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Why do TikTok's lip-syncing teenagers alarm Donald Trump?

Concern over ByteDance seems odd compared with more aggressive China actions

Bytedance, the $150 billion Chinese unicorn behind TikTok is already among the world's most valuable private companies.   © Reuters

When a handful of China's top entrepreneurs and investors caught up on Zoom earlier this year to swap notes about the changing tech landscape, among the speakers was ByteDance founder Zhang Yiming.

Founded in 2012, the $150 billion unicorn behind TikTok is already among the world's most valuable private companies. And when it comes to global aspirations, Zhang's creation is by far the most successful company to come out of mainland China in years.

"We all wanted to hear what he had to say about his company," recalls one participant who has known Zhang for many years. "But instead, he gave a very philosophical speech about the need to guard against extrapolating from the last 70 years of peace and not to take things for granted. He spoke of a time in which things would spin out of control. His message was: 'prepare not to be devastated.'"

A self-effacing, geeky entrepreneur who has disrupted the mainland tech scene by challenging the mighty Tencent's share of online viewers of news and entertainment, Zhang seems an unlikely catalyst for worsening relations between the planet's two economic superpowers.

U.S. President Donald Trump's attempts to ban TikTok, the international version of ByteDance's short video app -- which the company is fighting in court -- has triggered a surge of nationalist anger in China, making ByteDance the vehicle for exactly the kind of disorder Zhang anticipated. "Yiming knew how much pressure he would encounter in his overseas march," this investor adds. "For at least a year before that, when we got together, all he asked me about was the future of China-U. S. relations."

Yet TikTok is an odd choice to have incurred the wrath of the White House, even by the eccentric and inconsistent standards of the Trump Administration.

Nominally, administration officials and regulators claim their concern is over data privacy. But teenage preferences for their most beloved hip-gyrating dancers is a strange priority when compared to China's aggressive South China Sea stance and the existential threat to U.S. technological supremacy posed by Chinese companies such as Huawei.

To be sure, ByteDance was hardly the first mainland entity to encounter hostility in the U.S. Yet part of the reason for the enmity clearly has more to do with its unparalleled success; not just in China but internationally. Other consumer internet companies there have expanded outside their home market but never to the extent that ByteDance has. Even Facebook has tried several times to launch direct rivals to TikTok in the U.S. and India, but they have failed to match TikTok's popularity.

At the heart of ByteDance are its algorithms. "There should be a cultural barrier for Chinese tech companies to crack the U.S. market," said Eugene Wei on a recent TechBuzz China podcast. "But ByteDance algos determine what to show you. They serve you good content, using your feedback to train the algo on your taste, one video at a time. They read your mind. And they help (content) creators monetize their videos."

In interviews, Zhang often calls himself as someone who loves to code, recalling Microsoft's Bill Gates who has often described himself as a programmer, not an entrepreneur. Indeed, Bytedance takes its name from the 'dance' of binary code's 0s and 1s.

To this day, about half of the technology at the heart of ByteDance comes from Zhang himself, with the rest from his team, says one longtime investor in ByteDance. A recent patent application for "Method And Device For Social Platform-Based Data Mining" lists Zhang's name as the first of the four filers according to the (U.S.) Journal of Engineering.

"He competed with everyone," recalls this investor. "He was always technology-driven and always relied on his same pool of engineers. He would calculate with exact accuracy his road map; the traffic, the monetization."

There was nothing foreordained about Zhang's rise. Indeed, the speed of his success has even surprised Zhang himself, say people close to him.

Still, he had to overcome many skeptics. When he launched Toutiao, a news app, in 2012, many potential investors questioned Zhang's judgment. Similarly, when he launched Douyin in 2016 against seemingly more powerful rivals with far deeper pockets.

Right from the beginning, Zhang had a powerful backer in Neil Shen, founder of Sequoia Capital China, who consistently maintained that he was "backing the person, not the product." Today, Sequoia's managing partner, Doug Leone, is among those leading talks with the Committee on Foreign Investment in the United States.

The first time this reporter met Zhang, he sat in a small cubicle that could barely accommodate two people, wearing a dark hoodie over a T-shirt. The grubby Beijing dormitory that served as his office had such patchy electricity that when the team ordered eight hot pots for a company party, it could only warm four without tripping the fuse box. Several hires and potential recruits fled in dismay, Zhang later recalled. "But we thought we were (better than the facilities of other startups) because we had two bathrooms and others had only one."

Like many other prominent tech entrepreneurs, Zhang has learned that he needs to be mindful of politics. His news site now features clips of President Xi Jinping's most mundane appearances as among the most important stories of the day. But on the other side of the Pacific, he leaves the politics to investors such as General Atlantic and Sequoia. Zhang's globalization dream now seems more remote by the day.

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