TikTok has replaced chipmakers at the frontlines of the US-China trade war. But while semiconductors have been caught in the crossfire, social media is unlikely to take a hit.
The viral video app looked set to splinter operations after President Trump issued two orders banning it from continuing to operate in the US under Chinese ownership, citing national security concerns. This pushed TikTok’s parent Bytedance to put the platform’s American, Canadian, Australian and New Zealand operations up for sale.
Oracle, Microsoft, and Walmart were among the willing suitors, but negotiations have since come under fire from the Chinese government. For the first time since 2008, China revised export rules concerning commodities to include “personalised information recommendation services”. This means TikTok’s parent ByteDance needs approval to sell off its prized algorithm – arguably the secret to TikTok’s success.
Without the algorithm, TikTok is less appealing to buyers, and less likely to sell before the September 17th deadline that Trump gave Bytedance to divest operations from China.
As competitors for TikTok are already waiting in the wings, including Facebook’s clone Reels and Triller, another American platform on which Trump is releasing presidential campaign videos, it seems unlikely that efforts to block the sale of the TikTok algorithm will have a lasting impact on the American social media market.
Chinese semiconductor factories on the other hand, remain reliant on US imports of software and equipment for the production of high-end chips for applications like artificial intelligence and 5G. At least until the country builds out its own advanced semiconductor foundries.