TikTok building separate app for US as exit deadline looms
ByteDance and TikTok declined to comment.The initiative, known internally as 'M2", has a September deadline, and could represent the biggest technical break between TikTok's US operations and its international business. The change is expected to impact how 170 million US users access global content and how non-US creators make money on the platform.The new US-only app is designed to function independently, similar to Douyin — the version of TikTok available exclusively in mainland China. Users from outside the US will not find the American version in their app store, sources said.Technical details of the upcoming US app are reported here for the first time. The Information first reported on the planned launch of the US TikTok app.While current content is expected to migrate into the new app, it remains unclear to what degree new content from the global TikTok apps will be integrated into the US version. The new app is expected to use only data from US users to train its recommendation algorithms, further distancing it from TikTok's global systems, sources added. As a result, most users will be recommended content generated within the US.SEPARATION ANXIETYThe push to separate TikTok's US app from its global platform has been underway for months, as ByteDance executives prepared various plans to prevent a ban of the app in the US, a move required by recently passed legislation over data security concerns.The future of the app used by nearly half of all Americans has been up in the air since a 2024 law, passed with overwhelming bipartisan support, required ByteDance to divest TikTok by January 19.Washington officials have said TikTok's ownership by ByteDance makes it beholden to the Chinese government, and Beijing could use the app to conduct influence operations against the US and collect data on Americans.advertisementAfter the first deadline and a brief moment of "going dark" in January, TikTok began moving non-US user data out of American data centers run by Oracle, ensuring only US user data remained on servers in the US, paving the way for separating US and international businesses, according to sources.The company has also been working on separating the codebase for its core algorithm since last year, a move first reported by Reuters and denied by the company at the time.Once the split is completed, the core technology and ongoing development will be managed separately from the global TikTok team, although some ByteDance employees could continue supporting TikTok US in an outsourced capacity, one of the sources added.This has raised internal concerns about whether the algorithm for the US will remain as effective in the long run as it is today, when TikTok can leverage ByteDance's global engineering talent and product expertise.The project comes as ByteDance faces continued political pressure in Washington to divest its US business. A deal had been in the works this spring to spin off TikTok's US operations into a new US-based firm, but it was put on hold after China indicated it would not approve it following Trump's announcements of steep tariffs on Chinese goods.advertisementIf a sale is finalised, the new app is expected to be owned by a joint venture formed by an American investor consortium and ByteDance, which will maintain a minority stake.The consortium, which has emerged as the frontrunner, includes ByteDance's current shareholders Susquehanna International Group (SIG), General Atlantic, KKR KKR.N, as well as new investors such as Blackstone and Andreessen Horowitz, Reuters previously reported. Oracle ORCL.N is also likely to take a stake.Still, it remains unclear whether Beijing has approved the plan to copy the algorithm or sell TikTok's US operations.During previous negotiations, Chinese authorities expressed strong reluctance to allow the export of TikTok's recommendation algorithm, widely seen as ByteDance's valuable asset and a key driver of its global popularity.In 2020, when the Trump administration first pushed for a sale of TikTok's US business, China updated its export control rules to cover technologies such as recommendation algorithms, effectively giving the government a say over any transfer.At the time, TikTok's management team rejected the plan of hiving off its US operations as detrimental to both users and the global network, according to people with knowledge of the decision.advertisementNow, the talks on TikTok's fate are also part of President Trump's broader trade negotiations with China over tariffs, sources said.Trump said last week he would resume talks with China about a TikTok deal. While he said he was "not confident" about Beijing's approval, Trump added, "I think the deal is good for China and it's good for us."- EndsMust Watch
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Mint
22 minutes ago
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Why it has never been better to be a big company
