What TikTok’s U.S. deal means for its business in Europe

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LONDON — To say it’s been a turbulent year so far for TikTok and parent company ByteDance would be an understatement. 

TikTok has been caught up in an intensifying geopolitical battle between China and other nations, with the short-video app facing bans in the U.S. and India, which was its largest market in terms of user numbers. Governments said TikTok’s links to China made it a national security threat, but the company has disputed this from the start.

It looked as though things may calm down after U.S. President Donald Trump gave his “blessing” to a TikTok deal with Oracle and Walmart on Sunday, but Beijing is yet to give its approval. What happens next is anyone’s guess.

Assuming the deal does go through, what happens to TikTok in Europe? Home to more than 100 million TikTok users and over 1,600 TikTok employees, Europe has hardly been mentioned in this whole saga. But TikTok’s users, advertisers and employees must be wondering how they’re going to be affected, if at all.

London headquarters?

Less than a month ago, there was talk of putting TikTok’s international headquarters in London, but that looks increasingly unlikely.

“Assuming the Oracle/Walmart deal goes through, then the HQ for TikTok Global for sure is in the States,” said Matthew Brennan, a social media analyst based in China.

TikTok has offices in Paris, Berlin, and Dublin, but London is TikTok’s biggest hub in Europe by some margin.

“For London to be the HQ of a company like TikTok would have been a coup for the city, but alas it seems not to be,” Brennan told CNBC, adding that it would have greatly raised the prestige of London in terms of attracting international tech talent.

The U.K. is facing something of a “tech drain” as companies exit or change strategy, said Abishur Prakash, a geopolitical futurist at the Center for Innovating the Future, a strategy consulting firm.

“First, Nvidia bought Arm,” he said. “Now, TikTok is changing gears on its HQ. This is about far more than lost investment and jobs. Wherever these firms are, they will give rise to the next generation of ecosystems and industries. As tech firms exit the U.K. for the U.S., new geopolitical tensions may emerge between London and Washington — over technology.”

Not everyone thinks it matters if TikTok sets up its international HQ outside of London, though.

Timothy Armoo, chief executive of Fanbytes, a company that helps brands advertise through social video, told CNBC: “I don’t think it’d be such a big loss to be fair.”

“The London ecosystem is pretty advanced with some incredible companies based here,” he said. “Sure, the lack of jobs will be a short term hit but long term I think any impact will be pretty small.”

Data storage

Under the deal, U.S. TikTok user data would be stored on Oracle servers in American data centers.

TikTok users in Europe currently have their data stored on servers in the U.S., with a backup copy in Singapore. Who operates those servers is less clear and TikTok declined to comment when asked by CNBC.

Last month, before much of the chaos, TikTok announced that it was building its first European data center in Ireland.

When it is up and running, the 420 million euro ($493 million) facility will store and process data for all of TikTok’s European users. However, that’s not going to be until at least 2022.

Advertisers and creators

From an advertising perspective, European companies are still keen to spend on TikTok, according to Fanbytes’ Armoo.

“Apart from maybe spooking brands out a bit when it first started for a small period, I haven’t seen anything much,” he said.

“Most European business we’ve spoken to are more looking at the opportunity provided by the platform rather than the anti-China narrative. Users are also nonplussed.”

TikTok creators — anyone that posts a video on the platform — are also continuing to plough ahead in Europe.

Some of them are hoping to secure a slice of the 250 million euro “Creator Fund” that TikTok announced on Sept. 1. The company said the fund was designed to help creators turn their creativity into a career.

A similar fund exists in the U.S. and globally TikTok expects to give out over $2 billion to creators in the next three years as it attempts to take on Instagram and YouTube.

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