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
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.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
Rightmove: Asking prices set to rise 2% in 2026 after post-Budget market reboundBuyers and sellers who held off in anticipation of the Budget will come back to the market and contribute to asking prices increasing next year, according to Rightmove
-
Coreweave is on borrowed timeAI infrastructure firm Coreweave is heading for trouble and is absurdly pricey, says Matthew Partridge
-
Coreweave is on borrowed time
AI infrastructure firm Coreweave is heading for trouble and is absurdly pricey, says Matthew Partridge
-
Renewable energy funds are stuck between a ROC and a hard placeRenewable energy funds were hit hard by the government’s subsidy changes, but they have only themselves to blame for their failure to build trust with investors
-
Profit from document shredding with RestoreRestore operates in a niche, but essential market. The business has exciting potential over the coming years, says Rupert Hargreaves
-
The war dividend – how to invest in defence stocks as the world arms upWestern governments are back on a war footing. Investors should be prepared, too, says Jamie Ward
-
Literacy Capital: A trust where great returns fund a good causeThere’s plenty to like about specialist private-equity trust Literacy Capital, says Max King
-
An AI bust could hit private credit – could it cause a financial crisis?Opinion Private credit is playing a key role in funding data centres. It may be the first to take the hit if the AI boom ends, says Cris Sholto Heaton
-
8 of the best ski chalets for sale nowThe best ski chalets on the market – from a traditional Alpine-style chalet in Switzerland to an award-winning Modernist building in Japan’s exclusive ski areas
-
Did COP30 achieve anything to tackle climate change?The COP30 summit was a failure. But the world is going green regardless, says Simon Wilson
