\" title=\"\" rel=\"noopener noreferrer\">censoring content that might offend Beijing. Late last year, The New York Times and others reported that CFIUS was looking into the Musical.ly deal. Washington politicians also began voicing fears that TikTok could be a conduit for China to meddle in American elections.<\/p>\n<p class=\"css-158dogj evys1bk0\">With pressure building, some of Mr. Zhang\u2019s investors and advisers offered ideas for putting distance between TikTok and ByteDance, including reorganizing TikTok\u2019s corporate or legal structure.<\/p>\n<p class=\"css-158dogj evys1bk0\">In an interview in November, Alex Zhu, a founder of Musical.ly who was then the head of TikTok, said the company wouldn\u2019t rule out such changes.<\/p>\n<p class=\"css-158dogj evys1bk0\">\u201cWe continuously look at the company structure and optimize the structure,\u201d Mr. Zhu said.<\/p>\n<p class=\"css-158dogj evys1bk0\">But instead of a major restructuring, Mr. Zhang opted for personnel changes. This spring, he reshuffled ByteDance executives in China and said he would personally devote more time and energy to Europe, the United States and other markets. In May, Liu Zhen, a former Uber executive in China who had been overseeing ByteDance\u2019s global expansion, left the company. Mr. Zhu was replaced as TikTok\u2019s head by Kevin Mayer, a veteran Disney executive in the United States.<\/p>\n<p class=\"css-158dogj evys1bk0\">ByteDance also embarked upon a lobbying push in Washington to sell the idea that TikTok\u2019s allegiances were with the United States, not China. In meetings with lawmakers, lobbyists emphasized the app\u2019s light, uplifting fare and the fact that many of its top leaders were American residents.<\/p>\n<p class=\"css-158dogj evys1bk0\">Last month, when American technology companies including Facebook and Google began reassessing their operations in Hong Kong in the wake of a new security law that gave the Chinese government greater powers in the territory, TikTok went further, announcing that it would stop operating in Hong Kong completely.<\/p>\n<\/div>\n<\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">The move let TikTok demonstrate its willingness to stand up to Beijing, as its head of U.S. public policy later emphasized in an email newsletter to Capitol Hill. But Hong Kong had not been a major market for the app, making the decision look more like a publicity stunt than a self-sacrifice made on principled grounds.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-158dogj evys1bk0\">The Trump administration\u2019s scrutiny continued unabated. After <a target=\"_blank\" class=\"css-1g7m0tk\" href=\"https:\/\/www.nytimes.com\/2020\/06\/21\/style\/tiktok-trump-rally-tulsa.html\" title=\"\" rel=\"noopener noreferrer\">Mr. Trump failed to draw huge crowds at a June re-election rally in Tulsa, Okla., TikTok users claimed to have pulled off a prank by registering for tickets and then not attending the event. In early July, Secretary of State Mike Pompeo floated the idea of banning the app over security concerns.<\/p>\n<p class=\"css-158dogj evys1bk0\">Within weeks, Microsoft said it had received Mr. Trump\u2019s go-ahead for pursuing a deal to buy TikTok\u2019s U.S. operations. CFIUS had decided to order ByteDance to divest.<\/p>\n<p class=\"css-158dogj evys1bk0\">In a letter to ByteDance\u2019s employees on Monday, Mr. Zhang made the recent turmoil sound more like a technical matter than an existential threat brought about by hostile geopolitical forces.<\/p>\n<p class=\"css-158dogj evys1bk0\">He wrote that the company had repeatedly emphasized that it was willing to make technical changes to address U.S. concerns, yet the order to sell was made anyway. \u201cWe do not agree with this decision, because we have always insisted on guaranteeing users\u2019 data security, the platform\u2019s neutrality and transparency.\u201d<\/p>\n<p class=\"css-pncxxs etfikam0\">Lin Qiqing contributed research.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div class=\"post-item-metadata entry-meta\">\n<p class=\"has-background has-very-light-gray-background-color\">Disclaimer: Content may be edited for style and length.\u00a0<a class=\"newsium-categories category-color-1\" href=\"https:\/\/www.nytimes.com\/2020\/08\/03\/technology\/tiktok-bytedance-us-china.html\" target=\"_blank\" rel=\"noopener noreferrer\">Story Source<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0\u00a0 [responsivevoice_button rate=&#8221;1\u2033 pitch=&#8221;1.2\u2033 volume=&#8221;0.8\u2033 voice=&#8221;US English Female&#8221; buttontext=&#8221;Story in Audio&#8221;] How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide The Chinese entrepreneur behind TikTok took ample precautions when he set out to straddle the tech world\u2019s most treacherous divide: the one separating China\u2019s tightly controlled internet from the rest of the planet. &#8230; <a title=\"How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide\" class=\"read-more\" href=\"https:\/\/aviancetechnologies.com\/blog\/how-tiktoks-owner-tried-and-failed-to-cross-the-u-s-china-divide\/\" aria-label=\"Read more about How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":5961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1,30],"tags":[],"class_list":["post-5960","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-technology"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide - Aviance Technologies<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide - Aviance Technologies\" \/>\n<meta property=\"og:description\" content=\"\u00a0\u00a0 [responsivevoice_button rate=&#8221;1\u2033 pitch=&#8221;1.2\u2033 volume=&#8221;0.8\u2033 voice=&#8221;US English Female&#8221; buttontext=&#8221;Story in Audio&#8221;] How TikTok\u2019s Owner Tried, and Failed, to Cross the U.S.-China Divide The Chinese entrepreneur behind TikTok took ample precautions when he set out to straddle the tech world\u2019s most treacherous divide: the one separating China\u2019s tightly controlled internet from the rest of the planet. ... 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