TikTok troubles narrow gap between Beijing and ByteDance founder Zhang Yiming

Platform NewS: China's ByteDance CEO and TikTok apps Founder

ByteDance founder Zhang Yiming has positioned himself as a global platform entrepreneur, largely eschewing any Chinese government involvement, but the ongoing US demands to divest TikTok are testing the boundaries with Beijing.

A year ago, ByteDance was approached with the Chinese authorities with offers of aid when TikTok, a short-video app with a huge following among young people globally, confronted political warmth in India, a source familiar with the situation told Reuters. But the company sent only mid-level personnel to meet with government officials, signalling that the business desired to go it alone.

The 38-year-old Zhang, who has trodden a different route to some other high-profile Chinese tech tycoons, shifted tack in August when President Donald Trump threatened to prohibit TikTok from the United States unless it had been sold to a US-based business.

Zhang’s team sought a meeting on his own behalf with China’s ambassador in Washington, Cui Tiankai, two sources familiar with the matter said.

While Zhang was just hoping to get an informal discussion with Cui to seek guidance, his approach has been regarded as a turning point, authorities and industry sources told Reuters.

The embassy directed the ByteDance team to the foreign ministry in Beijing. Although no additional talks took place, and Cui and Zhang didn’t talk, the Chinese authorities interpreted the strategy as a sign that ByteDance was open to assistance.

China entered the fray on August 28, by means of a technician export control list that experts said would provide them regulatory supervision over any TikTok deal. Journalists could not determine if Beijing’s interpretation of Zhang’s approach and the Chinese authorities move were connected.

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Among the sources said that by standing up to ByteDance, Beijing wished to show to private companies caught in the crossfire of China-U.S. tactical contest that the nation is firmly behind them.

The diplomatic dance taking place about TikTok follows years of acrimony between Washington and Beijing over the function of Huawei Technologies, which the US has alleged is effectively a Trojan horse for Chinese espionage.

Huawei and Beijing have repeatedly denied any such action.

Asked about its involvement with ByteDance, a Chinese foreign ministry spokesman said he was not aware of the particulars of this circumstance, including that the United States has been over-generalising that the notion of national security and abusing its power.

A senior US administration official said China had blocked US tech companies like Facebook and Twitter for decades as well as the United States’ actions were designed to protect the private information of its citizens.

“We’re just very concerned that, essentially, whatever could be performed on that platform would be subject to the Chinese Communist Party’s algorithmic attempts to control human behaviour worldwide.”

‘POLITICAL FOOTBALL’

China had originally considered speeding up the launch of an “entity list” to punish foreign companies, groups and individuals deemed harmful to its interests, a government source with direct knowledge of the matter said.

But this was dropped as a countermeasure to the Trump administration’s move to ban transactions with ByteDance and Tencent’s WeChat because it would have escalated tensions and was replaced instead by the rules published last week.

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Zhang did not know of the tech export rule revisions ahead of time, two sources told journalists at our partner news agency Reuters, and the company’s view is that it ultimately prefers to be free to make its own decisions, according to one of the sources. Others close to the TikTok sale talks say the move threw a spanner in the works of already-complicated negotiations and could scupper any deal.

China’s commerce ministry, which published revisions to the tech export control list, did not respond to a request for comment.

ByteDance is negotiating with a MicrosoftWalmart coalition, and a competing investor consortium led by software business Oracle, on a sale of TikTok that could be worth as much as $30 billion.

ByteDance is still keen not to become a “political football” and prefers to use legal means rather than rely on government backing to resolve the issue, the source said. The company is suing to block one of Trump’s orders.

“I doubt having the authorities speak up for this firm can do much in helping it gain market access into another country,” said Chu Yin, a Chinese scholar with the Center for China and Globalisation, a Beijing-based think-tank.

“ByteDance could fare better if it can share some interests with its rivals in the US,” he added.

A DIFFERENT PATH

Zhang has pursued a different path to Chinese internet entrepreneurs such as Alibaba founder Jack Ma, who is a member of the Communist Party, and Tencent’s Pony Ma and Baidu’s founder and CEO Robin Li, who are both members of the Chinese People’s Political Consultative Conference (CPPCC), a ceremonial advisory body.

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Zhang, who is not a member of either, has focused on global growth even as his counterparts have retrenched from overseas and opted to focus on domestic markets.

This year he appointed new heads for the China operations to personally take up more responsibility over ByteDance’s international business and also began moving key research capabilities and decision-making functions abroad. In March, he said in an open letter that he spent two-thirds of 2019 overseas.

He has personally sought advice from around ten people at US think-tanks and former US government officials recently, a source familiar with the situation said.

Zhang has also taken numerous steps to assuage US concerns that TikTok could be endangering Americans by collecting personal data and censoring political content.

He hired former Disney exec Kevin Mayer as TikTok CEO, moved TikTok content moderation work outside China and established a “transparency centre” from the US to give outsiders access to observe TikTok’s data security policies and practices.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Yingzhi Yang and Yew Lun Tian in Beijing. Julie Zhu in Hong Kong. Keith Zhai in Singapore. Alexandra Alper in Washington. Writing by Brenda Goh. Editing by Jonathan Weber and Alexander Smith.

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