Does TikTok really endanger the national security of the U.S. Why did Oracle lose the Chinese market?

Chinese companies go abroad and see the world through storms

  Central Commission for Discipline Inspection and State Supervision Commission website Han Yadong

  The Internet platform TikTok issued a statement on September 19 that its parent company ByteDance has reached a principled consensus with Oracle and Wal-Mart in the United States. Based on this, the three parties will reach a cooperation agreement in compliance with the laws of China and the United States as soon as possible.

  The statement said that this principled consensus has been submitted to the US government as a proposal, and TikTok believes that the tripartite principled consensus will solve the problems surrounding the company's future operations and development in the United States.

TikTok is willing to continue to provide "a safe and inclusive platform" for global users, including 100 million US users.

  The US Department of Commerce said on the 19th that it will postpone the previously announced decision to ban TikTok software from downloading and updating app stores in the United States from midnight on the 20th local time to midnight on the 27th.

  The fate of TikTok went through several days.

Does this company endanger the "national security" of the United States?

Why did Oracle, which cooperated with TikTok, "lost" the Chinese market?

What kind of storms might Chinese companies encounter when they sail out to sea?

Our reporter interviewed experts on Internet and international trade issues.

The U.S. implements strict control over the Internet space on the grounds of national security

  In the past year, the United States has continuously escalated its pressure on TikTok.

Since July of this year, the Trump administration has directly put pressure on ByteDance: selling TikTok's US business to Microsoft or other US companies, otherwise it will be blocked.

  The reason for suppressing TikTok has been attributed to "national security" by the Trump administration.

Last Monday, Oracle and TikTok parent company ByteDance submitted a plan to the US government. TikTok said in a statement: "I believe this plan can solve the US government's security concerns."

According to media reports, in accordance with this plan, TikTok headquarters will remain in the United States, and Oracle will become TikTok's partner in data security compliance, providing cloud architecture services for US users.

Since TikTok's US business has offices in Los Angeles, California, the program is also called "California on the Cloud."

  US President Trump stated that he has "in principle" agreed to TikTok's cooperation plan with Oracle and Wal-Mart.

  According to Lu Benfu, a professor at the School of Economics and Management of the University of Chinese Academy of Sciences, TikTok adopts a "data trustee" model, that is, relevant companies take into account the local country’s concerns about data security and select local companies as the "data trustee" to be responsible for data storage and monitoring of data. All access to customer data.

This may become a mode of data flow internationally in the future.

  It is worth mentioning that the US government has not provided any real evidence on how TikTok endangers the "national security" of the United States.

However, the use of security as a reason for network control is not an isolated case for the US government.

"Any short video posted by ordinary citizens is considered to be related to national security. In theory, whether this situation is related to national security is actually a question mark." Lu Benfu analyzed: "The United States has a trend of generalizing data security. In addition to preventing known threats, unknown threats are also included in the scope of supervision."

  The United States is the birthplace of computers and the Internet. It is also the country with the most developed information industry in the world. It is also one of the countries with the most stringent control over cyberspace security.

In February 2003, the United States issued the "National Cyber ​​Security Strategy" report, which formally raised cyber security to the strategic level of national security and established a set of legal systems.

  TikTok once submitted its cooperation plan with Oracle to the US Treasury Department.

The Committee on Foreign Investment (CFIUS) under the U.S. Department of the Treasury is responsible for conducting national security reviews of foreign mergers and acquisitions.

According to U.S. regulations, CFIUS has clear jurisdiction over “transactions that may cause foreign governments to obtain sensitive personal information of U.S. citizens”. Once a business activity involves U.S. national interests and national security, it will often be based on the disclosure of personal privacy information. Exercise the right of veto.

Prior to this, Huawei’s acquisition of 3Leaf Systems, a technology developer in the San Francisco Bay Area, was rejected by CFIUS on the grounds of threatening national security.

In November 2019, CFIUS launched an investigation into Bytedance's acquisition of American short video app

After nearly a year of review, CFIUS has concluded that “Bytedance’s acquisition of has national security risks, and TikTok does not have any mitigation measures to address these risks”.

