China Wins This TikTok Round – Analysis

21 Gateway House

With Oracle, Walmart and U.S. venture capitalists now holding the majority of TikTok Global’s shareholding, China’s closed digital world gets a breather, and the possibility of a truly open global Internet, gets a blow. China has won this round.

By Blaise Fernandes*

On September 20, after much backing and forthing, U.S. President Donald Trump didn’t ban Chinese social media app TikTok, but suggested that American entities hold a controlling stake in TikTok Global, with data residing in the U.S.

Has the world lost an opportunity to bring China to the global negotiating table on digital governance? Has the opportunity to tear down the firewalls that enclose China, and prevent the world from accessing its digital internet market, and have a truly open, inclusive and free global internet, been squandered? It seems so, for now.

Here’s why. TikTok is China’s prized digital possession. Having it banned would have been a body blow to the Digital Silk Route, and a financial loss of over $100 billion. This includes the future valuations and earnings of TikTok, and China’s soft power vehicle. Instead, China’s bureaucracy has outsmarted its U.S. counterparts, and the deal now on the table is a proposed 20% holding by Oracle and Walmart in TikTok Global; this, along with the large U.S. venture capitalist holding in TikTik’s parent Bytedance,[1] will bring the U.S. ownership of TikTok to 53%, making it a U.S. entity. Oracle will host TikTok Global’s data on servers in the U.S.[2]

China has won because of several reasons.

First, it has not allowed U.S. giants like Facebook, Alphabet, Netflix, in to China. Market access for the U.S. players is still denied, and it was not part of the TikTok bargain.

Second, there is no mention of transfer of technology; the algorithms are still owned and controlled by Bytedance.



Please enter your comment!
Please enter your name here