The TikTok hearing is over for a week.
This vortex from the other side of the ocean is closely tied to the heartstrings of the Chinese science and technology circle. This is not an ordinary hot spot, but a deduction of a sample example. Every Chinese company that intends to go overseas and expand its business territory is paying close attention. , I hope to find a way out and the possibility of maneuvering in TikTok.
What TikTok projects is the future and destiny of those who go to sea.
The story of going out to sea can be traced back to 9 years ago, the mighty globalization, the golden age when everyone was high-spirited and excited, the bell of Nasdaq, when it crowned Alibaba, it belonged to the Chinese Internet Rongguang, during that time, Chinese Internet technology companies began to collectively embark on a journey to the sea.
In 2016, Ali entered the Southeast Asian market through the acquisition of Lazada. In 2017, it invested US$1.1 billion in Tokopedia, Indonesia's largest e-commerce company. In 2018, it invested in Turkish e-commerce Trendyol and acquired South Asian e-commerce platform Daraz at the same time.
In 2015, Xiaomi embarked on an international journey and held its first large-scale overseas press conference in New Delhi. Lei Jun's "Are you OK?" at the press conference became a classic. Currently, India has become Xiaomi's second largest market outside of China.
In 2013, at the Mobile Asia Expo, Qihoo 360 launched its two international versions of products, namely Internet Security (PC terminal) and Mobile Security (mobile terminal), and the overseas strategy surfaced for the first time.
In 2013, WeChat set aside a budget of 2 billion yuan and invited world-class football stars Messi and Neymar to endorse it. Ma Huateng once said bluntly: In my life, Tencent has been able to develop international products, but now only WeChat is the only one.
China's "fleet" going to sea is high-spirited. How happy the start is, how skinny the reality is.
"1
The storm of compliance that cannot be
overcome
WeChat has encountered obstacles and has been unable to gnaw at the North American market for a long time. It is still difficult to squeeze in the impregnable walls built by Facebook, WhatsApp, and Line. Under the huge amount of advertising bombing and promotion methods, the situation of WeChat is still not satisfactory. According to Tencent 2020 According to the quarterly report for the first quarter of 2019, the number of monthly active users of WeChat reached 1.206 billion, while the number of US users of WeChat in the same period was only 19 million; according to AppAnnie, as of August this year, the number of monthly active users of WeChat in the United States was about 3.3 million, which is even lower than the total monthly active users of WeChat. A fraction, obviously, the core users of WeChat going abroad are still Chinese.
And Alibaba is also hitting a wall. In May last year, Alibaba announced the divestment from India’s PaytmMall and chose to abandon the Indian e-commerce market. The latest setback came from Alibaba’s Pakistani e-commerce website Daraz Group, which recently announced that it would lay off 11% of its employees Daraz's growth momentum will slow sharply in 2022, its chief executive Mikkelsen said, due to reasons including the Russia-Ukraine war and soaring inflation disrupting supply chains and the economy.
Of course, Daraz isn't the only Alibaba global property whose business has slowed over the past two years. In addition to Daraz, Alibaba operates three other global platforms: Lazada, which focuses on the Southeast Asian market, AliExpress, a cross-border e-commerce platform, and Trendyol, which focuses on the Middle East market. According to Alibaba’s latest quarterly report, In the third quarter of last year, the total number of orders on these three platforms fell by 3% year-on-year. According to data from Euromonitor International, AliExpress’s market share in Western Europe last year was only 4%, far behind Amazon’s 20%. It can be seen that Alibaba’s hard work in the past 10 years is still difficult to improve.
At the beginning of last year, Tencent also reduced its shareholding in Sea Limited, from 21.3% to 18.7%. Just a while ago, JD.com also announced the closure of its Southeast Asian e-commerce business. In addition to the siege and interception of competitors, the bigger eye of the storm comes from the inescapable global fundamentals.
