On this episode of The Decentralists, we discuss how the U.S. wants to force a marriage between TikTok and the world’s largest software company, Microsoft.
Eight months ago, we predicted the ban of TikTok was inevitable. Meanwhile, TikTok has tried to rebrand itself as an American company, without success. Now President Trump has given TikTok six weeks to be bought by an American company, and it looks like Microsoft is the leading candidate.
Will Microsoft buy TikTok completely or just some of it? Is this controversy just an attempt by Trump to distract from his failed response to the pandemic? Is this a sign of a geo-politically segmented Internet?
Whatever the case, it’s clear that social media is being weaponized by nations fighting an economic cold war with each other.
What does this mean for Chinese technology companies operating in the USA?
On this episode of The Decentralists, we discuss how the U.S. wants to force a marriage between TikTok and the world’s largest software company, Microsoft.
Eight months ago, we predicted the ban of TikTok was inevitable. Meanwhile, TikTok has tried to rebrand itself as an American company, without success. Now President Trump has given TikTok six weeks to be bought by an American company, and it looks like Microsoft is the leading candidate.
Will Microsoft buy TikTok completely or just some of it? Is this controversy just an attempt by Trump to distract from his failed response to the pandemic? Is this a sign of a geo-politically segmented Internet?
Whatever the case, it’s clear that social media is being weaponized by nations fighting an economic cold war with each other.
What does this mean for Chinese technology companies operating in the USA?
Henry : Hey, everyone, it's Henry, Mike, and Chris of the Decentralists and it's another Hot Topix time. But again, we're going to be talking about TikTok because it doesn't want to leave the news cycle at all. Specifically, it looks like there's some country that wants to force a marriage between TikTok and the largest software company in the world, and it kind of blows my mind. Not sure that I understand it. So, Mike, I'm going to go over to you and Chris and say guys, can you figure out what's going on? Can you explain it to me and the rest of our listeners?
Mike : Well, thanks for that one, Henry. I mean, this has got to be one of the most complicated stories that's kind of playing out in front of our eyes right now, this TikTok thing. You know, we talked about TikTok seven months ago, when they were first kind of targeted as a Chinese company. If you guys might recall, about seven months ago, TikTok was targeted by Donald Trump and Mike Pompeo, and the Department of Defence. And first they start with speculation, “It's a Chinese company.” It's, “They’re tracking information and sending it back to China.” And then they escalated a little bit by saying that the Armed Forces weren't allowed to have TikTok on their phones. Armed Forces personnel.
Henry : Yep.
Mike : And then they escalated it a little bit further and said DND, so Department of Defence, that means civilian contractors and all that good stuff are not allowed. Well, that was seven months ago, and it went kind of quiet. And at that time, I called it, I said “Donald Trump is going to ban TikTok.”
Henry : Right. I remember, and we've got it on record.
Mike : Totally. Flash forward, say, six and a half months. So in the last three weeks, India banned TikTok and 58 other Chinese apps over a border skirmish that they had in the remote hills of the Himalayas, with China.
Henry : Right. We did a hot topic on that one.
Mike : We’ve talked about that. Seriously. And then a week later, we had to record a double album, because it got even worse when Donald Trump went out said he was going to ban them.
Henry : That's right.
Mike : Now we're having a triple album. I mean, because it's now gotten to the point where last time we speculated, Henry that not only were they going to get banned, but that because of the ban, if you recall, and the listeners will remember this, I said, “I guarantee you right now, TikTok, and the guys that run TikTok are looking for a way to fast track a NASDAQ IPO, or some kind of stock offering so they can make themselves an American company and get out from the Chinese stigma.”
Henry : Yep.
Mike : And remember, I said to you that there's no way they're going to make that happen in 90 days.
Henry : Yes, I do.
Mike : So what's the next best step? They're now out looking to get bought. And the idea is, who better than Microsoft? I mean, realistically, there wasn't anybody left because Trump hates everybody else. He wasn't going to let Bezos buy them.
Henry : Right.
Mike : But so what's happening now is you've got TikTok literally being forced into an arranged marriage, right, shotgun wedding. But a shotgun wedding is usually somebody's dad, pointing a shotgun at somebody else and saying, “It's time you married my son or my daughter.”
Henry : Yes.
Mike : There's no relationship between Donald Trump who's pointing the shotgun. Technically, there's no relationship, right? He's pointing a shotgun at TikTok and forcing basically an independent technology company that operates globally, he's forcing them to sell themselves to an American company in order to survive.
Henry : In America.
Mike : To survive, period. Because the point is, they've been banned in India. If they get banned in the States, it's over. And so this is the summary, but it's even weirder. Chris, talk about the press release.
