China Big Tech in 2023: TikTok owner ByteDance faces critical year as decisions in Washington and Beijing weigh on its future
- A security deal with the Biden administration to continue operations in the US was reportedly delayed by a growing backlash from American lawmakers
- A forced sale of TikTok’s US operations could be difficult as the Chinese government could technically veto such a deal
2023 will be critically important for China’s largest unicorn, ByteDance, as it faces ongoing political uncertainties from Washington with regard to its hit TikTok app, while at home Beijing’s policies will continue to shape its China operations, according to analysts and executives.
The elephant in the room for ByteDance is the future of TikTok, the first China-owned app with global reach, as its security deal with the Biden administration to continue its operations in the US was reportedly delayed by a growing backlash from American politicians who questioned the platform’s links to China.
TikTok is banned from all US House of Representatives-managed devices, while at least 19 states have blocked it from state-managed devices, and some US lawmakers are calling for an outright ban. Meanwhile, the Wall Street Journal reported that the White House is also considering forcing a sale of TikTok’s US unit, two years after the former Trump administration failed to do so.
“I do think the Biden administration will force a sale,” said Katie Harbath, founder and CEO of tech policy firm Anchor Change and former Facebook public policy director. “I don’t think TikTok’s investors will tolerate a shut down in the US and the government will face a backlash from Americans if they try to ban it. A sale is the best case all around.”
However, a forced sale of TikTok, which has hit 1 billion monthly active users across the world but is not available in China, could be difficult as the Chinese government could technically veto such a deal. According to an export control regulation launched by Beijing in 2020, exports of algorithms, the machine learning core that empowers the success of TikTok, requires Beijing’s approval.
For parent ByteDance, TikTok is one of six business groups – and considered one of its most promising assets. TikTok’s China version, Douyin, has 600 million daily active users at home and remains the key revenue source for ByteDance.
At the same time as US politicians are alleging TikTok’s China links, ByteDance, is also a target of Beijing’s efforts to curb the power of Big Tech.