The reason is that TikTok is used by a large number of American users, and there is a “possibility” that the Chinese as the controlling shareholder may hand over user data to the Chinese government, thereby jeopardizing the national security of the United States.

  Cross-border data flow is the fourth flow in addition to the flow of people, logistics, and capital. It is considered by the United States to be an important issue involving national cyberspace security. The United States law sets extremely strict requirements on data storage and flow.

For example, the U.S. Foreign Investment Risk Review Modernization Act of 2019 explicitly includes foreign investment in companies that store or collect sensitive personal data of U.S. citizens into the scope of review, and strictly restricts foreign companies from collecting U.S. citizen data.

  According to Zhao Guodong, secretary general of the Zhongguancun Big Data Industry Alliance, an Internet company in the alliance is mainly engaged in services such as mobile APP data collection.

The company's operations in the United States are subject to strict supervision, and data collected is strictly prohibited from leaving the country.

"The United States has strict control over the virtual digital world, and has a series of specific control measures." Zhao Guodong said.

  For a long time, the United States has attempted to use "Internet freedom" as its banner to clear the way for its dominant cyberspace.

In fact, the United States, which preaches "Internet freedom," has never neglected prevention and supervision of the Internet.

Advanced network monitoring systems are spread all over the United States and abroad, implementing very efficient monitoring and control.

It can be said that the United States is the country with the most stringent Internet supervision in the world.

  "The real purpose and intention of the United States to promote'cyber freedom' is to realize its cyberspace interests and hegemony. If'cyber freedom' cannot guarantee its market expansion and national interests, the United States will replace freedom with regulation. The TikTok incident is once again It exposes its true face of using national security as a coat and omnipotent supervision." Zhao Guodong said.

Why did Oracle, which cooperated with TikTok, "lost" the Chinese market

  An agreement with TikTok has brought Oracle, headquartered in California, into the public eye again: Why is there little news about this industry giant in the Chinese enterprise software field recently?

  People familiar with the development of the information industry disclosed that, in fact, with the rise of Chinese local Internet service companies in recent years, Oracle has had to "defeat" from the Chinese market.

  Oracle is the second largest software company in the world after Microsoft, and an absolute oligarch in the database market.

In 1989, Oracle officially entered the Chinese market and established R&D centers in Shenzhen, Beijing, Shanghai, Suzhou, and Nanjing.

However, in May 2019, Oracle stepped on the brakes in the Chinese market: the first batch of layoffs in the China R&D center was about 900 people, accounting for nearly 60% of the total number, and the entire center may face overall abolition.

This is regarded as a landmark event of Oracle's "failure" in the Chinese market.

  Oracle's decline in the Chinese market is the result of market competition and the profound changes in the database industry.

Since IBM launched the first-generation database DB1 in 1968, the database has been the core of enterprise information technology systems.

After 2000, the Internet and cloud computing technology changed, and the new database era led by open source, distributed and cloud computing gradually came.

The former innovation leader Oracle was slow to respond and even stood on the opposite side of the new technology.

  Traditional IT vendors are declining in the cloud era, and their business in China has been replaced by rapidly rising Chinese Internet companies. Oracle's decline is a reflection of this process.

In September 2009, Alibaba Cloud announced its establishment, and soon its engineers wrote the first line of code for Feitian.

In May 2013, Alipay's last IBM minicomputer went offline.

In July of the same year, Oracle's database was removed from Taobao's core advertising system.

As Oracle's largest customer in the Asia-Pacific region, Ali's "Go IOE" (abbreviation for IBM, Oracle, EMC) reflects the new choice of the domestic database market in the Internet era.

As all kinds of large and small enterprises "drive" their database business to the cloud, at present, 80% of Chinese technology companies use Alibaba Cloud services, and 29 provinces and municipalities across the country have moved their government services to Alipay.

  Similar processes have occurred in other industries.

In the context of the rapid growth of domestically-produced cars, the French car company Peugeot Citroen announced last year that it would stop developing its joint venture, Changan PSA, due to setbacks in the Chinese market. It recently decided to move the battery production line established in China back to France.

In 2019, Peugeot Citroen's car sales in China and Southeast Asia were only 1.17 million, a 55.4% decrease year-on-year, and its losses in China amounted to 700 million euros.

