Tik Tok casting off ties with China

TikTok wants to shed its label as a Chinese brand.

Tik Tok is trying to distance itself from its Made in China origins. Picture: Bloomberg

TikTok this year made history as China’s first social-media company to make it big in the US. Now, TikTok wants to shed its label as a Chinese brand.

As TikTok faces mounting scrutiny from US politicians and regulators, some employees and advisers in recent weeks have approached senior executives to suggest ways the company could rebrand, according to people familiar with the discussions.

Ideas included expanding operations in Southeast Asia, possibly Singapore — which would allow executives to distance the video-sharing app from China — and rebranding it in the US, the people said.

TikTok has reduced the amount of content from China that appears on the app, hoping to minimise reminders of its Chinese roots to American users, according to people familiar with the company’s practices.

Some investors in TikTok’s parent company, Beijing-based ByteDance, acknowledge that an attempt to set the app apart from China could be difficult to execute and that some of the ideas are long shots at best.

But the discussions reflect how TikTok’s meteoric rise is under threat and how some close to the company increasingly view the company’s Chinese ownership as a liability.

One reason behind the concern: ByteDance’s investors, including Sequoia Capital and SoftBank Group, viewed growth in the US as key to achieving their goal of an initial public offering late next year, people familiar with the matter said. ByteDance was recently valued at $US75 billion ($110bn), making it one of the most valuable start-ups in the world.

A ByteDance spokesman said an IPO wasn’t the company’s focus, and moving TikTok’s headquarters to Singapore wasn’t under consideration. He said there was no discussion to change TikTok’s brand name. He also said the company didn’t determine how much Chinese content is on the app because users, not TikTok, upload videos.

“It is well-known that ByteDance was founded in China,” he said. “But the reality is the TikTok app does not operate in China, and we have been further building out and empowering teams in the markets where it does operate.”

ByteDance operates a version of TikTok in China under a different name, Douyin, and the head of TikTok is based there, although the company’s website doesn’t list any offices in China.

For TikTok, the challenge is that many politicians and regulators — and some parents — are wary of the potential for the Chinese government to demand information about the app’s users any time. Increasing the tension between the two countries is the trade war. “We are stuck in between,” one ByteDance employee said. “We are a Chinese company, and we do business overseas.”

ByteDance isn’t the only company in this position. Since a 2018 law expanded the power of US regulators to limit foreign access to technology deals, other Chinese companies have tried to find ways to manage or work around these new restrictions.

When ByteDance in 2017 bought Musical.ly, the small social-network in the US that morphed into TikTok, most Americans hadn’t heard of it. ByteDance poured money into promoting TikTok on popular apps in the US, and as of earlier this year, more than 100 million Americans downloaded the app.

That popularity sparked a backlash. After several senators expressed concerns that TikTok was censoring content to appease Beijing and collecting data about American users, the US launched a national security review.

“TikTok claims they don’t store American user data in China. That’s nice. But all it takes is one knock on the door of their parent company, based in China, from a Communist Party official for that data to be transferred to the Chinese government’s hands, whenever they need it,” Senator Josh Hawley said during a hearing on data security in early November. TikTok has said it stores data on American users in the US and Singapore, although its website says the app may share user information with ByteDance.

“The Chinese government has never asked us to provide access to any TikTok US user data, and we would not do so if asked,” a ByteDance spokesman said.

Investors fear that if the US forced ByteDance to divest itself of TikTok or cease US operations, other countries with concerns about TikTok, such as Japan and India, also could decide to take action, according to people familiar with the matter.

Additional reporting: Kate O’Keeffe