Earlier this month, TikTok announced that it would withdraw from Hong Kong in protest over a new national security law that would obligate companies in the semiautonomous region to comply with China’s surveillance regime.
On its surface, the move seems like a victory for human rights: TikTok won’t be complicit in surveillance and censorship requests coming from Beijing, its move signals a clear separation between data stored outside China and data stored inside, and its willingness to take a principled stand may inspire other tech companies to follow suit.
But the reality is far blurrier.
TikTok is owned by ByteDance, a Chinese company that also offers an equivalent product called Douyin that has many users in Hong Kong. Douyin has no plans to follow TikTok’s lead in departing Hong Kong, so even after TikTok leaves the market, ByteDance will still be able to expand its user base and revenue there. Douyin hasn’t made any statements about its plans to comply with the new security law, but it will be difficult for the app to operate in Hong Kong without complying with government requests for user data and censorship. So even with TikTok’s withdrawal, there won’t be a significant change to ByteDance’s footprint in Hong Kong or to its human rights impact there.
Tiktok’s move also increases pressure on U.S. companies to withdraw. Critics will argue that since TikTok is taking a strong stand on human rights, Google, Twitter, Facebook, Apple, and Microsoft should too.
But if U.S. tech firms exit the market, that’s a win for ByteDance. Switching costs are low for people who use online platforms, so users will quickly shift to products that remain operational after the others leave. With its competitors fleeing the market, Douyin—and other companies that are willing to comply with Chinese law—will be well-positioned to pick up new users and advertisers.
Perhaps the only one to benefit more than ByteDance from tech platforms’ withdrawal from Hong Kong is the Chinese government. The Chinese government can exert more control over Chinese companies than U.S. ones, so if people shift from using predominantly U.S.
tech products to using predominantly Chinese ones, China will have more authority over the tech ecosystem. In practice, that means that there’s likely to be an increase in compliance with censorship and surveillance requests, and people in Hong Kong will have less freedom to express themselves and less privacy.
It’s also helpful to the Chinese government because it solidifies TikTok’s position as a competitor to U.S. companies outside of China. China has long wanted a global competitor to companies like Facebook and Google, but its successful homegrown products have been far less competitive outside of China’s borders, particularly in the United States. But now, with TikTok rapidly gaining market share, it’s a pivotal moment to demonstrate that it can be a formidable foe to U.S. tech firms.
Whether TikTok can serve as that global counterweight to U.S. tech firms is contingent upon convincing policymakers that it is independent from Beijing. Secretary of State Mike Pompeo has threatened to ban TikTok, and several members of Congress have introduced legislation seeking to prohibit federal government employees from using the app. The pressure is increasing outside the U.S. as well, with India banning TikTok in late June and European policymakers investigating the company as well.
It’s difficult to evaluate whether politicians’ fears are justified. TikTok says that it maintains separate servers, won’t provide data to the Chinese government, and doesn’t censor in response to requests from China. The transparency report the company published on July 9 indicates that it didn’t receive any requests from the Chinese government between July 1, 2019, and Dec. 31, 2019, a time period in which protests were taking place in Hong Kong.
All of that suggests TikTok’s departure from Hong Kong may reflect real separation, an indication that ByteDance is more hands-off than the typical parent company would be. If accurate, that’s promising. It would be a good thing for TikTok to serve as a model for how a global tech company could respect human rights and act independently from the government of its parent company. And more competition in the tech sector is good for tech users.
On the other hand, TikTok and ByteDance don’t seem entirely separate either. TikTok’s new CEO is also the chief operating officer of ByteDance. And despite its pronouncements that it will store user data outside of China, TikTok’s privacy policies enable it to “share your information with a parent, subsidiary, or other affiliate of our corporate group,” including ByteDance.
TikTok’s withdrawal from Hong Kong is a strong move at a time when tensions between the U.S. and China are escalating and the two countries’ tech firms are competing aggressively. It may not have much of an impact on human rights or ByteDance’s fortunes in Hong Kong. But it helps China politically and economically, and puts U.S. tech firms on their heels.