Argument

ByteDance Can’t Outrun Beijing’s Shadow

The Chinese social media firm is the most valued start-up in the world—but it’s going to hit political walls.

An AFP collaborator uses the Chinese app TikTok on Dec. 14, 2018 in Paris. (-/AFP/Getty Images)
An AFP collaborator uses the Chinese app TikTok on Dec. 14, 2018 in Paris. (-/AFP/Getty Images)

In the wake of the arrest of Huawei’s chief financial officer, tensions between Chinese and U.S. firms have come to the forefront of global attention. However, it’s not just Chinese hardware companies that have international ambitions. Consumer-focused unicorns (firms valued at $1 billion or more) are both Sinicizing the global internet and running into their own set of political obstacles.

Consumer-focused companies have generally had a hard time breaking out of China, thanks in part to the very different habits of Chinese and foreign users. A new generation of tech unicorns however, is taking up the challenge to open foreign markets. The firm currently with the greatest capacity to reshape the internet landscape is ByteDance, currently the highest-valued private start-up in the world.

The Beijing-based technology company has two bread and butter competencies: recommendation algorithms and consumer-facing entertainment product development. It has two enormous hits to its name in Toutiao/TopBuzz (basically a Facebook feed of news and entertainment but without the friend-posted content) and Douyin/TikTok (Vine but with a much richer content environment and better recommendations).

It is also expanding internationally at an aggressive pace. TikTok became the most downloaded app in the United States this past fall. ByteDance CEO Zhang Yiming, likely as a hedge against regulatory actions restricting growth in China, has set a goal of a 50 percent foreign user base by 2020. A big part of its $75 billion valuation prices in the fact that unlike, say, Tencent’s WeChat, it has proven to be able to deliver abroad.

But with its success globally comes the same tension points other consumer-facing tech companies have encountered. “The same exact attention and complaints people have with Facebook they’re going to have with ByteDance,” said Technode’s John Artman on his China Tech Talk podcast. For instance, its international news apps have faced pushback in India for publishing racist fake news in the lead up to an election, and it even faced a suspension of an app in Indonesia for “pornography, inappropriate content, and blasphemy.”

For now, ByteDance’s issues around content have been around social norms rather than politics. But the company has also proven itself ill-prepared to respond to criticism in democratic countries. For instance, ByteDance has issued spurious YouTube copyright takedowns when called out for hosting racy children’s content and sued media outlets that publish critical reporting of fake news on its overseas operations.

Aside from being bad PR, this response also speaks to a greater disconnect. The principles a local firm like ByteDance, which came up in the party-shadowed garden of the Chinese tech sector, applies to government cooperation and content policy questions abroad is likely fundamentally different from how the policy teams at Silicon Valley firms, filled to the brim with ex-U.S. administration officials, will do so.

ByteDance has already been repeatedly forced to bend the knee to party authority at home. Most punishingly, in April 2018 the government compelled ByteDance to shut down its popular “Neihan Duanzi” (“inside jokes”) app for good due to its “vulgar” content. In response, Zhang issued a letter of self-criticism where he said, “Our product took the wrong path, and content appeared that was incommensurate with socialist core values.” He also promised that the firm would in the future “Further deepen cooperation with authoritative [official party] media, elevating distribution of authoritative media content, ensuring that authoritative [official party] media voices are broadcast to strength.”

These nods to the party are readily apparent to users in China. After the government crackdown on ByteDance products, advertorial-style Douyin videos about the police and army started to appear more frequently—driven, presumably, by internal tweaks to the recommendation algorithm. Yet while such actions may reinforce ByteDance’s standing domestically, as its market abroad grows the firm’s connection to and reliance on the Chinese Communist Party will come into focus. In a global environment where concern over both Chinese influence and the role of tech firms in the public sphere is growing, this could be a big shackle for an ambitious company.

Even for American firms, this challenge isn’t easy. Facebook, even with a high-powered U.S. policy team and a chief operating officer who worked under Larry Summers in the Treasury Department, has struggled to navigate these waters. After the heat they’ve been facing, the likes of Google, Twitter, and Facebook are at least pouring real resources into addressing fake news. As evidenced by its aggressive hiring efforts for content managers with local language skills, its cash prizes for debunking fake news, its work to delist accounts, and its partnerships with local fact-checkers, ByteDance appears to be aware of the problem and is starting to do the same.

But ByteDance has another problem that Western firms don’t share. The potential for Chinese government interference in ByteDance is considerable—and like other tech firms in China, there’s little the company can do about it. At some point, the Chinese government will realize the potential impact content platforms like ByteDance could have on foreign public opinion. In such an eventuality, Russians spending a few million dollars on social media ads in the 2016 election will seem like child’s play compared to the Chinese government compelling ByteDance to tweak its algorithms to boost certain candidates’ chances.

Further, this sort of subtle tweaking of algorithms feeding content is much more likely to go undetected than the Russian 2016 influence operations. No one is likely to notice a few extra anodyne “don’t forget to register to vote!” PSAs aimed at favored candidates’ supporters. While the Chinese government’s levels of sophistication when it comes to influencing U.S. politics are, to say the least, underdeveloped, having foreigners rely on apps for news and entertainment is a powerful potential vector of influence.

Chinese tech firms are not enthusiastic partners in these sorts of foreign-policy endeavors. Just as how Western firms after the Edward Snowden leaks have pushed back on government requests for information, as they know that consumers’ trust in their products is central to their business, so do Chinese companies know the potential impact of suspicions of government cooperation. Look at the Huawei founder’s claims that he would resist government requests for information.

It’s true that Chinese tech CEOs would generally prefer to have nothing to do with the government. Take DiDi’s initial response to police requests for data—in one instance, after twice outright refusing the request on privacy grounds, it finally simply printed out a few boxes of documents that for the police’s purposes were nearly useless. ByteDance’s CEO is surely not happy to have to issue apology letters and face mandated shutdowns of popular products.

But at the end of the day, there is very little that these firms can do in a party-state environment. China’s national intelligence law, according to one interpretation, gives total authority to the government to compel firms—and with no independent judiciary, even extralegal pressure is very hard to resist. CCP regulators who can take massive bites out of market capitalization seemingly at will alone make keeping officials at home happy ByteDance’s first priority, regardless of reputational risks abroad.

 

Philip Spence is a pseudonym for a Beijing-based freelance journalist.

A decade of Global Thinkers

A decade of Global Thinkers

The past year's 100 most influential thinkers and doers Read Now

Trending Now Sponsored Links by Taboola

By Taboola

More from Foreign Policy

By Taboola