Mar 29, 2024 11:24 AM
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Cover Story | TikTok: The Countdown (AI Translation)
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This article was translated from Chinese using AI. The translation may contain inaccuracies. Click the button on the right to hide or reveal the original version.
当地时间2024年3月12日，美国华盛顿特区，一些众议院民主党人和 TikTok的创作者举行新闻发布会，表达他们对众议院共和党立法的担忧。图：Anna Moneymaker/视觉中国
文｜财新周刊 杜知航 关聪 屈运栩
By Caixin Weekly's Du Zhihang, Guan Cong, Qu Yunxu
文｜财新周刊 杜知航 关聪 屈运栩
By Caixin Weekly's Du Zhihang, Guan Cong, Qu Yunxu
Cover Story | TikTok's Challenging Journey Overseas (Available to Basic Members)
一切都被打得措手不及。来自美国的这一轮政治风暴，其猛烈和迅速程度都大大超出TikTok及其母公司字节跳动的心理准备。
Caught entirely off guard, the political storm from the United States hit TikTok and its parent company ByteDance with a ferocity and speed that far exceeded their expectations.
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Caixin is acclaimed for its high-quality, investigative journalism. This section offers you a glimpse into Caixin’s flagship Chinese-language magazine, Caixin Weekly, via AI translation. The English translation may contain inaccuracies.
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Cover Story | TikTok: The Countdown (AI Translation)
Three Things to Know
- TikTok, owned by ByteDance, faces a significant political challenge in the United States with a bipartisan bill aimed at banning it due to its Chinese company background. The "Protecting Americans from Foreign Adversary Controlled Applications Act" passed the House of Representatives rapidly and is now under Senate consideration. If enacted, it could lead to TikTok's removal from U.S. app stores unless divested within 180 days.
- Despite TikTok's commercial success in the U.S., including a Gross Merchandise Volume (GMV) surge to nearly $1.2 billion in less than four months after launching TikTok Shop, political pressures have escalated. The platform has over 1 billion monthly active users globally, with significant user bases in the U.S., Europe, and Southeast Asia. TikTok's contributions to the U.S. economy include generating nearly $15 billion in revenue for small and medium-sized businesses (SMBs) and creating thousands of jobs.
- The potential ban raises concerns about broader implications for international operations and investor losses, as U.S. venture capital funds hold a significant share in ByteDance. Alternatives and competitors are already positioning themselves to capture TikTok's market share should it be banned or forced to divest its U.S. operations.
AI generated, for reference only
A Deeper Dive
TikTok, a leading short video social application owned by ByteDance, has encountered significant challenges in the United States due to political and regulatory pressures. With over 1 billion monthly active users globally, including substantial user bases in the U.S., Europe, and Southeast Asia, TikTok has become a major player in the digital space. However, its Chinese company background has led to scrutiny from U.S. lawmakers who have proposed legislation aimed at banning TikTok in the country [para. 1][para. 2].
The "Protecting Americans from Foreign Adversary Controlled Applications Act" is a bill that seeks to prohibit applications controlled by foreign adversaries within the U.S., targeting TikTok specifically due to concerns over national security and data privacy. This bill passed the House of Representatives with an overwhelming majority and is awaiting discussion in the Senate. If signed into law by President Joe Biden, who has expressed his willingness to do so, it could lead to TikTok's removal from U.S. app stores [para. 3][para. 4].
TikTok's commercial activities in the U.S., particularly through its e-commerce platform TikTok Shop, have seen rapid growth with Gross Merchandise Volume (GMV) reaching nearly $1.2 billion shortly after launch. The platform has been instrumental for small and medium-sized businesses (SMBs) in generating revenue and creating jobs. However, the potential ban poses a significant threat not only to TikTok's operations but also to its economic contributions in the U.S., including job creation and tax contributions [para. 5][para. 6].
In response to these challenges, TikTok has engaged in lobbying efforts and public campaigns to sway opinion against the ban proposal. CEO Zhou Shouzi visited Washington D.C. for discussions amid these pressures. Despite these efforts, if banned, TikTok faces not only operational shutdowns but also substantial financial penalties based on its user base size [para. 7][para. 8].
