A US TikTok ban may not be a huge loss for China

The company and its foreign investors will lose out, but Beijing has plenty of options — legal and illegal — to access the personal information of American citizens.

The demise of TikTok in the US is now more likely than ever after the House of Representatives overwhelmingly approved legislation that would force ByteDance Ltd., the Chinese owner of TikTok, to sell up or face a ban. While this development has caused frenzied speculation about the future of the popular app, freedom of speech, and potential buyers, China's reaction has been uncharacteristically restrained.

Other than accusing the US of "bullying," Beijing has not threatened retaliation or escalated its anti-American propaganda. It is likely that China is holding back its vitriol because the legislation could die in the Senate, where passage remains uncertain.

However, an even more plausible explanation is that China may not lose that much even if Congress does pass a bill banning TikTok. Beijing could even gain from the divisive battle waged in American courts over issues of freedom of speech that are sure to unfold if President Joe Biden signs such a law, particularly just months out from an election.

Once it goes into effect, TikTok's days are numbered because ByteDance will not get approval from the Chinese government to sell its core technology — the powerful algorithm that influences user engagement. Potential American buyers expecting that President Xi Jinping will allow a homegrown tech crown jewel to be sold under Washington's pressure simply have no idea about the political logic of the calculations of Chinese leaders.

Even though ByteDance owns TikTok on paper, in reality, the potential losses from blocking it will be borne by foreign and private Chinese investors. American venture capital firms, along with foreign tech investors, own 60% of the company, while its Chinese founders and employees control the rest. Along with these investors, the obvious losers would be ByteDance's employees, not to speak of the 170 million Americans who use the app.

By contrast, it is hard to gauge how much damage a ban can inflict on Beijing directly, even though that appears to be the main motivation behind Congressional sponsors of the legislation.

Besides avoiding any potential financial losses from outlawing TikTok, China will not be deprived of a tool to gather data on American citizens, because it can acquire this legally by purchasing from third parties. Alternatively, it can also obtain such data illegally through hacking, as in the case of the theft of personal information of more than 20 million Americans seeking federal employment.

Denying China's use of TikTok as an instrument of global propaganda may not yield much, either. Fears that Beijing could turn to the app to manipulate public opinion in the West and even interfere in elections are legitimate. But Beijing's record in using overseas propaganda to burnish its image seems unimpressive, judging by its consistently poor favorability ratings in nearly all Western and many developing countries.

In addition, Russia's success in using American-owned platforms such as YouTube, Facebook, and X (formerly Twitter) to conduct malign influence operations indicates that there are plenty of options accessible to China.

If a TikTok ban can hurt China modestly, its potential damage to America's image as a bastion of freedom of speech and judicial independence could be substantial, while also boosting China's propaganda that the US is just another hypocritical superpower bully.

In all likelihood, Beijing will not bless a ByteDance sale of TikTok, thus forcing the company to sue the US government to save its American business.

TikTok's strongest defence will be the rights to free speech of American users. Although it remains uncertain whether courts in the US will strike down the proposed ban if it becomes law, previous rulings by federal judges against attempts to outlaw the app in the US and in Montana indicate that TikTok has a fighting chance.

A victory in American courts will make its critics lose face and delight China, although nobody should expect Beijing to say anything positive about US rule of law.

China conceivably could gain even if TikTok fails to persuade the courts that the ban is unconstitutional. Beijing could use this case as the latest evidence of the politicisation of the US judiciary.

As the contest between the US and China is about both hard (military and economic) and soft (ideological) power, the eventual outcome of this fight will undoubtedly influence how the rest of the world views America's handling of this thorny issue. At stake is not the fate of an app, but the reputation of the US as a country with due process under rule of law.

For now, Beijing apparently believes that advocates for a ban have set themselves a trap more than pull off an anti-China masterstroke. Cynical as they are, Chinese leaders might not be wrong about the fallout of the end of TikTok in the US.