Why London should embrace TikTok

The China-based social-media app needs a new HQ. Britain’s capital would be an ideal home, says Matthew Lynn.

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.

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.

Recommended

Beyond the Brexit talk, the British economy isn’t doing too badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Chipmaker Arm gets a helping hand from Nvidia
Tech stocks

Chipmaker Arm gets a helping hand from Nvidia

Arm, the British chip designer, is to be sold to a US peer in a record deal for the industry. The consequences will be far-reaching.
21 Sep 2020
Spare us these desperate measures
UK Economy

Spare us these desperate measures

Struggling firms are trying to reinvent themselves. Some are going to have to get much more radical
21 Sep 2020
Universal Credit comes good
UK Economy

Universal Credit comes good

The government’s benefit reforms have been plagued with disasters since their introduction in 2013. The Covid-19 crisis, however, has revealed a posit…
21 Sep 2020

Most Popular

Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Oil producers are back at their Covid-19 lows – is it time to buy?
Oil

Oil producers are back at their Covid-19 lows – is it time to buy?

With demand for oil hammered by Covid-19 and talk of “peak oil demand”, there are lots of good reasons to be bearish on oil producers. So, asks John S…
22 Sep 2020
IAG's share price is ready for take-off - here's how to play it
Trading

IAG's share price is ready for take-off - here's how to play it

The owner of British Airways has had a turbulent year, but is now worth a punt. Matthew Partridge explains the best way to play it.
8 Sep 2020