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The Economist
The Economist
Business

Forced sales are the wrong way to deal with Chinese tech

IN DECEMBER 2017 a Chinese technology firm called ByteDance bought Musical.ly, an app which let its young users dance and lip-sync to music videos. This did not, at the time, look like a recipe for geopolitical strife. ByteDance merged Musical.ly with a similar app called TikTok, which started growing at a blistering pace. Today TikTok has 100m users in America, and competes with Facebook and Snap. With growing popularity has come growing scrutiny, as Sino-American tensions spread from trade to tech, and a barrage of invective from President Donald Trump. This looks set to culminate in a forced sale of TikTok’s American business to a domestic buyer. Touted as vital to protect Americans’ data, the crackdown is in fact a depressing example of jingoistic opportunism, more likely to chill investment in America and stoke Chinese nationalism.

The legal basis for TikTok’s divestment comes from the Committee on Foreign Investment in the United States (CFIUS), which this week ruled that the Musical.ly deal was against America’s national-security interests. Having flirted with banning TikTok altogether, Mr Trump now seems willing to accept a fire-sale. Microsoft, an American software giant, is in talks to buy TikTok’s American operations, as well as those in New Zealand, Australia and Canada (see article).

ByteDance is the latest in a series of Chinese firms, among them Huawei, a telecoms-equipment provider, to be targeted by the Trump administration amid fears of cyber-spying and propaganda-peddling. It claims—without providing evidence—that the firms are, or could be, used to pass Americans’ personal data to the Chinese government. ByteDance will not be the last in the crosshairs. Lenovo, a partly state-owned Chinese firm, sells lots of computers in America. Tencent, a social-media giant, owns large stakes in video-game studios with millions of American users. On August 2nd Mike Pompeo, the secretary of state, suggested that America may take action against not only TikTok but also Tencent’s WeChat app and “countless more” Chinese firms “feeding data directly to...their national security apparatus”.

This article appeared in the Leaders section of the print edition under the headline "Trumpian TikTok"

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