For all the unwieldiness it entails, scale has always brought enormous benefits in business. Fixed costs are set against more revenue, raising profits and supporting investment. Heft brings greater bargaining power with suppliers and financiers. From the early 2000s, the advantages of scale became even more pronounced. Intangible assets, including software and intellectual property, gave the upper hand to companies that could afford to invest in them. Globalisation provided big companies with more room to grow, as well as access to larger—and cheaper—pools of labour. In America, the gap in profitability between big and small firms widened (see chart 1). Economists began to speak of 'superstar" firms racing ahead of the competition. Now size is conferring advantages in new ways. Artificial intelligence (AI) is reinforcing the dominance of big firms over small ones. So is the presidency of Donald Trump, which has raised the importance of resilience and political sway. Yet these same disruptions could spell danger for America's corporate giants. Already companies from Apple to Walmart are discovering how their size can make them a target of Mr Trump's wrath. Start with AI. You might imagine that lumbering leviathans would be too tied up in bureaucracy to make use of the technology. In fact, their scale allows them to invest far more in it than smaller rivals. According to a survey in December by Bain, a consultancy, American companies with more than $5bn in revenue had an average annual budget for generative-AI projects of $27m, five times the level in the preceding February. Those with between $500m and $5bn in revenue, by contrast, had set aside $9m, up by two-thirds over the same period (see chart 2). JPMorgan Chase, America's biggest bank, says it has rolled out AI tools to most of its 320,000 employees. UnitedHealth, the country's biggest health insurer, claims to have 1,000 different applications for the technology. 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We examined the profitability of listed American companies, as measured by their return on invested capital, in nine non-financial sectors before and after the pandemic. For seven of the nine, the biggest firms—those in the top quintile by revenue—were, on average, more profitable across 2023 and 2024 than they were across 2018 and 2019. The bottom quintile, by contrast, became less profitable in the same number of sectors. Bigness tends also to bring increased supply-chain resilience—just as important in a trade war as it was amid covid-19. 'During the pandemic, I kept getting calls from small and medium-sized businesses saying that they could not get shipping capacity. The big companies were, by and large, at the front of the queue," says Philip Damas of Drewry, a shipping consultancy. Such prioritisation pays when companies are rushing to import products into America before tariff deadlines. It helps, in addition, that big companies tend to have more suppliers in more places. 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On May 23rd he threatened a tariff of 'at least 25%" on iPhones sold in America but made elsewhere. Even if the courts make Mr Trump's tariff threats toothless, he has plenty of other means at his disposal to make life difficult for companies. America's corporate giants have enjoyed super-sized advantages. They should be prepared for some super-sized headaches, too. To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter.
Mint
22 minutes ago
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Demand for American degrees is sinking
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Indian Express
25 minutes ago
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With Aug 1 deadline looming, India's faces a trade predicament: to accommodate Trump's hardball tactics while maintaining tariff advantage
With less than a couple of days left for the August 1 deadline that the Donald Trump administration set itself to thrash out deals with its trading partners, the American President said he is planning tariffs for 'the rest of the world' at 'somewhere in the 15 to 20 per cent range'. That would mean a significant increase on the 10 per cent 'baseline' tariff that currently applies to most trading partners. India's talks with the US for an interim deal are in a limbo of sorts, given the lack of a significant breakthrough so far. As things stand, three things are clear: the US is pushing for zero duty access to the Indian markets, like the deals it has got with Vietnam and Indonesia. That would, however, be a tough demand for India to accommodate. Secondly, from its perspective, New Delhi is pushing for a headline tariff number of around 15 per cent for its goods going into the US, like what was offered by the Americans to the EU and Japan, with the comparative tariff advantage starting to diminish if the tariff starts to go over figure and inch up closer towards the 20 per cent mark, or even higher. Also, going by the deals signed by the US so far, the tariff scenario for each country seems to be dependent on multiple external factors as well. This includes investment commitments and promises on directional shifts in trade in goods that America is keen to peddle. The Trump administration is learnt to be pushing for India to commit to specific purchases and investments, of the sort that it got the EU and Japan to sign up for. The commitment for purchases should not be a big issue for India, given that Trump is ostensibly focused on extracting a big figure that runs into billions of dollars, without even bothering to specify the time-frame for achieving these targets. The full texts of the deals for both Japan and the EU are not out, and are unlikely to be out anytime soon. India has comminated its openness to purchasing three big-ticket items from America: defence equipment, natural