Dealing with regulators, watching a tech war bloom: How TikTok ended up where it is now.
Even if TikTok satisfies Thursday’s congressional committee, can it ever be just another social media platform?
It was 2019, I was working for a Chinese internet technology company in Beijing and I had recently returned from a vacation in Vietnam.
We’d crawled through war-era underground tunnels, ate delicious food and had a riveting conversation with a South Korean businessman who owed a bunch of people money back home. So, he’d shifted his business to Vietnam where he planned to hide out for a while, he said.
While our South Korean vacation acquaintance could run from his problems, it seemed that Chinese tech companies at the time, could not.
I was back at work a few weeks before the news hit that TikTok had been fined $5.7 million in the US for failing to obtain parental consent for users under age 13.
Then the US and China fell into a trade war. Huawei was at the center of it all. And, in a matter of months, the company was sanctioned and banned by the Trump administration.
Other Chinese tech companies with global ambitions watched on.
Huawei and TikTok were among the biggest China-founded, China-made technology companies to make it abroad. So the vibe was tense and people were waiting to see what would happen next.
TikTok was a sign that everyone had to get their apps in order. Some had major cleaning up to do.
That is because many companies spent a lot of money on expensive marketing campaigns, which included things like onboarding influencers and attending creator conferences.
But they had not spent enough time ensuring that they were adhering to the relevant laws and regulations in countries targeted for expansion.
Í don’t think they necessarily set out to ignore regulations. But, I do think that there was this idea that if there were really important rules to abide by in a country, then there should be proper guardrails in place to prevent companies from breaking them.
Maybe it's because the environment that Chinese tech companies exist in is a different world from the US. The rules are not always clear, but you have a basic idea of what you should and shouldn’t do. If you do slip up you’ll be punished rather quickly – well before you gain 35.7 million users like TikTok had when it was in the US back in 2019.
The best next option for a Chinese tech company entering the United States might be to get out ahead of things and consult with regulators to make sure that they are abiding by the right laws.
However, this can be hard for Chinese tech companies in a new environment. Many of them don’t want to call attention to the fact that they are from China.
This is because there is this mentality in China that ‘no one wants to see China get too big’. It’s an idea that comes from a mix of propaganda and historic memory.
For some companies what happened next with Huawei only confirmed this bias.
Huawei was a national symbol in China the next phase of technology.
For years Chinese companies had been assemblers or importers of technology. Huawei represented a new era of China-born tech companies, making everything from start to finish (except microchips which will become very important later on in this story).
It had grown from a telecommunications company to a consumer hardware company. There were Huawei stores all over the world, Huawei phones were growing in popularity and people were even starting to use Huawei-made computers. The company was even on the cusp of being the world’s go-to 5G hardware supplier.
But by the end of 2019, Trump administration sanctions and bans made it near-impossible for Huawei to access US-made microchips. Then its profits started to fall.
Huawei isn’t out of business though. It still provides a high amount of 5G infrastructure in countries like Germany and is also the go-to data center provider for a number of African nations. However, years later, there is still a stigma that surrounds Huawei. And, coupled with China’s close relationship with Russia during the ongoing war in Ukraine, it’s making people question Huawei’s trustworthiness again.
This makes me wonder if it’s even possible to stop the momentum that fuels sanctions and bans once it gets going. Will TikTok ever be able to just be a social media platform, now that it has been labeled as a potential security risk in at over 5 places?
Maybe the story will play out differently this time. TikTok is a very different company from Huawei, in a few ways:
TikTok is an internet technology company. Huawei was making and importing hardware that could be used to support Chinese military technology, security experts claim.
Huawei was financed, in part, by China’s government. TikTok, on the other hand, is funded by a mix of Chinese investors and foreign investors.
TikTok is a household name with more than 843 million users globally. It is an app that has made regular people 6-figure-earning influencers. If TikTok was banned tomorrow, I’m sure at least some people would miss it. Huawei was on the rise before the US government ban, but it had not yet reached TikTok levels of brand recognition. Most people couldn’t even say the name ‘Huawei’ correctly.
The US Congressional Committee that TikTok is about to face may not care about these differences. They want to know if TikTok is a threat to national security – an idea that will be a challenge for TikTok to debunk.
Let’s see if what TikTok offers Congress on Thursday is enough.
For now, as I watch all of this, I remember a simpler time. Back when TikTok was just Douyin – a wildly successful Chinese app overrun by weird mukbang videos.
Extra reading:
Check out this visual: Where TikTok is Banned and Why