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The Nationalisation of TikTok
TikTok USA is used by over 100 million Americans for entertainment, self-expression, and connection. Donald Trump, President of America, has given a 45-day ultimatum to Bytedance, TikTok’s Beijing headquartered parent company, to completely sell off its American business or stop operations by September 15th, 2020. Microsoft may buy.
America, the world’s most libertarian country has unleashed a precedent-setting event by nationalising TikTok.
This will have severe geopolitical ramifications.
This is the new normal for the world’s internet economy.
The calculus of investments in technology will change.
The genie is out of the bottle.
I share four tech warfare outcomes, but lets first understand China.
China’s Tech Prowess, second to America
Nine of the top twenty world internet leaders are Chinese companies, across both software and hardware.
Widespread everyday consumer applications of Artificial Intelligence, Video streaming phenomenon, Bike Sharing, SuperApps, Fintech, Group Social Commerce 2.0., mobile payments are some consumer internet verticals that were innovated, not in America, but in China.
Global tech companies routinely copy from China, it’s the new normal. Do read this Gartner case study.
Chinese have worked 9-9-6 and their technology has arrived.
Outcome 1. China’s BRI & Technology WarFare Levers
65 countries, 35% of Global GDP, 4.8 Billion Internet Addicts
China’s Belt and Road Initiative (BRI), earlier known as One Belt One Road (Chinese: 一带一路), is its global infrastructure development strategy to invest in nearly 65 allied countries with a total population of 4.8 Billion people, constituting 35% of Global GDP.
China’s allied countries today make up a large portion of American tech product users, especially the “in-exchange of user data, free products” from the house of global advertising duopolies, Google and Facebook.
China will possibly precondition “tech-warfare” in their investments across Belt and Road Initiative (BRI) countries.
Imagine if China were to mandate blocking of a certain country of origin apps before making critical multi-billion investments in a country?
Outcome 2. Collateral Damage to American Tech Co’s
75% of Facebook users are outside of the USA and Canda. 75%
A Casey Newton Report posits, “Facebook already faces fights around the world from governments on both the left and the right related to issues that fit under the broad umbrella of national security: election interference, influence campaigns, hate speech, and even just plain-old democratic speech. Zuckerberg knows that the leap from banning TikTok on national security grounds to banning Facebook on national security grounds is more of a short hop,”
The risk to American technology companies is loud, read, and clear.
Imagine a China ally country asking Facebook to sell or shut its local operations within 45 days. This is plausible after America’s TikTok nationalization.
Outcome 3: Rising Tech Nationalism
The more populous a country, the more it will flex its ‘tech-nationalism’ muscles. Warnings to take over and/or ban technology companies will become common in the future. See this world internet penetration map 👇.
The genie is out of the bottle.
The ban or localize risk will be carefully evaluated by investors.
The calculus of technology investment changes forever.
Outcome 4: Chinese (ending) love for American Brands?
Chinese love Apple, Tesla, Nike, Estee Lauder, Oreo, Disney, Starbucks, and myriads of American brands, which duly harvest this love by cornering Chinese wallet share.
Chinese are nationalistic people and the ongoing trade war between the US and China was already impacting their purchase decisions of American brands/
Consulting firm AlixPartners survey shows that 78% of respondents think their consumption of American brands will be impacted, and 70% said the trade war will impact their overall purchasing. More than half of respondents (51%) cited national loyalty as the main reason for not buying American brands, over quality (27%), price (16%), and speed of delivery or customs (6%).
The TikTok episode will irreversibly damage the Chinese consumer sentiment for American brands.
America’s nationalization of TikTok has let the proverbial, genie out of the bottle.
There is no way, it can be put back.