The clock’s ticking for regulators on TikTok
1 Aug 2019|

In the 18 months the Australian Competition and Consumer Commission was busily working away on its 623-page opus on digital platforms, Chinese-owned app upstart TikTok grew a global audience of over 700 million.

With no serious regulatory barriers—let alone a Great American Firewall—to stop it, TikTok achieved its meteoric growth, ironically enough, by ploughing US$1 billion into ads on the social platforms of its Western rivals like Facebook, Facebook-owned Instagram, and Snapchat.

As the ACCC scribes reached the halfway point of their report, Beijing-based ByteDance—the company behind TikTok—became the world’s most valuable start-up on the planet after securing a US$3 billion investment round which gave it a jaw-dropping valuation of US$75 billion.

Then, just over a week before ACCC Chairman Rod Sims handed the finished report to Treasurer Josh Frydenburg, ByteDance announced at the Shanghai Film Festival that it had amassed more than one billion active users across its family of apps.

The overnight success of TikTok should serve as a reminder to the ACCC that, as journalism professor Margaret Simons flagged in her submission to the inquiry, regulators ‘should not assume that Western digital platforms will be the only ones to gain a foothold in Australia’.

Despite the warning, TikTok gets just a single mention in the report—and only because Facebook listed it as one of its many competitors in an answer to the inquiry. Tencent-operated WeChat gets a paragraph, but with no analysis—despite being used by over a million Australians and having a trail of problematic stories behind it.

To be sure, TikTok is still very much a B player in Australia and—at the moment at least—is only a video-sharing app for tweens that you, as a reader of The Strategist, have probably never heard of (which, by the way, is completely by design).

But ByteDance executives are reportedly considering opening an Australian office. They have already been scouting the local market for content creators and, according to market research group Forrester, the company is already pulling in anywhere from $3.7 million to $12.9 million in Australia.

The speedy rise of TikTok should serve as a wake-up call to regulators. We may be most familiar with Silicon Valley’s tech behemoths like Facebook and Google, but there’s a fresh blessing of Chinese unicorns galloping our way.

Unlike China’s first generation of social media tech giants who stumbled in their international expansion, second-generation upstarts like ByteDance are proving to be much more sure-footed. What we don’t know is where they’ll pirouette to next.

There are already signs that the suite of mini-programs in the TikTok app is going to expand. Similar, seemingly inane Western apps like Snapchat have already branched out to news publishing and certainly ByteDance will be looking to do the same.

After all, news is a core competency for ByteDance. The company’s main app inside China is the news aggregator Jinri Toutiao (‘Today’s Headlines’) and it has already significantly disrupted the news business there.

It also offended the ruling Chinese Communist Party in the process. In April last year, the company was ordered to suspend Jinri Toutiao after the authorities decided the news stories featured on it were ‘opposed to morality’.

That prompted ByteDance CEO Zhang Yiming to pledge to increase his team of censors from 6,000 to 10,000—the job ads for which noted that candidates with ‘strong political sensitivity’ would be preferred—as well as pour even more resources into developing an AI-powered automated censorship apparatus.

TikTok has already attracted the ire of regulators around the world, including in Indonesia, India, the UK and the US, where the company has accepted a US$5.7 million settlement with the Federal Trade Commission for violating the Children’s Online Privacy Protection Act.

But beyond the expected regulatory missteps of a fast-growing social media platform, TikTok is uniquely susceptible to other problems that come from its ineluctable closeness to the censorship and surveillance apparatus of the CCP-led state.

Beijing has demonstrated a propensity for controlling and shaping overseas Chinese-language media. The speedy growth of TikTok now puts the CCP in a position where it can attempt to do the same on a largely non-Chinese-speaking platform—with the help of an AI-powered advanced algorithm. There’s evidence to suggest politically motivated censorship is already happening.

Australia’s regulators may think they have a gargantuan task ahead of them grappling with America’s tech behemoths, but they will face a whole new order of problems when they try to rein in the Chinese tech unicorns that are inextricably linked to the CCP’s opaque and erratic censorship and surveillance regime.