TikTok, a social-media app for sharing videos, which has millions of teen and even pre-teen followers, would seem an unlikely battleground for a geopolitical struggle between the world’s two largest economies. Owned by the Chinese web giant ByteDance, TikTok has more than 800 million users and has started to rival the American giants of social media. With its engaging mix of jokes, videos and music, TikTok is a lot of fun, and it has the potential to be a huge business as well.
A bridge between East and West
President Donald Trump, though, is not amused. He has threatened to ban the app in America and is forcing through a sale of at least some of its operations to Microsoft. Why? The US argues that the massive amount of data TikTok collects is a potential threat to national security. Possibly, though it’s hard to see how lots of 13-year-olds lip-syncing to songs can undermine the West. More likely, the US is worried about Chinese apps undermining its dominance of the internet – and wants to break them up while it still can.
It remains to be seen whether the Microsoft deal is completed. While the battle rages, TikTok is looking to set up a headquarters in London. That makes sense. London is already home to many of the leading Chinese tech giants. Tencent is expanding in London. So is Alibaba and JD.com, the Chinese equivalent of Amazon, has discussed basing its European arm in the capital.
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These companies are not yet household names in the way that Apple and Google are, but they are huge businesses all the same. With Europe largely out of contention – in part because it has become obsessed with regulating rather than building the digital economy – the battle for the online market is now between America and China. It would be easy for the UK to find itself forced to take sides. But that is not necessarily the right thing to do.
True, where national security is at stake, as was the case with the telecoms operator Huawei, then Britain should side with the United States. It is our oldest and strongest ally and the one country we can rely on in a crisis. Operating mobile telecoms systems clearly has security implications. The owner of the network, or its government, has access to vast quantities of data and in a conflict could switch it on and off.
It is not hard to understand why the UK pulled back from letting Huawei build the next generation of mobile networks. But the battles with companies such as TikTok are as much commercial as strategic. It doesn’t make much difference to the UK whether teenagers use Chinese or US-owned apps to chat to one another.
A delicate balancing act
The digital economy of the 21st century is not going to be dominated by the US alone. Like the physical economy, it will be shared between the US and China. London is a natural bridge between the two. And that could be an incredibly strong position for the British capital. London is already the European hub for the American tech giants. Google, Facebook, Apple, Amazon and Netflix already all have a huge and growing presence in the city. Despite Brexit and all the warnings that companies would flee the UK, it is their main base.
If the Chinese giants are here as well, it will becoming the meeting point between the two – and a magnet for entrepreneurs and finance. It will be the one place where ideas can be shared, technologies swapped and deals done. And for the thousands of small companies that supply the giants it will be the natural base.
San Francisco and Shanghai will be the two main tech centres for the next few decades. But as a bridge between the two, London could be third. It is going to be a delicate balancing act. We don’t want to alienate the US, or be seen to be siding with its main rival. Yet at the same time there is no reason why we should help America dominate the web. We should be neutral, act as a broker between the two sides and allow London to reap the benefits. That will strengthen the British economy at a time when it needs all the help it can get.
Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
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