Finding fact and fiction in TikTok fears and China’s tech crackdown

• The divide between China and the West is deepening, with tech as the backdrop and the subject of regulation

Are you on TikTok? The running (meme-ified) joke among my peers is that they’re only on Instagram these days to watch weeks-old TikTok videos shared by their younger friends and content recycler accounts.

For many it is hard to see the appeal of this app, which is too often derided as the lip-syncing, viral-dancing waste of time it can be.

There is, of course, another side to it. There are (potentially) 8-billion sides to it — because of that superpowered algorithm that “reads” you and sorts you with brutal efficiency. Swipe through it for a minute or two and suddenly you will have no illusions about your preferences, priorities and peccadilloes.

The other side to TikTok can be wonderful and empowering. Other than the occasional “thirst trap” (google it if you really don’t know) and Stranger Things fan art, my feed is full of financial information (people sharing real data and their strategies for managing money), chefs making quick work of dinner, and — increasingly — news.

IMPRESSIVE

That is how I learnt that Olivia Newton-John died on Monday, with the video bubbling up on my “For You” page just after the news broke, when I was deep in a doomscroll with no plans to emerge. I’m not saying the death of this musical legend was mission-critical news that couldn’t wait another minute, but that is impressive global information dissemination by any standards.

The other most common reason I hear from my peers (millennials and GenXers) is fear, fear of what the app knows about you and what it is “sending back to China”.

That same fear is what drove the closing of the UK parliament’s TikTok account last

week. The BBC reports that multiple MPs “raised concerns about the risk of data being passed to Chinese governments”, calling on parliament to close the account until ByteDance (which owns TikTok) could give “credible assurances” that its privacy policies protect users and that it doesn’t share private and sensitive information with the state.

ByteDance has repeatedly denied accusations over the years that it was channelling information to China or was controlled by the Chinese government, but as political tensions between Western governments (such as the UK and US) and China continue to tick up, TikTok becomes an unlikely flashpoint.

Most famously, Donald Trump’s administration sought to have the app banned in the US, and Microsoft even offered a reported $20bn for the app’s US operations in 2020 — a bid that was rejected. Off the back of this pressure, TikTok confirmed in June 2022 that 100% of its US user traffic is now being routed via Oracle Cloud Infrastructure, Oracle being a US firm.

And look, to a degree there is reason to worry about this stuff. China has repeatedly demonstrated its willingness to get hands-on lately with activists and journalists.

It is not just downstream users feeling the hurt. China’s “tech crackdown” kicked off about 24 to 18 months ago, with some of the market’s iconic companies — e-commerce giant Alibaba, Meituan (food delivery platform), Didi (ride-hailing app), and conglomerate Tencent — feeling the searing heat of the political scrutiny, investigations and even hefty fines.

The reach of regulators in China was felt by companies across the tech spectrum, from online education to gaming, to crypto, firms small to large. Some analysts have called the crackdown a bid to reclaim power in a sphere that seems to have threatened the national narrative, targeting a sector where the regulators had seen their power diminished.

If you’re looking for a handy example of it in action look no further than Alibaba founder Jack Ma, whose independence, freedoms and business plans were directly curtailed after speaking critically about the Chinese financial system.

PARALYSIS

In the lead-up, sentiment seemed to sway from Ma as a success to emulate to an “evil capitalist” — not a good look in ostensibly communist China, especially as inequality deepens and the resulting anger simmers, factors pushed along by the pandemic and hard lockdowns.

In June, Bloomberg wrote that despite the slight increase in optimism (about the fate of China’s tech players) in markets, insiders still “describe an ongoing sense of paranoia and paralysis”.

This, paired with the feeling that “sky-high growth rates” are a thing of the past, means these unnamed sources are passing on opportunities and acting as if another crackdown is imminent. The depressed mood shows itself in venture capital and startup spheres too, and the reluctance to make a move without clarity on what to expect.

Now a new sliver of the sector finds itself in the gaze of the great red eye. As I write this Reuters is reporting that China’s corruption watchdog confirmed it was investigating alleged illegal activity by three top executives with links to the huge statefunded chip investment vehicle, the National Integrated Circuit Industry Investment Fund. Watch this space, I guess.

Let’s not forget that many major US tech firms and their platform products are blocked in China, including Facebook and Twitter — portrayed as vehicles for Western propaganda — while the biggest apps in those markets (such as WeChat) have near complete hold in the regional markets and little to nothing beyond its borders.

How this plays out is terrifying on a human level, but also intellectually fascinating: we’re seeing the divide between China and the Western powers deepening, with tech as the backdrop for the drama, and tech as the subject of regulation in both, all while tech itself dissolves more and more borders in our work and personal lives.

How we solve a problem of a tech company monopoly or ethical threat created by tech capability in 20 years’ time may well depend on which global power “wins” the bid for dominance of chips, eyeballs and hearts.

IT IS NOT JUST DOWNSTREAM USERS FEELING THE HURT. CHINA’S ‘TECH CRACKDOWN ’ KICKED OFF ABOUT 24 TO 18 MONTHS AGO