Will a potential US ban drive TikTok deeper into the arms of Southeast Asia?

Temu, a Chinese cross-border e-commerce app, which is popular in the US currently could benefit if TikTok is banned, said an analyst.

If TikTok is banned in the United States, the video-sharing app’s Chinese owner ByteDance might choose to focus more resources on Southeast Asia, where it has more than 325 million monthly users, an observer said on Thursday (Mar 14).

“Southeast Asia collectively … will not be as big as the US in terms of … advertising dollars and also how much e-commerce goods they can sell,” said founder and CEO of Singapore-based consultancy Momentum Works Jianggan Li.

“(But) at the end of the day, if they don't have a choice, they will probably deepen their operations in Southeast Asia as well as other regions which are still somehow friendly towards TikTok.”

Indonesia alone has 125 million TikTok users, the largest Southeast Asian market and second-largest global market after the US. 

Speaking to CNA’s Asia Now after the US House of Representatives overwhelmingly passed a Bill that would give ByteDance about six months to divest its US assets or face a ban, Mr Li said the issues that TikTok is facing in the US are largely driven by geopolitics.

“Currently, most of the Southeast Asian countries will try to stay out of geopolitics, so I do think that from a regulatory point of view, TikTok would probably not face the same challenge as they are facing in the US,” he said. 

He added that the firm is likely to devote more resources to ensure it is compliant in the countries it is operating in, following scrutiny in countries like Malaysia and Vietnam. 

IMPACT OF POTENTIAL BAN OF APP IN THE US

Temu, a Chinese cross-border e-commerce app, which is popular in the US currently, could benefit if TikTok is banned, said Mr Li.

TikTok has been growing its TikTok shop function, which is a direct competitor of Temu, he noted. 

“But Temu is also a Chinese app. So would they face the same scrutiny after TikTok is banned in the US? These are the second degree consequences which are still too early to tell,” he said.

The fate of the legislation rests with the US Senate. 

However, US President Joe Biden’s indication that he will sign the Bill will put pressure on Democrats to pass the legislation, said Professor of Law and Technology at Georgetown Law Anupam Chander.

If ByteDance does sell its stake in TikTok, its rivals like Meta or Google will encounter anti-trust issues, he noted.

With TikTok valued at US$50 billion or more, it may take a consortium of companies to buy it over, he told CNA’s Asia First. 

“The law doesn't require that they be American. It could be just as long as they're not essentially Chinese or Russian,” he said.

IMPACT ON AMERICAN TIKTOK USERS

The potential removal of TikTok will agitate many American users of the app, said Prof Chander.

“Most people using the app don't really fear that their activity on the app can be weaponised against them or the United States,” he said.

Mr Li said that it would be a painful adjustment for small businesses that have to shift away from the app, because operating on other kinds of traditional e-commerce platforms will be very different compared to operating on TikTok shop.

Overall, while users may have other options, none of the other apps’ algorithms is likely to be as sophisticated as TikTok’s, which quite accurately feeds consumers the content they want to watch, he said. 

That said, the users will adapt, said Mr Li.

“Users would adapt to a new situation if TikTok becomes unavailable and that's what happened in India a few years ago when TikTok was banned,” he added.

“And I do think that the TikTok or ByteDance as an organisation, they're also very adaptable. If they have no other choice, they will probably try to develop other markets to compensate for the lack of US success.”