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

The charts that matter: more pain for goldbugs
Economy

The charts that matter: more pain for goldbugs

Gold investors saw more disappointment this week as the yellow metal took a tumble. Here’s what’s happened to the charts that matter most to the globa…
18 Sep 2021
The new social-care levy: an unfair tax that protects the “assetocracy”
National Insurance

The new social-care levy: an unfair tax that protects the “assetocracy”

The government’s regressive social-care levy will make Britain’s tax system even more complex. Root-and-branch reform is long overdue.
18 Sep 2021
Kieran Heinemann: the history of shareholder capitalism
Investment strategy

Kieran Heinemann: the history of shareholder capitalism

Merryn talks to Kieran Heinemann, author of Playing the Market: Retail Investment and Speculation in Twentieth-Century Britain, about the history of t…
17 Sep 2021
Cryptocurrency roundup: litecoin blunder, cardano update and bitcoin mining in Laos
Bitcoin & crypto

Cryptocurrency roundup: litecoin blunder, cardano update and bitcoin mining in Laos

Saloni Sardana looks at the week’s biggest stories in the world of cryptocurrencies.
17 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021