Jumping on the ban-wagon... The Chinese government has taken a 1% stake and a board seat in the Chinese subsidiary of TikTok’s parent company, ByteDance. US officials have considered banning TikTok before — ex-President Trump issued an executive order last September to yank TikTok from US app stores, but President Biden revoked it. Now that China has a stake, one US Senator has urged Biden to block TikTok entirely.
There’s a great divide... between Chinese and American social giants. Many Chinese social giants haven’t taken off in the competitive US market. Meanwhile, US companies like Facebook and Twitter can’t compete in China because they’re banned. ByteDance tried to have the best of both worlds:
- It launched two versions of the same social video app in the US and China — TikTok and its censored Chinese cousin, Douyin.
- Success came... In 2020, ByteDance's revenue more than doubled from 2019, and TikTok overtook Facebook as the most-downloaded app in the world.
- So did scrutiny... ByteDance delayed its IPO amid China’s regulatory crackdown. Now the Chinese government's stake in the company may cause US regulators to consider new limitations for TikTok US.
The TikTok threat has expanded... The US' original worry: that TikTok might share US data with Chinese authorities. This week, a group of bipartisan Senators demanded that TikTok reveal how and why it plans to collect biometric data from its 100M US users. But there's a newer fear: that China could influence TikTok’s powerful algorithm to promote misleading info that advances its interests. Still TBD whether those concerns are warranted — but the scrutiny from lawmakers is real.