Internationally, ByteDance's valuation has skyrocketed over recent years due to TikTok's success. Institutional shareholders from the U.S hold significant stakes in ByteDance, indicating that a ban would not only affect ByteDance but also American investors significantly [para. 9]. Despite previous close calls with bans under former President Donald Trump’s administration and ongoing state-level restrictions on government devices, TikTok remains optimistic about navigating through these challenges based on past experiences of overcoming regulatory hurdles [para. 10][para. 11].
The broader implications of a potential ban include influencing international perceptions of market fairness and freedom of speech issues raised by other countries like China. Additionally, there are concerns about a domino effect leading other countries like Canada and the UK to consider similar actions against TikTok [para. 12][para. 13].
ByteDance’s journey reflects both its rapid rise as a global tech powerhouse through platforms like TikTok and Douyin (its counterpart in China), as well as the complex geopolitical landscape affecting tech companies operating internationally amidst rising tensions between China and Western nations [para. 14]. The situation underscores ongoing debates around data privacy, national security concerns associated with foreign-owned apps operating within national borders, and how digital platforms can navigate increasingly fragmented global internet governance structures [para. 15].
AI generated, for reference only
Who’s Who
- ByteDance
字节跳动 - Summay： ByteDance, the parent company of TikTok, is a Chinese internet technology company founded in 2012 by Zhang Yiming. It is headquartered in Beijing and has expanded globally with a diverse range of products and services. ByteDance's flagship product, TikTok, is a short video sharing platform with over 1 billion monthly active users worldwide. The company has experienced rapid growth, with its valuation reaching $300 billion in 2022, and its revenue doubling every year from 2016 to 2018. ByteDance has also expanded into e-commerce, with TikTok Shop generating significant revenue in the US and Southeast Asia. However, the company faces regulatory challenges in the US, with a proposed ban on TikTok citing national security concerns. Despite localization efforts, the future of TikTok in the US remains uncertain.
- TikTok
抖音 - Summay： Based on the article, here are the key points about TikTok:- TikTok is a short video social media platform owned by Chinese company ByteDance, with over 1 billion monthly active users globally.- It has faced repeated threats of being banned in the US due to national security concerns, with the latest bill proposing to ban it passing the House of Representatives.- TikTok has made efforts to localize its operations and data storage in the US, but the proposed ban bill still aims to remove it from the US market.- The platform has a significant user base in the US, Europe, and Southeast Asia, and has been expanding e-commerce capabilities through TikTok Shop.- If banned in the US, it would impact ByteDance's valuation and revenue, and could lead to copycat actions by other countries.- Competitors like YouTube, Instagram, and Meta are eagerly awaiting the opportunity to capture TikTok's user and ad revenue if it is banned.- Despite the challenges, TikTok is lobbying hard in the Senate to prevent the ban bill from becoming law, while also preparing contingency plans.
- Meta
Meta - Summay： Based on the article, here are some key points about Meta:- Meta, the parent company of Facebook, Instagram, WhatsApp, and Messenger, is one of TikTok's major competitors in terms of social media traffic.- Instagram, with a user demographic similar to TikTok, integrated a vertical short video feature called Reels in August 2020. Reels content is reshared an average of 3.5 billion times daily.- YouTube, another Meta-owned platform, has also launched a short video feature called Shorts, which has over 2 billion monthly logged-in users and 70 billion daily views.- Despite integrating short video features into its platforms, Meta has not been able to reverse TikTok's momentum. In 2022, YouTube and Instagram ranked higher than TikTok in U.S. and global downloads, but TikTok overtook them comprehensively a year later.- Meta's social apps have over 3 billion combined monthly active users, but their average daily usage time per user is less than TikTok's.- Meta's user base is aging, while TikTok's audience has evolved to include young adults with spending power. TikTok has gradually attracted advertisers from e-commerce and gaming sectors.- In 2023, U.S. adult users spent an average of 55.8 minutes daily on TikTok, surpassing Instagram's 30.6 minutes and Facebook's 30.2 minutes.- Meta generated $131.9 billion in advertising revenue in 2022, significantly surpassing TikTok's $11.64 billion. However, TikTok's advertising revenue is expected to exceed $14 billion in 2023.In summary, Meta is one of TikTok's main competitors in the social media space, and while it has integrated short video features into its platforms, it has not been able to stem TikTok's growth. Meta's user base is aging, while TikTok's audience includes more young adults with spending power.
- Google
谷歌 - Summay： According to the article, Google's parent company Alphabet has launched a short video feature called Shorts on YouTube, which has gained significant traction. The article highlights that Shorts has over 2 billion logged-in users per month, with daily views reaching 70 billion. This feature is crucial for YouTube in increasing viewing duration.