Chris : Okay. So essentially, Trump is saying, “Time's up for TikTok.” He wants to ban them. But Microsoft is essentially saying, “Hey, wait up, Trump. We’re the company you still love.”
Mike : The one. The one tech company left.
Chris : The one tech company left, right? “We're willing to buy TikTok.” Essentially, what Microsoft is saying though, is that they're not going to buy TikTok completely, but only service in the United States, Canada, Australia, and New Zealand. So essentially--
Mike : How do they do that?
Chris : Well, you know how there are different versions of Netflix in different countries?
Mike : Yeah.
Chris : Some movies are available in the United States that you can't watch in Canada or the UK or so on and so forth.
Mike : Right.
Chris : It would essentially be the same thing with TikTok.
Mike : Okay, so hold on a second. Let's think about this just one-- What's very important about that distinction? It's still Netflix. So Netflix in Australia may have a different lineup than Netflix in Canada but that's literally just because of the licensing agreements that Netflix has on those videos that they have. But the videos are still coming from the same library.
Henry : Or are they? Is it coming from servers in Australia versus servers in North America?
Mike : There's no way. I guarantee you that content is in one big set of cloud servers somewhere. And basically, it's just the access is governed. Because that's why VPNs work, Henry.
Henry : Right.
Mike : I could VPN from Canada, and tell people I'm pretending to be Australian. I could watch Australian Baywatch, or whatever it is. And so I guess what I'm trying to get at is how-- Because the nut here with TikTok is where that data is.
Chris : Well, so this is where content delivery networks come into play. So Microsoft could essentially build content delivery networks in the United States, Canada, Australia, and New Zealand. And based upon IP address, Microsoft will only serve content from servers within close geographical proximity.
Henry : And they have the ability to do that because they have Azure servers and storage all over the world.
Chris : Absolutely, they do. So essentially, what's happening here is, you know how in China they have the Great Firewall of China where Facebook is not available in China but Weibo is?
Mike : Right.
Chris : And even with TikTok, TikTok isn't available and in China. A Chinese version of TikTok called Douyin is available in China. Chinese users can't access TikTok. So what essentially could be going on here is a Microsoft service delivers an American version of TikTok that is only available in the United States, Canada, Australia, and New Zealand. If you want to access the global version of TikTok, you'll have to dial into a VPN. Say that you're from, I don't know, Indonesia or something like that, if you want the global version of TikTok.
Mike : There's no way. This is completely impossible. Right? I mean, this has to be completely impossible.
Henry : So okay, Mike so what do you think is going on?
Mike : I think this is a smokescreen. Honestly. I mean, what are we now? What is the date today? The fourth of August, right? September, October, November, we are less than 90 days away from the presidential election.
Henry : So you're thinking that maybe this is Trump wanting to create some supposed big win?
Mike : No, I don't think [so]. No, I think it's more a distraction. I mean, look where we are, we're in the middle of a pandemic that is out of control.
Henry : Getting worse every day.
Mike : Getting worse every day in the United States. But not even that, Henry, it's getting worse in the United States, and it has been since the beginning. And that's what Donald's focused on. But now, I read this morning that the Australians have locked down Melbourne again.
Henry : Yes.
Mike : And those were one of the countries that everybody touted as-- You know, speaking of Canada, Australia, New Zealand, and the United States, they touted as being one of the best ones at kind of stopping it. And they're back in emergency mode. And so what you've got right now is you've got a pandemic, you've got people protesting in the streets, you've got lots of crazy, crazy things going on--
Henry : Economic disasters.
Mike : And the economic disaster, and unemployment and all of these things. And what's everybody talking about? An impossible deal. And I think, what's the deal, Chris, didn't you say in the press release the timeline is 90 days?
Chris : They have six weeks, so that's less than 90 days. But Mike, I'm going to disagree with you here.
Mike : Okay.
Chris : I don't think this is a smokescreen. We've seen this before. It happened with Huawei. It happened with ZTE. The CFO of Huawei is in jail right now awaiting trial.
Mike : House arrest.
Chris : She's in house arrest and she hasn't even had a trial yet. She's just stuck in house arrest here in Canada due to Huawei apparently making deals with the government of Iran. So, unfortunately, Mike, I think we are in an era now in which the internet is getting more and more segmented according to geopolitical proximity.
Henry : So essentially, Chris, you're saying that the reason behind this is simply an incredibly massive example of weaponization again.
Chris : Yeah, absolutely this is weaponization. And unfortunately, I think this all means for us is that are we entering an era in which all Chinese technology companies basically, are no longer going to be important?
Henry : Well, what about Lenovo? They sell so many laptops in America--
Mike : Oh yeah, they were talking about Lenovo today.
Henry : And not only that, but people generally consider Lenovo laptops to be superior to your HP or your Dell or what have you.
