Yesterday (23 March), TikTok’s CEO Shou Zi Chew testified before a US congress committee, in the latest development of an epic struggle for TikTok’s future in the US market, its biggest and potentially most lucrative.
Just a few days earlier, TikTok announced that it had reached 150 million monthly active users in the US. The US government has recently threatened a ban, while one member of the congress committee said: “Thank you, Mr Chew, for bringing Republicans and Democrats together.”
We have talked extensively about TikTok and other Chinese companies in the book “Seeing the unseen: behind Chinese tech giants’ global venturing”, in which we also mentioned that an inflection point has come for Chinese companies – facing challenges both domestically and in global geopolitics.
We also have some thoughts on the this hearing, the development of the TikTok struggle in the US, and the wider implications:
1. The hearing is closely scrutinised – it is on the front page of major media outlets, YouTube broadcasts were garnering views, while some funny moments were made into TikTok Clips. (such as: “Mr Chew.. So if I have the TikTok app on my phone, and my phone is on my home WiFi network. Does TikTok access that network”). Doesn’t that remind you of Mark Zuckerberg’s congress testimony in 2018?
2. However, TikTok is facing a much more complex challenge. Facebook is, after all, an American company, while TikTok, being an affiliate to a Chinese firm, is caught in the bifurcation and US-China geopolitical tussle.
3. ByteDance and its founders, being commercially and success driven, would naturally want to avoid dealing with politics. Unfortunately at their size and under the current political environment, they simply can’t. What they can do is lobby, navigate, comply – a very painful process which might or might not yield results despite all the effort.
4. As for the congress hearing itself, the company needs to get all the facts right – but that’s only the bare minimum. Trust is non-existent, and predetermined opinions trump all facts – especially as election year in the US draws near.
5. As in the cold war, it is difficult for anyone in the US political establishment to sound any support or sympathy towards TikTok. This is another inconvenient fact that TikTok has to deal with.
6. Shou Zi Chew highlighted his Singapore identity and links to the US. Does anyone still remember ex-Disney executive, American Kevn Meyer, who joined as TikTok CEO but very quickly left? Same for politicians, it is difficult for TikTok’s American executives too. One can only imagine the pressure that Meyer had been going through, in addition to the challenges of dealing with the people and organisational challenges within ByteDance itself.
7. Again about Shou Zi Chew’s Singaproean identity. In the current geopolitical environment, Singapore, and most Southeast Asian countries, are trying hard to stay neutral. This might become harder and harder but they will have to stand firm on this.
8. ByteDance, through TikTok, is undisputedly the most successful Chinese tech major in the US market. The challenges TikTok are facing are closely watched by other Chinese tech majors and their investors. They obviously hope that TikTok will hold ground – as a ban would set a scary precedent.
9. Among these companies are Pinduoduo, whose Temu cross border ecommerce platform is making waves in the US and other Western markets. Recently Google Play took off Pinduoduo app citing policy violations. While nobody uses Pinduoduo outside China and Google Play is not available in China, this episode nonetheless sends a signal that Temu’s fate might not be entirely in their own hands.
10. The struggle for TikTok also hastens Chinese companies’ move to either adapt to the political operating environment, or curtail their global ambitions. The first option will not be easier but we are sure many will at least attempt. Again, Singapore’s role will become more and more interesting here.
For those who seek a deeper understanding about the macro trends and undercurrents behind the scene, you can also read late Singapore founding father Lee Kuan Yew’s book “One man’s view of the world”. The wisdom stands out amid all the noise.
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].