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Ticktock TikTok – is time up for the social media platform?

Green & Good (ESG and Impact)
social media

Whether you gather your news from traditional, online, or social media sources, one thing you are unlikely to have missed is the furore around TikTok.

Western lawmakers have spent the last year exploring how to restrict the platform which some say poses a significant threat to cyber security, has the potential to spread misinformation and poses a risk to citizens’ data. So far, much of this has just been postering, but, last week, the US House of Representatives approved a Bill that would force the Chinese owners of TikTok to sell within six months, or it would be banned on US soil. The Bill hasn’t yet gone to the Senate, but time appears to be running out for ByteDance’s ownership and operation of the social media app.

In the UK and European Union, TikTok has been banned from government devices due to security concerns and the EU has launched a formal investigation into the software. Across the pond, some individual US states have made moves to block the app, but so far, no bans have been legally upheld.

TikTok, a company estimated to be worth around $225 billion, has begun to hit back. They say that any future bans or ownership dictates are based on “misconceptions” and “geopolitics”. They recently released a statement on how they hope the US Bill will not pass in the Senate, and that lawmakers should be “listening to the facts” and “consider the impact it will have on the economy, small businesses and the 170 million Americans that use the app”. In the UK there are around 20 million users, with many businesses and politicians using the app regularly.

Government intervention in the private sector is a huge deal, especially if it could result in the forced sale of an international business. TikTok, which has a footprint in every single country in the world, will not back down easily, and it also has a mass following of devoted creators and viewers on its side. Any curtailing or changing of the app could have potentially significant impacts on the economy and society, as well as set a precedent for other foreign-owned companies.

And this is where the ownership structure of TikTok is interesting. Incorporated in the Cayman Islands, with headquarters in Singapore and Los Angeles, TikTok is run by Shou Zi Chew, a Singaporean national – something he has been keen to stress in recent months. The major shareholder and operator is ByteDance, a Chinese technology company headquartered in Beijing with close ties to the Chinese Government. But the part which receives less attention is that around 60% of TikTok is owned by international investors, not based in China, including some of the largest Western PE and hedge funds.

Last year, the company proposed a plan that it would store US user data on domestic servers controlled by American technology company Oracle. Recently, Shou Zi Chew has been more open in discussing TikTok’s “For You Page” algorithms, having given a TED talk on his ambitions and, in essence, suggested that it is very similar to Instagram’s content algorithms. This so far has not been enough to placate the governance concerns of the US government, but it demonstrates that there is a desire from the company to move a little.

But, say that TikTok can’t move far enough to keep lawmakers happy, who then would be able to buy the company? If ByteDance did relinquish control of TikTok, it would require a massive company or consortium to buy the company. Microsoft has been involved in talks previously, and social media powerhouse Meta would no doubt be interested, as could Alphabet, Google and the like. But then you are getting into the realms of anti-trust issues and competition law. Ownership of TikTok is not easy now, and it certainly won’t be in the future either.

At the heart of this is “power”, a currency arguably more important than money itself. The concern is that this is a company with close ties to the Chinese Government that has significant ownership and control of algorithms. The base concern is that China can ultimately influence what Western users see. And they aren’t particularly transparent over their algorithms either, or who or what can go into them.

The world of news is changing, with more and more people using online and social media sources for their news. With newspapers, it’s easy to find out who the editors are, or what the political slant is. With TikTok, what is basically the equivalent of editorial decisions are now being made by a non-transparent body with close links to the Chinese Government. The influence that news has on society, the economy and elections is enormous, so no wonder lawmakers and regulators are beginning to wise up to the risks and, perhaps, are looking to protect their own interests. 

And this is without even getting into the latest developments on the Telegraph and its UAE-based suitors.

TikTok is a disruptor – breaking up the monopoly of what is a Western-dominated sector. Social media apps are largely owned and managed by big US Silicon Valley companies. Does backlash against a Chinese competitor just demonstrate that the US cannot cope with a rival with a quality platform that challenges its own niche?

Governance being dictated by government is not a new phenomenon, but it is a controversial one. TikTok, which on the surface is a fun app, where teenagers watch harmless videos of their favourite creators dancing, has a potentially sinister underbelly. It has much of the West frantically scrambling to work out what to do. But, just like the hold that TikTok has over some portions of society, has TikTok, or China, already got a hold over the West that will be impossible to shake?

Watch this space – probably on TikTok…