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Monday, September 07, 2020, 11:09
TikTok ban shows potential of tech to brighten China's image
By Pan Yuanyuan
Monday, September 07, 2020, 11:09 By Pan Yuanyuan

The United States government's suppression of short video mobile app TikTok, which is owned by Beijing-based company ByteDance, is untenable legally, unreasonable procedurally, and is not based on "facts". It reflects the US government's anxiety about the development of China's digital technology. It is also the result of a combination of security, economic, political and ideological factors.

The US government issued the first executive order on Aug 6 to ban US transactions with ByteDance, which actually banned TikTok's operations in the US and aimed to force ByteDance to sell its US business at a low price.

 As China becomes a major outbound investment country, more local technology companies with innovative prowess and overseas markets are needed

Although such a decree may change or even cease to be implemented before it is launched, it caused a huge shock in global business and political circles, as the US issued such an extreme decree on mobile app services operated by Chinese internet-based companies in the US.

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Whether to save the company's profits, or to serve as a model for other companies, or to resist unfair investment treatment, or even to fight for a fair platform for China, ByteDance should sue the Trump administration to protect the legitimate rights and interests of companies at large.

On Aug 24, TikTok filed a legal challenge against the US government's order. The lawsuit was filed in the federal court for the Central District of California.

To start with, the suit directly influences its profits. ByteDance is a private company and its mobile app Douyin is currently the world's highest-income software in nongaming app sector. Douyin's overseas version TikTok has been accepted and widely used by mobile phone users in major countries across the world. ByteDance is quite different from other internet-based companies in China, which have a generally low proportion of overseas revenue.

ALSO READ: Experts query legal basis for ban on TikTok

Douyin's income from countries outside of China accounts for a huge proportion of the total and it is still growing rapidly. According to a data platform report quoting Douyin's latest financial report, ByteDance earned US$175 million globally last year, among which China accounted for 48.3 percent while the US accounted for 35.7 percent. The deliberate suppression by the US government may result in a sharp decline in profits and asset value of Douyin/TikTok, as well as a significant reduction in profits returned to ByteDance.

What is more worrying is that the US government's suppression of TikTok is just the beginning of suppression of the country's internet-based services. More overseas Chinese internet-related companies may receive similar treatment.

It is directly related to the taxes these companies pay in China, and to the sources of income for a large number of upstream and downstream Chinese companies associated with these overseas companies.

Second, the suit will directly influence future innovation and commercial model of Chinese businesses and their confidence in going global. Before TikTok went overseas, most Chinese internet-based companies mainly imitated the business model of foreign, mainly the US, network apps and relied on China's huge population and market to achieve their own rapid development in the country.

However, these companies still lagged behind their US counterparts in originality and innovation. Their businesses find it difficult to receive recognition of international users, let alone chase or surpass their US competitors.

TikTok, as an original Chinese internet-based service, changed this situation and took a lead in a vertical market. TikTok dominates the short video market outside of the old social media text, pictures and long videos, and has become one of the most popular products among US users.

ByteDance is the first Chinese internet-based technology company that leads global mobile apps in the information era. As China becomes a major outbound investment country, more local technology companies with innovative prowess and overseas markets are needed.

Chinese-language mobile app Douyin represents the trend of Chinese companies with original technology going overseas. This has greatly enhanced the confidence of local technology companies to innovate and go global. The suppression of TikTok in the US will inevitably have a negative impact on such companies' plans to expand overseas in the future.

Third, the suit is to fight for fair investment treatment of Chinese companies in the US. The main reason for the ban is the so-called illegal use of personal information. It appears the US government is very concerned about the Chinese internet-based companies' improvement of service capabilities in the use of data.

In 2019, the Committee on Foreign Investment in the US accused TikTok of illegally collecting information about children, but the situation was quickly clarified. The committee also accused TikTok of transferring US user information to a Chinese server and cooperating with the Chinese government's content review, but so far it has not given any public evidence to substantiate its allegation.

Last, the suit is to fight for a voice of global public opinion. Network apps not only involve technological and commercial interests, but also are closely related to their content on individuals' cultural, political, and value identity.

Currently, global internet-based giants are mainly from China and the US. But internet-based companies from the two countries have great differences. The US labels have a first-mover advantage in providing global services. Therefore, they have mastered and expanded the voice of global public opinion platforms through various internet apps.

However, most Chinese internet-related companies mainly serve the domestic market and the vast majority of their users are Chinese. As it is an industry where the winner takes all, the global footprint of internet apps based in the US has made it easy to master the global public opinion platform, while making it difficult for Chinese companies to portray the country's tech prowess internationally.

Yet, TikTok has succeeded in becoming popular outside China, including in Western countries. It appears to have the potential to create opportunities for China to improve its global image and compete for the right to speak globally.

According to data provided by Sensortower, TikTok has been downloaded more than 175 million times in the US. The total global download volume exceeded 2 billion as at the end of April. This surpassed Facebook, YouTube and Instagram, making the Chinese company's digital asset the world's most downloaded mobile app.

According to data from the Center for Strategic and International Studies, users aged 10 to 19 constitute 37 percent of TikTok's patrons in the US, and those aged 20 to 29 account for 26 percent. It is not difficult to imagine that if the younger generation in the Western countries grow up using Chinese original apps, it will likely influence the way they perceive China-it could improve China's image in the hearts of Westerners.

The prospect of such influence and reach of China's image is not what might please the US government, and the latter's suppression of TikTok could well be related to such fears.

If TikTok continues its current development trend, Chinese technology companies will foster a less restricted global public opinion platform. Users are more likely to be open-minded about Chinese culture and China. The nation will cultivate a more friendly public opinion, laying a solid foundation for win-win foreign exchanges.

The writer is an associate research fellow at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences, and a special research fellow at the Institute of Economics, the City University of Macau.

The views don't necessarily reflect those of China Daily.

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