- Amazon
亚马逊 - Summay： Based on the article, here are some key points about Amazon:- Amazon is the dominant e-commerce platform in the U.S., attracting a large number of cross-border sellers.- TikTok Shop's strict policies for local stores, requiring U.S. residency, are favorable for Amazon's cross-border sellers to open new sales channels on TikTok Shop.- Amazon's existing resources and price advantage have contributed to TikTok Shop's quick start in the U.S. market.- Amazon's dominance in the U.S. e-commerce market presents a significant challenge for TikTok Shop's expansion.- If TikTok is banned in the U.S., Amazon and other e-commerce platforms like SHEIN and Temu could benefit from the resulting market opportunities.In summary, Amazon's strong position in the U.S. e-commerce market presents both challenges and opportunities for TikTok Shop's expansion. If TikTok is banned, Amazon and other platforms could gain market share.
- Pinduoduo
拼多多 - Summay： Based on the article, here are some key points about Pinduoduo:- Pinduoduo operates the e-commerce platform Temu, which has achieved significant success in the U.S. market, surpassing TikTok as the most downloaded app in 2023.- Temu's Gross Merchandise Volume (GMV) in the U.S. reached $10 billion in 2023, with a target of $18-20 billion for 2024.- Pinduoduo focuses on offering high cost-performance ratio products, and leverages high advertising and marketing expenses to increase customer acquisition costs for competitors like SHEIN.- Unlike TikTok, which relies on its own traffic to drive e-commerce transactions, Pinduoduo's Temu relies more on external traffic sources like advertising.- Pinduoduo's monetization path is longer than TikTok's, as it needs to attract traffic from external sources like advertising, while TikTok can leverage its internal traffic.- Despite its smaller scale compared to Temu, if TikTok commits to e-commerce, it could potentially pose competition to platforms like Pinduoduo.In summary, Pinduoduo's e-commerce platform Temu has achieved significant success in the U.S. market, and the company is expected to continue growing rapidly. However, it faces competition from TikTok's e-commerce business, which could potentially pose a threat if TikTok decides to fully commit to e-commerce.
- Temu
Temu - Summay： Based on the article, here are some key points about Temu:- Temu is an e-commerce platform that has gained significant traction in the U.S. market, surpassing TikTok as the most downloaded app in 2023.- In 2023, Temu's Gross Merchandise Volume (GMV) in the U.S. reached $10 billion, with a target of $18-20 billion for 2024.- Temu focuses on offering a high cost-performance ratio, similar to its parent company Pinduoduo in China.- It leverages high advertising and marketing expenses to increase customer acquisition costs for competitors like SHEIN.- Unlike TikTok, Temu relies on external traffic rather than leveraging its own platform traffic for e-commerce transactions.- Despite its smaller scale compared to TikTok, if committed to e-commerce, Temu could potentially pose competition to other platforms.- Temu's strategy involves starting with best-selling products and then expanding into other categories, leveraging Amazon's existing resources and creating a price advantage.- In summary, Temu has achieved significant growth in the U.S. market and has the potential to become a formidable competitor in e-commerce if it continues to expand its product offerings and scale.
- SHEIN
SHEIN - Summay： Based on the article, SHEIN is a Chinese fashion e-commerce platform that has successfully expanded into the U.S. market. In 2023, SHEIN's Gross Merchandise Volume (GMV) in the U.S. was comparable to that of Pinduoduo's Temu, reaching approximately $10 billion. The intense competition between SHEIN and Temu in the U.S. market has been highlighted. Despite TikTok Shop's significant growth in the U.S., it is still considered relatively small in scale compared to SHEIN and Temu. Additionally, the article mentions that the U.S. government has clarified that the proposed ban on foreign adversary-controlled apps does not include SHEIN and Temu, indicating that the ban is specifically targeting TikTok.
AI generated, for reference only
What Happened When
- October 2017：
- ByteDance acquired the American music video platform Musical.ly and merged it with TikTok, the international version of Douyin, in August 2018 before launching in the United States.
- October 2019：
- Then Senate Minority Leader Chuck Schumer, a Democrat from New York, and Senator Tom Cotton, a Republican from Arkansas, wrote to U.S. intelligence officials expressing national security concerns over ByteDance's acquisition of Musical.ly.
