The United States is ceding its position as a world technological power. For decades, the world’s brightest landed here to build. They chose the U.S. for a few simple reasons, among them access to world-class equipment and education, the ability to take high-paying tech jobs, and a business climate that rewarded the hard-working and lucky entrepreneur with potential riches.
The TikTok saga has been, at best, a comedy. China, long considered the land of clones, had built something world-changing, and the U.S. and its benighted executive legislated it using tactics and tricks that come from some 1990s business playbook.
At issue is the concept of fairness, however that is defined in the realm of global business. For decades, companies wanting to do business in the People’s Republic of China faced draconian requirements, including working with a local partner to represent the company. This resulted in many apocryphal stories that President Donald Trump’s old golfing buddies probably told each other over club sandwiches and Long Island Iced Teas. The idea, in short, was that China could pull the rug out from under any foreign business and that this process was often a sport for young Chinese businessmen who would either steal businesses outright or simply copy products and send them off to the counterfeit markets.
These stories were false, but you can imagine how they rattled around Trump’s brain over the years.
Turnabout is fair play, it seems, especially if the players in this saga stopped their business education in the 1980s. The TikTok partnership is literally a clone of China’s innovation-stifling requirements. This Chinese company—a company whose lifespan is limited at best—must work with a “trusted partner.” The resulting partnership ensures that American data stays on American soil—a laughable concept in an era of ubiquitous tracking and data collection—and that U.S. entities Oracle and Walmart will control 12.5% and 7.5%, respectively. This, in business terms, is peanuts. There is some talk of 40% being owned by U.S. investors, but that, like the story of mean old China, is a farce.
“TikTok’s parent company ByteDance gets to maintain ownership of the U.S. entity, Oracle gets a huge new cloud customer to boost its ailing business, Walmart gets access to teens to sell stuff, and U.S. customer data is no safer (it’s just now in the hands of U.S. predators instead of foreign ones),” wrote Jon Shieber on TechCrunch.
All of this is a cynical and outmoded effort to bite China for the “unfair” trade deals, real or imagined, that rocketed Apple, Microsoft, and Amazon into power, not to mention built the fortunes of Walmart executives. Without China, we forget, America couldn’t drown itself in cheap junk.
So Trump cut a deal. It’s a deal that props up Larry Ellison’s failing cloud business, embarrasses America, and reduces the possibility that the next amazing bit of tech will come from our shores.
The optimist will say that this rights the balance of power between the two most powerful countries in the world. The optimist will say that this was a long time coming and that to retain the status quo was the worst of all possible scenarios. And the optimist is a fool.
The U.S. has long been an innovation powerhouse and will remain so even as her power wanes. This power will wane as she keeps outsiders from entering, closes borders to keep the hungriest and smartest immigrants out, and creates an internal message of “America First.” This power will wane as the Ph.D. graduates in Shenzhen will look to solve real problems, problems that the U.S. once solved as a matter of course. By needlessly antagonizing a website for kids, the U.S. will cede the space race, be second or third in a race for a covid-19 cure, and lose any hope of becoming a manufacturing powerhouse.
The cynic will also have a date and culprit upon which to hang her anger. The date is today. The person is the man in the White House and his group of small-minded dinosaurs.