"In recent years, competition in the Chinese market has been fierce, especially the rapid rise of domestically-produced cars. China has passed the era of'posting a foreign brand and making a lot of money'. International brands must deeply integrate with the Chinese market to gain China continues to develop." said Xu Haidong, deputy chief engineer and director of the Industrial Research Department of China Association of Automobile Manufacturers.

  China is a hyper-scale consumer market with a population of 1.4 billion and a large middle-income group. It is the most important growth market outside the country in the eyes of global CEOs.

"Some foreign companies withdraw from the Chinese market, not because our labor cost advantage is disappearing and other macro-environmental changes. In many cases, it is the result of micro-competition of enterprises and their business in China has been replaced by Chinese companies. Behind the withdrawal and withdrawal, It is the rise of Chinese companies in these industries.” said Tu Xinquan, Dean of the China WTO Research Institute at the University of International Business and Economics.

  The law of world industrial development shows that technological changes will always push the old overlords who are not adaptable to change from the throne.

Oracle's "failure" in the Chinese market is actually the inevitable result of Chinese Internet companies advancing bravely, capturing and embracing Internet rules.

Chinese companies sailing out to sea are thrown out of pits one by one

  ByteDance is considered to be a successful Chinese Internet company going overseas.

In recent months, the fate of TikTok in the United States has attracted attention from all parties.

  In the past, there are ZTE and Huawei, and the existing WeChat and ByteDance. Their various experiences in the United States reflect to a certain extent the wind and waves that Chinese companies have to face when they set sail.

Facts have proved that they have become targets targeted by the US authorities precisely because they have developed fast enough and good enough.

The setbacks they have encountered have also given Chinese people a sober shot: Chinese companies still have a long way to go before they go global.

  Over the years, the rapid development of China's economy, especially the development of Chinese companies, has gradually replaced the business of some American companies in China. This is a reality that American companies have to face.

Similarly, Chinese companies entering the international market at a relatively fast speed, including the US market, must have a deeper understanding of the political, legal culture and the intensity of supervision in the US, otherwise they may become uncomfortable and even fall into a trap.

  "It has not left the political economy, nor the international trade of domestic politics. Before going out, companies must fully understand and grasp the international practices and the laws and policies of the host country." Tu Xinquan analyzed that the country the company enters is different and its investment risk There will be a difference in response to the response strategy.

For example, countries with a mature market economy are more concerned about your compliance, whether your company is sufficiently market-oriented and does not comply with their rules and regulations. In addition, their national security review is also an important consideration; it is not about the political situation. A stable host country must guard against risks, take the initiative to participate in overseas investment insurance, actively seek national-level intervention and coordination when necessary, and use the power of the country and relevant international organizations to protect the legitimate overseas rights and interests of enterprises.

  "The political and social resources of international partners can help Chinese companies to hedge against risks going abroad to a considerable extent." Zhu Jigao, a researcher at the National Opening-up Research Institute of the University of International Business and Economics, said that when companies carry out foreign investment and overseas operations, they must help local people solve employment and services. The community, etc., form a close connection with it, which also helps to better prevent and respond to various risks in foreign investment.

  The world today is undergoing major changes unseen in a century. The new crown pneumonia epidemic has exacerbated the evolution of major changes. The international environment has become increasingly complex, economic globalization has encountered a countercurrent, and unilateralism and protectionism prevail in some countries. Seek development in a certain world.

Even if an enterprise encounters setbacks when setting sail, there is no need to lose confidence in the future of the enterprise, because we still have a huge domestic market, which has always been the foundation and backing of Chinese enterprises.

"The world's largest producer of the BMW X5 is in the United States, but from the next year, the BMW X5 will be built in China, because the world's largest car sales market is in China. Similarly, our company must also take the Chinese market in depth. To be practical and to realize independent research and development of key core technologies and key components is the basis for going global and the strategic backing for preparedness." Xu Haidong said.

  Lei Jun, the chairman of Xiaomi, once said frankly: "Xiaomi's'going out' is not all smooth sailing. The internationalization of a company is a pitfall." Heroes have been suffering since ancient times.

The detours we have taken will calm us down and find a more stable and far-reaching path.