And TikTok, which has taken over the stick, seems to be more able to stir the nerves of overseas friends with its product genes and localized operations that understand human nature. In just five years, TikTok quickly took root in overseas soil and became popular for a while, according to the Sensor Tower report. , In May 2022, Douyin and its overseas version TikTok won the top spot in the global mobile application (non-game) download list with more than 64 million downloads. At the same time, the current global downloads of TikTok have exceeded 3 billion times, surpassing overseas mainstream platforms such as Facebook (now changed to Meta), and becoming the world's number one. According to Cloudflare data, TikTok will be the most visited Internet site in the world in 2021, surpassing the traditional overlord Google.
A series of domineering data, if you don't understand its origin thoroughly, you will have no doubt that TikTok is a native product born and bred overseas.
Unlike the predecessors of the BAT generation who went overseas, most of them are oriented to the domestic market and a small number of overseas Chinese groups. TikTok understands overseas, and its constantly evolving and mature algorithm mechanism can quickly capture the real and potential of users. Interests and needs, fill your fragmented time, viral gameplay, use high-participation challenges and Internet celebrity effects to attract traffic, and at the same time, a set of billing and reward mechanisms for user-created videos bring business opportunities to people from all over the world Young people provide livelihoods for tens of thousands of rising stars. Many TikTok players with millions of fans have gained a large number of fans and become stars with some popular videos, and have made a lot of money through the platform. No borders, breaking through the barriers of language and culture, this kind of "lure with profit, guide with entertainment" has stepped on the product features of common humanity, and quickly captured the minds of overseas users. After all, you can earn money with red envelopes while watching videos ,Why not do it? According to App Annie statistics, the average monthly usage time of TikTok users in the United States in 2019 was only 12 hours, slightly lower than that of Facebook and YouTube. By the end of 2021, the time spent on TikTok has reached 27 hours, making it the app with the highest stickiness among American users.
This was a successful and almost perfect template for going out to sea, but the gravitational force of reality is too heavy, and no one can be spared on the rough sea waves.
According to data released by ByteDance, in the first half of 2019, the company received more than 250 overseas investigations, including 99, 68, and 28 investigations in India, the United States, and Japan. In 2020, the Indian government will block more than 300 Chinese mobile phone applications including TikTok on the grounds of "national security threat". Before being banned, India was TikTok's largest user market, with 200 million monthly active users. In February of this year, the United States, Canada, the European Union, the United Kingdom, New Zealand and many other countries successively issued administrative bans to restrict the use of TikTok by government equipment. Yes, TikTok is facing a total ban, life and death.
We all watched the progress of the story. At the hearing on March 23, TikTok tried its best to respond to the U.S. Congressional inquiry. Although the theme was "how to protect U.S. data privacy and protect children from online harm", judging from the situation on the spot, "National security" is the one pointing directly at TikTok.
Xu Xu, director of the Digital Economy and Legal Innovation Research Center of the University of International Business and Economics, said that the TikTok hearing actually reflected three levels of problems. The first is the technical level, that is, the "data security" level; the second is the corporate compliance level, that is, the compliance work that TikTok can do for the protection of users; the third is the political level, that is, the current U.S.-China tensions.
Although Zhou Shouzi made a very sufficient explanation on the first two levels, before the hearing, Zhou Shouzi stated in his written testimony that after meeting some members of the committee, he learned that their concerns were mainly divided into four categories: Minor safety, data privacy security, real-world hazards of online activity, and the risk of content manipulation by foreign countries. Based on these four types of issues, Zhou Shouzi also made four commitments: first, to ensure safety, especially the safety of minors, as the top priority; second, to ensure that US user data is not accessed by foreign countries through the firewall; Third, TikTok is a platform for free expression and will not be manipulated by the government of any country; fourth, TikTok will maintain transparency and allow third-party independent agencies to monitor.
These four-point commitments are actually sufficient to respond to the current concerns of the US government. Prior to this, in order to eliminate US concerns about TikTok data security, since July 2022, TikTok has proposed a method to protect US users through data isolation and other measures, namely " Project Texas, according to Zhou Shouzi's introduction, has taken substantial measures to make the "Project Texas" a reality, and has spent about US$1.5 billion so far. To ensure that all overseas data is transferred to domestic servers in the United States and monitored by third-party companies, and TikTok is deleting American user data that is still stored on overseas servers.
