TikTok is currently confronting a profound and fundamental dilemma in the United States. If the app’s Chinese owner does not successfully sell it within the next year or so, it could be prohibited in its largest market.

This would significantly hinder China’s technological aspirations and exacerbate the separation between two distinct digital realms that revolve around competing economic superpowers.

ByteDance may be required to sell TikTok in order to avoid a nationwide ban under the legislation that Congress approved on Tuesday. President Joe Biden is anticipated to officially approve the bill on Wednesday; TikTok has already expressed its intention to contest the law through legal means.

Beijing has expressed significant opposition to a compulsory divestiture of TikTok and has amended its export control regulations to grant itself the authority to prohibit a sale based on national security concerns. ByteDance has limited choices to ensure TikTok’s future in the US, its largest market with 170 million users.

“The compelled divestiture of TikTok in the United States would result in a devaluation of the application, as the Chinese government will not authorize the transfer of its algorithms,” stated Alex Capri, a research fellow at the Hinrich Foundation and a lecturer at the Business School of the National University of Singapore.

He stated, “Should TikTok be compelled to cease operations in the United States, ByteDance’s prospects in other predominantly liberal democracies will face additional scrutiny.”

Banning TikTok Would Hit China’s Tech Ambitions And Deepen The Global Digital Divide

The sale can be completely prevented if the Chinese government refuses to allow ByteDance to give over TikTok’s algorithm. Alternatively, it may enable the sale of TikTok without including the highly profitable algorithm that is the foundation for its widespread appeal.

The United States’ imposition of a ban or the implementation of a diminished iteration of TikTok would result in a significant financial gain.

Capri stated that YouTube, Google, Instagram, and other TikTok rivals may experience a significant loss of customers. Furthermore, this would significantly impede ByteDance’s global aspirations.

“A TikTok ban would signal that the Chinese government prioritizes the security of the algorithm over ByteDance’s financial success and global growth, ultimately putting an end to ByteDance’s worldwide expansion,” stated Richard Windsor, a tech industry analyst and the founder of Radio Free Mobile, a US-based research company.

“The consequences suggest that the ideological conflict occurring in the technology industry will escalate.”

Capri suggests that a ban on TikTok is expected to expedite a division in the global technology industry, creating two distinct factions: one oriented around the United States and the other supporting Chinese technology.

“The action taken against TikTok in the United States represents not only a division between Chinese and Western applications in the platform economy, but also a broader division in the global technology landscape,” he stated.

“This encompasses various aspects such as the ownership and operation of data centers, the presence of internet satellites in space, the existence of undersea cables, and, naturally, the production of semiconductors.”

From that perspective, the TikTok ban has a positive aspect for Beijing.

“The imposition of a ban in the United States will trigger renewed endeavors to expand China’s digital influence in Southeast Asia, as well as other predominantly emerging markets across the globe,” stated Capri.

Rising difficulties faced by Chinese applications

The TikTok legislation was incorporated into a comprehensive foreign aid package aimed at assisting Israel, Ukraine, and Taiwan.

After President Biden’s approval, ByteDance will be given a maximum of one year to finalize the sale, or the platform will be subjected to a practical prohibition.

Banning TikTok Would Hit China’s Tech Ambitions And Deepen The Global Digital Divide

US officials and politicians have consistently voiced apprehensions regarding TikTok’s potential national security hazards, such as the possibility of data sharing with the Chinese government or the manipulation of platform content. However, TikTok has refuted the allegations.

Paul Triolo, partner for China and Technology Policy Lead at Albright Stonebridge Group, stated that the new divestiture bill is a direct outcome of a well-coordinated lobbying campaign by Silicon Valley venture capitalists affiliated with US technology companies. These companies are expected to gain advantages from the narrative of the China threat that the bill’s supporters have been promoting.

According to him, Chinese enterprises and apps operating in the US are encountering increasing difficulties.

The Biden administration is strengthening a recently established office within the Commerce Department to enforce the conditions of a regulation implemented during the Trump era. This rule safeguards US information technology supply chains, particularly linked apps. This rule may also be utilized to advocate for additional limitations.

“Triolo stated that it is improbable for Congress to specifically target another Chinese company, such as TikTok, in a particular bill. However, the Commerce IT supply chain rule could potentially be utilized in the future to restrict the access of Chinese companies and apps to certain segments of the US market,” Triolo explained.

Can we expect a retaliatory response from Beijing?

The Commerce Ministry of China has committed to implementing all “essential actions” to safeguard its interests following the approval of a previous iteration of the TikTok bill by the House of Representatives last month. However, it did not provide further details.

On Wednesday, Wang Wenbin, a spokesperson for the Foreign Ministry, responded to a question from CNN’s Marc Stewart by stating, “Regarding the TikTok issue, we have already expressed our position clearly, and I have no additional comments to make today.”

The Chinese government has already prohibited using most American social networking applications. Presently, Beijing restricts access to most US social media platforms, including Google, YouTube, X, Instagram, WhatsApp, and Facebook. This is due to their non-compliance with the Chinese government’s regulations regarding data collecting and the nature of shared content.

Triolo anticipates that Beijing will not respond with a significant level of intensity to the US prohibition on TikTok.

Banning TikTok Would Hit China’s Tech Ambitions And Deepen The Global Digital Divide

“Beijing has expressed its opposition to any compulsory sale of TikTok US by Bytedance, but its main concern lies in the transfer of technology,” he stated. “Broadly speaking, Beijing places significantly less importance on a social media company compared to its concerns regarding US technology regulations.”

“Beijing is highly likely to respond with strong retaliation to new US export controls, but it is unlikely to reciprocate if the US eventually attempts to ban TikTok in the US,” he added.

Beijing recently instructed Apple (AAPL) to eliminate social messaging applications WhatsApp, Signal, and Telegram from its China app store. However, the Chinese government has yet to take significant actions to suppress virtual private networks (VPNs), which technologically adept Chinese individuals commonly utilize to interact with friends overseas through messaging applications.

“The timing of the move was probably intended to demonstrate China’s ongoing commitment to blocking certain apps that it deems a threat to national security. However, it is worth noting that the number of users of the blocked apps in China is significantly lower than the approximately 170 million TikTok users in the United States,” Triolo stated.

SOURCE – (CNN)