A few years ago, few people would have predicted that a social media platform associated mostly with teenagers and indie musicians would become the subject of a scandal at the highest levels of government. It has become a flashpoint between the world’s two largest economies, the United States and China. TikTok may be the most successful Chinese consumer product ever launched in the American market, and it is now at the center of a confrontation between business and politics, and between private and government interests.
Everyone Wants a Piece of the TikTok Pie
TikTok has become a prize, and everyone, including the President of the United States, wants a piece of it. In early August, Donald Trump demanded a “substantial portion” of the purchase price in a proposed deal between Microsoft and ByteDance, the Chinese owner of TikTok. He also threatened to ban the app if a deal was not finalized by September 15, 2020. ByteDance was pushed toward a sale by Trump himself, after he threatened action against Chinese technology companies operating in the United States. Having effectively forced the deal, the administration now wants a huge percentage of the proceeds, claiming that it is “making it possible.”
An Offer They Cannot Refuse
Critics have compared the administration’s approach to the style of the Corleone family. Although the deal is supposed to be a private transaction between privately owned companies, both governments have become so involved that it raises questions about the real nature of the transaction and the role Trump wants to play in it. Given how strained U.S.-China relations have become, it would be naive to see the deal between Microsoft and ByteDance as just another business transaction.
Charlotte Jee, a reporter at MIT Technology Review, went further, calling Trump’s demand “almost Mafia-like.” Threatening a ban that drives down the price and then claiming a cut of the deal for “making it possible” recalls the famous “offer they cannot refuse.” The ultimatum and deadline set for the negotiations are another unorthodox step, and a hurdle for any potential agreement.
Is a Ban Even Possible?
The possible ban of one of the fastest-growing social media platforms (TikTok has shown bigger growth rates than Facebook and Instagram) has caused an uproar in America. Social media stopped being simple entertainment years ago and is now a marketplace worth billions. Whether TikTok can actually be banned for Americans is an open question. First, it is practically impossible to delete the app from every device in the U.S. Second, an effective ban would depend on Apple and Google, which run the main app stores. Russia faced a similar problem when it tried to ban the Telegram messaging app, and after two years the effort was widely seen as a failure.
However, Trump’s administration might not be bluffing. It has the power to make the regulatory environment so hostile for TikTok that the business loses enough value to be taken over by an American company. In this context, Facebook’s recent failed launch of a TikTok imitator may have been more of a trial run than simple copying.