At the same time, a special purpose subsidiary, TikTok US Data Security Company (USDS), has been established, which currently has nearly 1,500 full-time employees, to ensure that all US data is stored in the US and hosted by Americans.
In addition, TikTok also signed a contract with Oracle Corporation to store the data of American users on Oracle servers headquartered in Texas.
Zhou Shouzi emphasized at the hearing that "US data are stored on US soil and conducted by an American company under the supervision of Americans".
Formally speaking, this is already the most saturated compliance action. The purpose of the "Texas Plan" is very clear, which is to ensure that the data of TikTok users in the United States is isolated from the parent company ByteDance, in order to eliminate the concerns of the US government. Do you wish?
Xu Xu said: The United States does not require all companies to conduct third-party data hosting. The core problem of TikTok data hosting is still caused by distrust. This is similar to Microsoft’s treatment in the EU before. At that time, Microsoft also hosted its own data. , since January 2023, the "EU data border" will be launched for EU customers. In addition, due to the lack of mutual trust between the United States and Europe, the "safe harbor" for cross-border transfer of personal data has been abolished. Today, TikTok has come to the same anxious situation .If the Chinese government and the "Texas Plan" can work hard, TikTok's problems at the technical, corporate compliance, and political levels can be resolved,
Indeed, China made a clear statement in the "Global Data Security Initiative" released in October 2020: "Countries should require companies to strictly abide by the laws of the country where they are located, and should not require domestic companies to store data generated or obtained outside the country within their borders." It also echoes the concerns of the US government. If China further proves its position, is it possible to bridge the trust gap? Of course, this possibility is extremely small. After all, returning to the root of the problem, the so-called national security concerns may not be what the United States really wants.
At the same time, TikTok also launched Project Clover in Europe, proposing to spend $1.2 billion a year on measures to protect more than 150 million European users, and promised to store European TikTok user data locally. Plans include opening two data centers in Ireland within weeks and a third in Norway later this year. TikTok said that European user data currently stored in Singapore and the United States will be transferred to these three centers. It can be seen that TikTok is still trying.
TikTok is not the only one that has encountered this situation. This is a compliance storm that all Chinese-funded companies cannot get out of. Although this compliance is likely to be "presumption of guilt" and "exclusive suppression" under the guise of data security.
WeChat was blocked in the Indian market on the grounds of “affecting national security”, and Alibaba’s cloud business in the US was scrutinized by the US government. data, and in 2020, the Trump administration asked a number of American game companies to provide information on data security agreements involving Tencent Holdings Co., Ltd. on the grounds of national security. Further fermentation, the range is forced to non-hardware companies.
Zuo Xiaodong, a professor at the School of Public Affairs at the University of Science and Technology of China, pointed out that the impact of the TikTok hearing may far exceed the hearing that Huawei participated in back then. Zuo Xiaodong said that "Internet service" and "data security", these two key words reveal that the scope of influence of the TikTok incident will expand to all scenarios and all activities, and the game between China and the United States will enter a new stage with data security as the core. It will have a huge impact on Sino-US diplomatic and economic relations.
"Due to the extensiveness and sensitivity of data security issues, it will not be just one company that will be affected, but all Chinese-funded companies. If TikTok cannot save itself, then the next road for all Chinese companies going overseas will be It's even harder to walk," Zuo Xiaodong said.
"2
Going out to sea and entering the "Hard" mode
Behind the life and death of TikTok is the common problem of "Chinese-style going to sea".
"Let's go! To the great route!" This classic line in "One Piece" is exactly the inner cry of Chinese technology companies when they go to the international market. Now, their ambitions are hitting the south wall.
Since China's accession to the WTO in 2001, China has experienced four tides of going to sea.
The first time was around 2004, when Lenovo acquired IBM and BenQ acquired Siemens.