Henry : Absolutely! I love my ThinkPad. If Trump gets his grubby hands on my ThinkPad, I'm going to be upset.
Mike : Well, buddy, remember, hey, guys, what you're talking about now, the ThinkPad, is actually kind of the consummate example of why everybody's freaking out about TikTok. Because the ThinkPads was IBM.
Henry : Yes.
Mike : And IBM, the Big Blue, they are the banner IT organization on this planet. They were like the original. Guys.
Chris : Yep.
Mike : Remember that? And they were services and hardware, all the mainframes everywhere up until basically probably the ’80s were freaking IBM. And then that whole business goes to China.
Chris : Well, Mike, here's a question for you. So are we just going, not we, but is Trump just going to outlaw Chinese brands? Or is he going to outlaw all computer opponents made in China? Because Apple is an American company, but I guarantee you that the majority of components made in an iPhone are manufactured in China.
Henry : Right. And assembled.
Chris : And assembled.
Mike : Yeah, but then you got all the nitpicky stuff, right? They're made in China, out of silicon that's from China, but on a machine that's from the United States. So that's one of the ways that they kind of got around this Huawei thing before, is they first banned Huawei tech, and ZTE, remember in all the chips, and they almost went bankrupt, like you said, Chris? And then all of a sudden, they let them have the chips back, but then they turned around and banned the equipment that makes the chips, which all comes from the states. What I don't understand gentlemen, here. So what we've got is, is we basically have kind of the, I'm going to say almost the autocratic imposition of pressure on a kind of a corporation. It's not a government. This isn't a human rights abuse thing or anything like this. This is a corporation that operates a 15-second music vignette, social media application.
Henry : Yeah.
Mike : And they're literally being used as a pawn in a public relations war. And so where does this stop? Because the Microsoft thing, what they're talking about doing is basically impossible, because all they're really talking about doing is buying the trademark on the name TikTok in Canada, the US, Australia, and New Zealand, because presumably, none of the backend tech would be the same.
Henry : Okay, so, great input, but I have to ask Mike, and Chris as well. Where do you think this is going to play out? How do you think this is going to progress and end over the next six weeks or two months? What do you think is going to happen?
Mike : Chris, you go first.
Chris : Okay, so, my opinion, of course, is that Microsoft is fully capable of buying TikTok. They've got lots of experience in the social media sphere, they own LinkedIn. They own Yammer, they own Skype. Owning TikTok would essentially make them rivals with Facebook. And suddenly, Microsoft has leapfrogged itself from just an enterprise tech company to one of the most powerful social media companies on the planet.
Henry : So it would be good for them.
Chris : It would be good for them. But the problem now is, we're dealing now with a world in which technology becomes weaponized due to geopolitical influence. And I'm not sure that that's the world I want to live in. Because we've already seen how that plays out with China. Hong Kong used to be a TikTok country, now it’s a Douyin country.
Henry : Mm-hmm.
Mike : Correct.
Chris : I'm in Canada, and I have no interest in Trump whatsoever. And it disturbs me as a Canadian to think that Microsoft is going to be running TikTok service here, simply because Trump doesn't like them.
Mike : Right.
Chris : It disturbs me as a Canadian because that threatens Canadian sovereignty, I believe.
Mike : I'm sticking to my guns. This is a smokescreen. TikTok is going to get banned. Well, okay, here's what's going to happen. This ban of TikTok is going to drag out as long as it can. And it's going to be in the news every day. And it's just going to escalate. Because there's no way, Microsoft didn't get to be the number one software company in the world or, you know, you could argue who's worth most or what means the most, but Microsoft is a top software company in this world, and they didn't get that way by being stupid.
Henry : That's for sure.
Mike : This idea of buying TikTok for “Canada, US. Australia, New Zealand” is completely ridiculous.
Chris : Mike, I'll just say this. Microsoft almost bought Yahoo for $38,000,000,000. Two years later, Yahoo is worth $4 billion.
Mike : No, I understand, Chris. But there's a difference between buying Yahoo and buying Yahoo for Canada, the US, Australia, and New Zealand. This is not a possible deal. And so I think that literally, what you're going to see is, as long as this deflects attention from bad polling, from COVID-19, from bad economics, from Black Lives Matter, from unemployment, from just the borders being closed, and all this other kind of stuff, as long as it deflects attention from the problems that are facing Donald Trump and his reelection, it will remain a hot topic in the news, gentlemen. So we may be back here again.
Chris : I will concede one thing to you, Mike.
Mike : Yeah.
Chris : Which is that Trump is declaring ridiculous things right now in order to create smokescreens. So, Trump, last week said that he wants to delay the presidential election, which he can't do, only Congress can do that.