gas imports and nuclear reactors. Cobbling together a big number might not be a difficult task. Agri and dairy, two contentious issues, are likely off the table for now, which is positive for New Delhi. Also, with the UK deals, India has shown a willingness to be flexible on segments such as opening up public procurement. That gives some headroom for Indian negotiators for the final push. Indications are that a sixth round of talks between the two negotiating teams is expected to take discussions forward mid next month. What could be instructive is the limited takeaway from the Japan deal: how the Japanese negotiators managed to upstage their American counterparts by getting an immensely favourable deal on automobiles, even as they dangled the agri market access concessions and Tokyo's investment pledges as distraction the entire time. While India's trade deal with the US is likely to be less focused on sectors and more focused on the headline number unlike its UK deal, New Delhi is likely to push for market access in labour-intensive sectors, while trying to ensure a significant tariff differential compared to its Asian peers. Now, if the final headline tariff offered to India by Washington DC is between 10 per cent and 15 per cent, the tariff points offered to the UK and Japan, New Delhi should have reasons to be satisfied. The advantage starts to taper off once the tariff goes over 15 per cent and inches up closer to 20 per cent, as was offered by the US to Vietnam. A transshipment clause, of the kind slapped on Vietnam, could be a problem for India, given that a lot of Indian exports have inputs and intermediate goods in sectors such as pharma, engineering goods and electronics coming in from outside, including China. Also, clarity on the final American duty offer on China is a number that negotiators will be looking at, given the implicit assumption in New Delhi that the Trump administration will maintain a tariff differential. For Indian negotiators, other tariffs, over and above the baseline tariffs and the sectoral ones on steel and aluminum, is an added complication. Sectoral tariffs such as the 50 per cent on steel, aluminum and copper are already impacting India's exports to the US, and Trump's threat of steep tariffs on BRICS countries over them buying Russian oil is a looming concern. Will that be neutralised in the agreement is a question. Another question for New Delhi is: in the absence of any kind of interim deal, should it brace for an eventuality where there may not just be 26 per cent reciprocal tariffs, plus a 10 per cent additional BRICS tariff as well? That's perhaps the absolute worst case scenario, till an agreement is achieved. A tariff in the 15-20 per cent range would mean India still compares reasonably well with Indonesia (19 per cent), Vietnam (20-40 per cent) and has an advantage against China (30-34 per cent) and Bangladesh (35 per cent), without the additional BRICS tariff being factored in. Meanwhile, as the uncertainty continues, India's exporters are struggling to navigate the way forward because the buyers are not clear as to what the final tariff is going to be, and are consequently holding back on placing orders. The higher tariffs that the US has imposed on China means a number of Chinese manufacturers are now rerouting shipments to Europe at throwaway prices, which is impacting India's exports to the EU as well. India, like other countries, had frontloaded a lot of shipments ahead of the reciprocal tariff deadline for the ongoing Spring-Summer season, but a big question mark looms over the Fall-Winter season spanning October-March. Once the official level discussions wrap up by mid next month, there is a sense that a final call on the deal could come down to a conversation between the two leaders, Prime Minister Narendra Modi and President Trump. This is especially so since the American President is the trade negotiator-in-chief in this entire tariff rationalisation exercise. A firm commitment from India to purchasing American defence equipment, natural gas and nuclear reactors, alongside some kind of guidance on India cutting its purchases of fossil fuels from Russia could be part of the final offer from New Delhi. Trump needs to be convinced of a deal that he can hard sell as a victory to his base. The best case scenario for India would be to get a deal of some sort now, and then build on that in the future negotiations that could run into 2026. For Trump, another growing consideration could be the fact that higher tariffs are making it nearly certain that American households will pay higher prices for the everyday goods that are made overseas and imported into the US. Inflation is a looming reality. A Yale estimate from July 23 found that the tariffs will result in as much as $2,700 in 'lost annual income' per household, though the taxes collected would potentially help narrow the long-running federal deficit. The tariffs that have kicked in so far are bringing in some money into the US Treasury, with tariff revenue pegged at $27.2 billion in June and $22.8 billion in May, according to the Treasury Department's monthly statements, a sharp increase from earlier years. Anil Sasi is National Business Editor with the Indian Express and writes on business and finance issues. He has worked with The Hindu Business Line and Business Standard and is an alumnus of Delhi University. ... Read More