The second time was after the financial crisis in 2008, targeting resources and energy, as well as the hidden champions of European manufacturing. The vanguards were state-owned enterprises and large private enterprises, such as Chinalco’s attempt to acquire Rio Tinto, and Zoomlion’s acquisition of Italy’s third largest concrete company in the world The machinery brand CIFA is represented by Sany Heavy Industry's acquisition of the world's concrete giant Putzmeister.
The third time was after 2012, when Anbang, Wanda, HNA, Fosun, etc. used capital as a leverage to acquire overseas financial, cultural, and real estate projects. In 2016, due to the tightening of domestic policies, the momentum of this round was fierce. The sea suddenly braked.
The fourth wave started in 2015, which is the wave of technology companies going overseas under the wave of mobile Internet. In addition to domestic first-line Internet companies such as BAT and Toutiao, as well as established technology companies such as Huawei, there are also SHAREit (Eggplant Express), Cheetah, and OnePlus. Mobile phones and other companies that are blooming outside the wall and fragrant inside the wall.
Compared with other waves of overseas expansion, the fourth wave of internationalization has more diversified methods, more sunny operations, higher localization, and more reliance on technological advantages. This is also in line with the trend of globalization after 2018: globalization has entered an era where knowledge production and innovation are the main driving forces, and technology has become the most important global public good.
However, the fourth wave of globalization is like Pandora's box. Technology has become the B side of public goods, which is the rise of technological protectionism and data barriers. The importance of data has reached an unprecedented height. The superposition of technological sovereignty and digital sovereignty has begun to replace open sharing. , has become the main topic of global ecological relations, and the wrestling field of digital geopolitical conflicts has moved to the "sea". With the outbreak of the Russian-Ukrainian battlefield, it is a very negative node, and the role of technology companies has undergone significant changes. The neutral position is gradually breaking away and intervening in disputes between countries. The deduction and signal released by this situation are seriously tearing apart the digital globalization. In this context, the boundary between cyberspace and real space is gradually blurring, digital competition among governments has formed a new paradigm of power struggle, and technology companies are regarded as potential participants in the intergovernmental power game by default, while multinational companies’ overseas expansion is regarded as a new paradigm of power struggle. Colored thinks it is a "digital erosion".
Just like after Google announced that it would cut off supply to Huawei in 2019, on February 20, 2020, Google suddenly announced that it would delete more than 600 applications from the Google Play Store. Apps, involving tools, games, and live broadcasting services, and even LiveMe, a subsidiary that was spun off in November 2019, are also within the scope of the ban. You must know that more than 20% of Cheetah’s revenue comes from the Google platform. The impact is undoubtedly huge.
The second half of the fourth wave of going to sea has pushed this trend to a boiling point. Technology has slowly evolved from a public good to a national private property. Data, hardware and algorithms have also become the core means of production and strategic resources of various countries. Different from traditional and typical trade barriers such as tariff barriers and non-tariff barriers, a potential development of digital trade barriers in the form of "rationalization", that is, hidden under rationalization claims such as privacy security and personal data protection, continues to grow and develop.
For example, in 2019, the US National Security and Personal Data Protection Act 2019 (NSPDPA, not yet in force), clearly restricts the export of US user data, especially to China, and aims to regulate all companies that provide online services based on data (including " regulated companies"), shall not directly or indirectly transmit any user data or information required to decrypt that data (such as encryption keys) to any "country of concern" such as China, Russia, etc. It is not difficult to see that China's export to the United States The sea is full of difficulty value from the beginning.
The General Data Protection Regulation (GDPR) implemented by the European Union in May 2018 expands the scope of corporate accountability from the previous data controller to the data processor, and adopts the same standard of liability system for both ;Finally, and by adding the provisions of personalism to the original territorialism, the jurisdiction of GDPR has been greatly expanded. GDPR has built an extremely wide-ranging and extremely restrictive legal system for personal data protection, which has greatly increased the legal risks of data processing and trade for enterprises. After GDPR, data protection walls are gradually rising, and data localization policies based on the "territorial principle" are becoming the new rules of the global digital market. Countries in major regions have adopted different localization policies for specific types of data. For example, Indonesia requires e-money data and personal information held by the government, Singapore requires data from some public institutions, and the Philippines requires that financial data not cross the border in principle. The disaster center must be established in Indonesia. Obviously, this is a lot of expenses. If you want to go to sea, you must be able to spread the money. Just from the data compliance of going to sea, it is already a natural moat.