- October 2019：
- Senator Marco Rubio, a Republican known for his hawkish stance on China, wrote to then Treasury Secretary Steven Mnuchin that same month. Rubio questioned TikTok's content censorship mechanisms during Hong Kong's anti-extradition bill protests and requested the Committee on Foreign Investment in the United States (CFIUS) to investigate ByteDance's acquisition of Musical.ly.
- November 2019：
- Missouri Republican Senator Josh Hawley introduced the "National Security and Personal Data Protection Act," one of the earliest pieces of legislation proposed by the U.S. Congress targeting TikTok.
- June 2020：
- On the other side of the globe in India—then TikTok's largest overseas market—59 Chinese apps were banned by the government citing "privacy and security" concerns, with all apps under ByteDance, including TikTok, being no exception.
- July 6, 2020：
- Then-U.S. Secretary of State Mike Pompeo stated that the U.S. government was considering banning social media apps operated by Chinese companies, including TikTok.
- July 13, 2020：
- Less than a week later, White House advisor Peter Navarro declared that the Trump administration would take strong actions against TikTok and WeChat, not ruling out banning them in the U.S.
- August 2020：
- Donald Trump officially issued two executive orders: one demanding that TikTok be removed from app stores in the United States and prohibiting American internet service providers from offering services to TikTok; the other requiring ByteDance to divest its TikTok operations.
- September 27, 2020：
- The night before President Trump's first executive order was set to take effect, a federal court in Washington D.C. issued a preliminary injunction halting the executive order that would have banned TikTok.
- June 2021：
- After assuming the presidency, Joe Biden withdrew the executive order to ban TikTok.
- August 2020：
- The state of Nebraska announced a ban on TikTok on state government devices, becoming the first in the nation to do so.
- End of 2022：
- A significant number of state governments had joined the ranks of banning TikTok.
- End of 2023：
- Out of the 50 states in the U.S., 34 have banned TikTok on government devices and networks.
- May 2023：
- Montana took a further step by seeking to ban TikTok statewide, prompting the company to retaliate with a lawsuit.
- November 30th, 2023：
- A Montana court issued a preliminary injunction, halting the statewide TikTok ban proposal.
- December 2022：
- The U.S. Congress included the "No TikTok on Government Devices Act" in a budget bill, mandating the removal of TikTok from information technology systems within U.S. government agencies.
- February 27, 2023：
- The White House ordered federal agencies to uninstall TikTok.
- June 2022：
- TikTok wrote to the U.S. Senate, introducing the data security project "Project Texas," promising to store 100% of U.S. user data by default on Oracle Cloud and establishing the "TikTok U.S. Data Security" (USDS) company to specifically manage U.S. user data.
- Early 2023：
- TikTok and CFIUS renegotiated to make USDS independent from TikTok, managed by a separate board of directors nominated by TikTok and reviewed by CFIUS.
- February 12, 2024：
- Joe Biden's campaign team made its first appearance on TikTok.
- March 5, 2023：
- The heads of the U.S. House of Representatives' "Select Committee on the Chinese Communist Party," Mike Gallagher and Raja Krishnamoorthi, jointly introduced a bill to ban TikTok, demanding that TikTok be removed or divested.
- March 7, 2023：
- The proposal moved to the committee voting stage, where bipartisan members of the U.S. House Energy and Commerce Committee unanimously passed the bill with a 50-0 vote, surprising observers.
- March 10, 2023：
- The U.S. House of Representatives voted on the bill, passing it with a high majority.
- March 14, 2023：
- Chinese Foreign Ministry spokesperson Wang Wenbin stated during a regular press conference: "If the so-called 'national security' reasons can be used to arbitrarily suppress other countries' outstanding enterprises, then there is no fairness or justice. Coveting what is good in others and scheming to make it one's own is entirely the logic of a bandit. The way the U.S. handles the TikTok incident will make the world see more clearly whether the so-called rules and order of the United States are beneficial to the world, or merely serve the interests of the United States itself."
- March 14, 2023：
- He Yadong, a spokesperson for China's Ministry of Commerce, also lodged a protest with the United States, demanding that the U.S. genuinely respect the principles of a market economy and fair competition. He called for an end to the unreasonable suppression of foreign companies and urged the U.S. to provide an open, fair, just, and non-discriminatory environment for businesses from all countries to invest and operate in America.
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