Niall Ferguson is a senior fellow at the Hoover Institution at Stanford University. He’s been a professor of history at Harvard, New York University and at the University of Oxford. His books about international history and the British and American empires are read by the smartest people.
So, this brief passage from his Aug. 9 column for Bloomberg Opinion — “TikTok Is Inane. China’s Imperial Ambition Is Not.” — fascinated me:
Thirty minutes of TikTok left me with just one burning question: How can this thing be a threat to U.S. national security?
And then I had the epiphany. TikTok is not just China’s revenge for the century of humiliation between the Opium Wars and Mao’s revolution. It is the opium — a digital fentanyl, to get our kids stoked for the coming Chinese imperium.
It should be absolutely clear by now that the U.S.-China relationship that defined the global economy late in the 20th and early in the 21st century is over.
And there should be no doubt about China’s conception of itself as a power worthy of standing at least side by side with the United States.
The idea that TikTok represents a major “threat vector” or any sort of weaponizable advantage in a rapidly freezing Cold War is, however, absurd — silly, even.
That’s a point Jon Markman made last Monday:
Pro-growth policies are nice, but corporate managers mostly want politicians to stay out of the way.
On Saturday, Microsoft (Nasdaq: MSFT, Rated “B+”) and ByteDance, the Chinese parent of TikTok, put buyout talks aside after President Trump expressed opposition, according to a report in the Wall Street Journal.
This is not normal. It’s bad for business … and share prices.
TikTok is a wildly popular smartphone application best known for its silliness. Viral short videos of teens, millennials and celebrities dancing, lip-synching and playfully pranking their pets has been a welcome refrain to the seriousness of the global pandemic. At first glance, the app seems like a harmless bit of fun.
President Trump and Secretary of State Mike Pompeo see it quite differently. They have concerns the platform might be a trojan horse for the Chinese government. And with 2 billion downloads, it would be the perfect tool to secretly monitor Americans and manipulate public discourse.
But for them to reach to that conclusion, they’re making a lot of assumptions … and ignoring a few inconvenient truths.
ByteDance and TikTok operate independently. Data for TikTok’s American members is stored in Singapore and the United States, not China. There is also no direct evidence any personal information has ever been shared with the Chinese government.
The reported arrangement between ByteDance and Microsoft would make certain that never happens. According to a Reuters report, all American data would be protected by Microsoft. Furthermore, ByteDance agreed to divest its entire stake in TikToK.
The realities of international relations — especially when it comes to Great Power politics — mean it is wise to be skeptical.
At the same time, as Jon notes, “Investing on the basis of politics alone is one-dimensional. The wisest strategy is to find the companies best positioned to take advantage of big macroeconomic trends and buy dips.”
Of course, stable institutions make executing on such a strategy a lot easier:
The capital markets function best when transparent systems for mergers and acquisitions, government contracts and corporate governance are allowed to operate. These systems foster confidence. Ultimately, they allow investors to take more risk.
In contrast, a White House that flails at perceived enemies such as TikTok causes investors to lose confidence.
Investors shouldn’t fear a new president any more than they fear a healthy global business ecosystem that celebrates innovators like TikTok and risk-takers like Microsoft.
This is, obviously, a tumultuous time, for markets and the world in general. And 2020 will occupy the thoughts and pages of the Niall Fergusons of the world like no single year since 1968, maybe even 1914.
But, even amid such a fraught landscape, opportunity persists. Martin Weiss summarized it on Monday: “Indeed, we now live in two separate worlds — one dominated by a traditional brick-and-mortar economy in shambles … and another dominated by the digital economy that’s booming.”
TikTok and Microsoft are part of a booming digital economy that we talk about in our three-part video series, Future Shock 2020.
(The entire series is coming offline this week. So, if you haven’t watched it yet, click here while you still can.)
Best wishes,
David Dittman