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Most people in the West do not know the Chinese technology scene. TikTok users may or may not know that the app is Chinese in origin. They just don’t care.
China’s market is not only huge, but also the ultimate jungle. Three giant conglomerates, Alibaba, Baidu and Tencent, which were originally created to copy certain services in the US market, have been protected by Beijing so they can grow. They stopped being copycats a long time ago and now they strive to dominate each market segment, develop increasingly competitive products that attract more and more Chinese and oblige them to constantly develop features, uses, alliances, etc.
The company that owns TikTok, ByteDance, was founded by Zhang Yiming in 2012 and is a giant whose main product is an app called Toutiao, or “Headlines”, which provides many millions of Chinese people with current events every day by machine, using learning algorithms that keep the list of Create messages they are interested in. All of this, of course, with the approval of the Chinese government, which, as we all know, greatly appreciates the opportunity to know what its people are reading. Additionally, ByteDance acquired a Shanghai-based company, Musical.ly, in 2017, which already had around two hundred million users worldwide producing dance and lip-syncing videos. With this acquisition, along with another similar product from the company, Douyin, ByteDance created (and exported) the well-known TikTok, which capitalized on Musical.ly’s previous success and kept Douyin in the Chinese market where it competes with Kuaishou, a similar app, also known as Snack Video, which is especially popular outside of the so-called Tier 1 cities of Beijing, Shanghai, Guangzhou and Shenzhen.
So far, so good, except for one important detail: as required by law, these companies are absolutely committed to the Chinese Communist Party. The balance of power is clear and can be seen daily in the country’s media. All information from a Chinese company can be claimed and used by the Chinese government. This is a very different model from that of Western democracies, but the country claims it is different. So let’s not ask China for democracy, it has a different model, a different political vision and, of course, different priorities.
If we follow the Chinese market, we can see the three giants competing for control, even if we just get the message that the Chinese government allows us to read the Chinese market. Baidu has now launched Kankan, an app – just a search engine at the moment – that serves short videos in competition with Douyin and Kuaishou, while another NASDAQ-listed video platform, Bilibili, is attracting significant investment, which is very popular with Chinese millennials.
As we can see, China knows more about short videos and virality than the rest of the world combined. A competitive, well-funded ecosystem with a huge market and one fundamental characteristic: a one-sided balance of power with the Chinese government. If the Chinese government wants to know who is posting which videos, they can find out right away. If in any way it wants to get revenge on someone or reduce their social credit, like in a Black Mirror episode, it can. This is accepted by a society in return for economic growth and is never questioned. One of the Chinese entrepreneurs I teach every year recently told me, “Years ago, the government had to pay an army of people to patrol the internet and post pro-government messages to control potential incidents of dissent. Now these people are doing it freely. “
After learning how to capitalize outside of China through initial public offerings, mostly in the US, these companies are now looking to expand outside of China along the lines of TikTok. Why shouldn’t they? If you know more about a product category than anyone in the world and you can introduce it to other markets, why not? Do we have a problem with Chinese apps and services? Yes, because these companies are in the pocket of the Chinese government, which is currently building the Overseas Key Information Database (OKIDB) on possible data of interest to prominent or influential citizens of other countries. The Beijing authorities are not pursuing this type of surveillance alone, but to an unimaginable extent. This is the systematic use of personal data in the context of population control, a surveillance and surveillance system that is not subject to any independent body.
This is the reality of the Chinese technology markets. It’s not that countries always play by the rules, but at least they have them, they accept them, and they are ashamed enough of what it turns out that they try to keep their gimmicks under wraps. But China doesn’t care, and besides, it has been trying for some time to convince us that its system is better. And as long as they don’t play by the generally accepted rules, we unfortunately have a problem. It’s a circle that will prove very difficult to square.