The world has witnessed its fair share of tech-related controversies recently - yet nothing highlights geopolitical tensions across the globe as much as the recent US law requiring the ban, or international corporate divestiture, of TikTok in the country.

At the core of this turmoil lies the intricate interplay of corporate ownership and regulatory frameworks across diverse jurisdictions, alongside geopolitical rivalries in nations such as China and the United States.

This predicament here is epitomized by ByteDance, a Chinese company valued at approximately $270 billion, an international corporation that owns globally recognized applications like TikTok and CapCut.

The US law forcing an international corporation to divest one of the largest social media applications in the world exemplifies how large corporate conglomerates with multinational influence and multibillion dollar revenues are having major geopolitical implications in today's interconnected world.

ByteDance, a multinational internet technology company headquartered in Beijing, China, has captured global attention with its flagship product, TikTok. Founded by Chinese entrepreneur Zhang Yiming, ByteDance quickly rose to prominence with its innovative approach to short-form video content.

In 2017, ByteDance made a strategic move by acquiring Musical.ly, a popular lip-syncing app, for approximately $1 billion. This acquisition marked a pivotal moment for ByteDance's expansion into the global market and laid the groundwork for TikTok's meteoric rise to prominence. Leveraging Musical.ly's existing user base and technology, ByteDance positioned itself as a dominant player in the short-video space.

Central to TikTok's success is its sophisticated recommendation algorithm. By meticulously analyzing user behavior, interactions, and preferences, TikTok's algorithm delivers a personalized feed of content tailored to each user's interests. This algorithmic prowess ensures that users are consistently presented with engaging and relevant content, fostering sustained user engagement and platform growth.

While TikTok garners significant attention on the global stage, ByteDance's main app in the Chinese market is Douyin. Launched in September 2016, Douyin mirrors TikTok's format but is tailored specifically for Chinese users. With approximately 750 million users, Douyin stands as ByteDance's true cash cow, overshadowing TikTok's 150 million users in the United States. Its widespread popularity, particularly among younger demographics, underscores ByteDance's dominance in the Chinese digital landscape.

Beyond TikTok and Douyin, ByteDance boasts a diverse portfolio of products and services. One such example is CapCut, a video editing application owned by ByteDance.

This dual ownership of both TikTok and CapCut demonstrates that the ban of Tik Tok will only set the precedent to ban tech applications from divergent jurisdictions, especially amid growing scrutiny over Chinese-owned tech companies operating in the United States.

The new US Law forces ByteDance to divest Tik Tok as a alternative to banning the app in the United States. An international corporate divestiture is when an multinational corporation sell off assets, subsidiaries, or divisions as a strategic decision to streamline its operations or address regulatory concerns.

In the case of ByteDance, a corporate divestiture would entail ByteDance, a company headquartered in China, to sell off subsidiary entities across the globe associated with TikTok or the applications's intellectual property (e.x. its algorithm) to relieve fears about Chinese influence over user data and privacy.

While the US deliberates over the fate of Chinese-owned apps, China itself has not been immune to controversy regarding its policies towards American tech companies. The notion of "delete America" policies refers to China's efforts to reduce reliance on foreign technologies, particularly those from the US. These policies include promoting homegrown alternatives and imposing stringent regulations on foreign companies operating within its borders. 

As the TikTok controversy unfolds, it serves as a microcosm of broader geopolitical tensions and the intertwined nature of technology, commerce, and national security. The US faces a delicate balancing act between safeguarding its interests and maintaining open markets for innovation and competition. Similarly, China grapples with the imperatives of technological sovereignty while navigating a globalized digital economy.

In this turbulent landscape, the fate of TikTok, CapCut, and Global Tech Giants that have their headquarters in China will hang in the balance, symbolizing not just the clash of corporate titans but the collision of geopolitical forces reshaping the future of tech on a global scale.

As stakeholders weigh their options, one thing remains clear: the ramifications of this controversy will reverberate far beyond the confines of social media platforms, shaping the contours of a new era in international tech diplomacy.

Della Torre Law, PLLC