In fact, in addition to the institutional barriers of cross-border data flow, the overseas industry has also experienced the brutal baptism of the epidemic in the past three years, and the structural factors after the epidemic have not been eliminated. The uncertainty of the economic outlook and the shrinkage of the consumption side , At the same time, it also magnifies the previous cracks in international relations, and the expected pressure to cross the border to sea has increased sharply.
In addition, the successive inclusion of cross-border e-commerce into tax sources around the world is also adding to the cost of going overseas. After Mexico fired the first shot on June 1, 2020, the United Kingdom and the European Union will successively introduce new VAT (value-added tax) tax policies from 2021. In July of the same year, Florida and Kansas also began to officially implement the new tax law, requiring e-commerce platforms to calculate, collect and pay sales and use taxes on orders sold to these two states starting that day. On this day, the Government of Canada began implementing new Mall Tax (MTC) rules. Countries in Southeast Asia, including holy places to go to sea, have also begun to take unilateral actions to add digital service rights. From July 1, 2020, Indonesia will sell services such as streaming media services, applications and digital services to non-resident Internet companies that occupy an important position in the country’s market. Digital products such as games are subject to a 10% value-added tax. From January 2020, Singapore will impose consumption tax on overseas digital service providers whose global annual turnover exceeds SGD 1 million or exceeds SGD 100,000 in Singapore within 12 months. In order to cope with the pressure of tax reduction and the impact of e-commerce on the real economy, Malaysia also announced that it will impose a digital tax of 6% on online services such as software, music, video and advertising from overseas digital service providers starting in January 2020. In July 2020, the Philippine House of Representatives approved the Digital Economy Tax Act, which plans to impose a 12% value-added tax on digital services.
With the advancement of the "two-pillar" plan under the OECD's inclusive framework, the first pillar aims to increase the taxation power of market countries, and distribute a part of the remaining profits of super-large and high-profit multinational enterprises by modifying the existing cross-border income tax distribution rules. For market countries; Pillar 2 aims to establish a global minimum tax system to ensure that the effective tax rate of large multinational companies in each jurisdiction reaches at least the global minimum tax rate standard. According to OECD forecasts, according to Pillar 1, taxation of profits exceeding US$100 billion per year rights are expected to be redistributed to market jurisdictions; under Pillar 2, the 15% global minimum tax rate is expected to generate approximately US$150 billion in additional tax revenue per year globally. The setting of the global minimum tax rules jointly led by Europe and the United States has limitedly increased the tax revenue of developing countries in name and in the short term, but it has potentially and substantially suppressed the opportunities for backward countries and emerging industries to go overseas. is compressed.
"The life and death of TikTok after the 3 hearings
is unknown.
According to the analysis of professionals, judging from past cases, there is no precedent for the United States to completely ban social media, including the previous WeChat. The previous judgments of the US courts are very clear that the freedom of speech rights of these social media users cannot be violated. The US Constitution There are also related regulations. From a legislative point of view, it is very unlikely that some bills aimed at banning Tiktok will eventually be passed, because if the bills are to be passed, they need to be signed by both houses of Congress and the president, and they need to withstand the challenge of judicial review.
Of course, the worse ending is being forced to sell, and this result will surely become the butterfly in the Amazon jungle that triggered the hurricane, and the tsunami will be transmitted to more Chinese companies: "Data localization cannot meet the compliance needs of the United States , then how can we comply with the regulations?” This question has become a specious one, and the answer is dominated by the United States.
After the hearing, TikTok is still waiting for the final result of whether the Senate and the House of Representatives can pass the bill.
But at this moment, I can only sigh with emotion, the era of great voyages that cannot be returned, just like Fu Sheng, the chairman of Cheetah, said: "I have never lost before, and I have not won now. Everything seems to be back to the starting point."