‘ByteDance’s CEO needs to be tough and get prepared to withdraw from the US market’
Since United States’ President Donald Trump threatened to ban TikTok in the U.S. as long as the social media app remained in the hands of a Chinese company, the app’s parent company ByteDance has been scrambling to sell part of its operation to American investors.
An agreement with U.S. companies Walmart and Oracle to establish a new joint-company called TikTok Global finally received Donald Trump’s blessing on September 19 — only to jar against new obstacles days afterwards.
Yet two different interpretations of the deal had emerged this week: ByteDance said that it would retain a majority of 80 percent of TikTok Global under the agreement while Oracle said that as soon as the new company, TikTok Global, was created, ByteDance would lose its ownership stake in the service. In response, Donald Trump stressed on television that the Chinese firm would “have nothing to do with it, and if they do, we just won’t make the deal.”
The confusion seems to stem from the fact that 40 percent of ByteDance is already owned by American investors, which would render the total American shareholding of TikTok Global above 50 percent.
Meanwhile, the editor-in-chief of Chinese state-affiliated outlet Global Times, Hu Xijin, tweeted on Monday that the deal with Oracle and Walmart could still face opposition from Beijing. He said:
Based on what I know, Beijing won’t approve current agreement between ByteDance, TikTok’s parent company, and Oracle, Walmart, because the agreement would endanger China’s national security, interests and dignity.
— Hu Xijin 胡锡进 (@HuXijin_GT) September 21, 2020
While Beijing’s position on the Oracle/Walmart agreement is not yet official, in the recent past other government-affiliated news outlets have correctly anticipated the Chinese Communist Party’s decisions around the sale.
Following an editorial by China Daily slamming a potential agreement between ByteDance and Microsoft as “theft,” Beijing implemented a new set of rules restricting Chinese exports of AI technology.
The new rules forced ByteDance to limit tech transfers in the agreement with Oracle and Walmart — although the U.S. companies will still be able to see TikTok’s source code, ByteDance said.
On Weibo, some Chinese netizens have expressed support for the Oracle/Walmart deal. A popular economics blogger on the platform “Tianjin hero in stock market” （天津股俠）says that the agreement could establish a model for future disputes:
TikTok’s agreement is a good deal. First of all, it keeps ByteDance’s ownership of Tik Tok; Second, it has not sold its core technology and algorithm; third, it saves its U.S business; fourth, it only gives 20 percent holding to Oracle and Walmart as strategic partners; fifth, the new round of capital investment is confined only to Oracle and Walmart and does not harm the existing investors. This is the best solution in dealing with the suppression of Chinese corporations in the U.S.
But for Chinese nationalists, the deal will harm China’s interests. A Global Times’ editorial on September 21 said that the deal would be a de-facto transfer of core technology:
Oracle would be able to review TikTok Global’s source code and content data. If the source code of Tik Tok and Douyan [the Chinese version of TikTok] is shared, it means that the Americans would be able to access Douyan’s core technology.
Once TikTok Global takes over TikTok’s business over the world, it would block Chinese IPs from visiting the application. This means that Americans can take control of its global business in one single deal and impose discriminatory measures against visits from Chinese netizens.
The editorial also described the deal as an “unequal treaty” – a political term to describe treaties signed between the Qing Dynasty and colonial western powers during the 19th and early 20th Century – and disavowed it as a model for future conflicts:
The agreement reflects Washington’s bully and thief-like logic. It would harm China’s national security, interest and dignity. ByteDance is an ordinary Chinese corporation and the U.S. has resorted to state power to repress its development and impose an agreement. However, China is also a strong country and it would not submit to U.S. threats and its “unequal treaty” imposed on a Chinese corporate…
The U.S. is a big market. If the restructuring of TikTok becomes a model to enable U.S. control, it means that other Chinese corporations will face the same fate once they become competitive in the U.S. market — they might be taken over by the U.S. and their development in the global market would be serving U.S. national interests
As anticipated, Global Times’ rhetoric has attracted a lot of support on Weibo. Here are two popular responses to the editorial in question:
Judging from Trump’s performance, he would not dare to ban TikTok. Such action would affect the number of votes. ByteDance’s CEO needs to be tough and get prepared to withdraw from the U.S. market. This is an ultimate survival strategy.
Stop bluffing. China should not accept such calculative deal. They take us as fools. Huawei has had the gut to cut ties with such a thug-like country. No deal should be made if it is not fair. Self-strengthening is the way to deal with oppression, there will be another way out.