Mike : This is what I'm saying.
Chris : So I will concede, this may be an element.
Mike : You know, guys, I kind of feel like there's really no way out for these TikTok guys. Because the problem is that if you're China, you're basically being attacked by having one of these companies be attacked. This is kind of the thing that nobody thinks about when they talk about all these companies having state links to China, is that when you go after the companies, you go after the country.
Henry : That's right.
Mike : And to Chris's point, these guys buy lots of stuff off of North American and European and other companies, too. They're a huge market. So does this mean now that, basically, what needs to happen is every single American, Canadian, Australian, and New Zealand and God knows whoever else - pick the name of the country - that operates in China will now have to divest itself from the parent? Let's say Louis Vuitton from France has to sell the Chinese version of Louis Vuitton to a Chinese company. So this is the kind of tit for tat we're talking about. And the Chinese government and all these guys, they have the power to execute on this stuff. Make no mistake. And so I don't think this is in the best interests of anybody. I really don't. I think that if it's November 4th, and Joe Biden is the president of the United States, I think this just goes all the way. The question is, there's a gun to TikTokʼs head right now, does somebody pull the trigger before November 3rd? And I've already called that. I think it's going to get banned.
Henry : Yeah. Oh, yeah. Absolutely. So essentially, what you're saying, Mike, is you believe it will be banned. But both of you, of course, you can't see what's going to happen in the future but you both see this as a bad omen for the future because things can get worse. And essentially, this can cause aggressive behaviour and isolationist behavior between major superpowers. And that can only bring us all down.
Mike : Well, exactly because it's all of our data that's hostage.
Henry : That's right, and nobody's paying for it.
Mike : And that's where all the value-- The reason why everybody's so wound up is because everybody knows how much TikTokʼs data is worth. It's an entire generation. You know, Chris and I were talking earlier this morning, Henry, I mean, TikTok is the Generation Z social media platform, because they don't want to be on the same platform as their parents. And their parents are the Instagram generation. And their parents of the Instagram generation are the Facebook generation. And so this is an opportunity to kind of take control of an entire generation, that data is invaluable. That's why everybody's in a lather about this thing.
Henry : Yeah.
Mike : But it's not going to happen.
Chris : Trump did say that he's worried that TikTok will be used to spread Chinese propaganda.
Mike : Of course he is. I mean, because that's a convenient thing to say nowadays. They're the biggest punching bag on the planet right now, China. Come on.
Henry : Mike, when you were talking about the value of the data, could it be that the young generation now who's loving TikTok right now, 20, 30 years from now, the owners of all that data can sell it back to them as reminiscing about the good old days and the stuff you used to do?
Mike : Absolutely.
Chris : That’s what's happening with MySpace right now.
Mike : Really? They're selling you back your own stuff?
Chris : The only reason anybody logs into MySpace right now is to see what their lives were like 15 years ago.
Mike : Oh, my God.
Henry : Mike, this is why you've got to get Manyone up and running and just humming because people need to own their own data.
Mike : Absolutely.
Henry : And if they want to monetize it, fine, but just own it, because you created it. It's just like music copyright, for goodness sakes,
Mike : We should not be held hostage. Nobody. If somebody walked up to our door with a gun and took us hostage, it would be illegal, and there would be cops all over the place. But somebody basically just makes a decision and takes our data hostage, and that's okay. It's not. So we need to take control of ourselves. It's time to put an alarm system in our house, it's time to decentralize. It's time to just get rid of all this ridiculousness, Henry, and basically get down to something a little more healthy, where my data is mine, I communicate with people the way I want to communicate with them, I share the way I want to share with them. And if somebody decides to ban it, they’d better be banning the entire Internet.
Chris : So Mike, I just want to speak about that further here. The web was built to be decentralized. We all know this story about the origins of ARPANET. It was created for in the event that there was a disaster, let's say a nuclear disaster, people would still be able to communicate with each other through decentralized servers.
Henry : You’re right.
Mike : Right. So we just need to go back to the way it was meant to be.
Chris : We need to consider, okay, in the event of a disaster, let's say a pandemic, God forbid, causes a--
Henry : Oh, that could never happen, Chris.
Mike : No, never.
Chris : You still want to communicate with people you love from across the globe.
Mike : That's right.
Chris : So we need to build a system, once again, that allows for that.
Mike : Perfect. I couldn't have said it any better myself, Chris.
Henry : Absolutely right, Chris. And gentlemen, that is, I think, a natural and a really good way to end. But there's no question we're going to be revisiting TikTok and Microsoft and Trump again. And I look forward to that for future episodes of Hot Topix. Mike, Chris, thank you very much. There's more to come.
Mike : Thank you, Henry. Quintuple album, I guess. First ever.