TikTok is in a battle for survival in the US, where politicians across the country are working to ban it over unproven fears the Chinese government can harvest Americans' personal data from the app.
The stakes could hardly be higher for the wildly popular video-sharing platform, which is owned by Beijing-based ByteDance. About 150 million Americans use it, and a ban here could lead to other western nations quickly following suit, such as the UK.
TikTok, which says Beijing has never asked for any data, is turning to the southern state of Texas as it struggles to convince sceptical US officials that it will do everything it can to protect user data.
Dubbed “Project Texas”, the $1.5 billion plan would create a separate US-based company to store all American data with Austin-based Oracle.
“We have designed Project Texas to move forward in the United States,” TikTok's chief executive Shou Zi Chew said at a Congressional hearing last month.
“Firewall off American data stored on American soil by an American company, overseen by American personnel.”
Several bills are already being considered by Congress, including one endorsed by the White House, that would ban TikTok.
President Joe Biden's administration also recently delivered TikTok an ultimatum, saying it could be banned if its Chinese owners did not sell their stake in the company.
The app has already been banned on federal government devices for members of Congress and the military. Nearly half of all US states have also banned TikTok on government devices.
And some states are looking to go further still, absent a federal ban. Earlier this month, local lawmakers passed a bill that would make Montana the first US state with a total ban on TikTok, though how such a ban could be enforced at the state level is unclear.
TikTok is already banned outright in India and Taiwan. Western governments, including in the EU, Canada and New Zealand, have banned the platform from government devices. The UK has also announced a ban.
Mr Chew's challenge is to convince a sceptical US Congress that there is a barrier between app users in America and any servers that could feed data to China.
He said that all new US data has been sent to Oracle since October, and the company this month began deleting all US user data from non-Oracle servers. He said he expects that process will be done by the end of this year.
In a press release announcing the partnership with TikTok, Oracle chief executive Safra Catz said the project would allow for greater security and data privacy for its US users.
“We are 100 per cent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world,” Ms Catz said.
“This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders.”
Although nearly half of all Americans use TikTok, it has become a scapegoat for concerns over trade, security and competition with China in general.
In Texas, Republican Governor Greg Abbott banned the app from all government-owned devices in December, leading some public universities to ban it on campus internet networks.
“Owned by a Chinese company that employs Chinese Communist Party members, TikTok harvests significant amounts of data from a user’s device, including details about a user’s internet activity,” Mr Abbott said in a statement.
But he hasn’t always opposed the idea of a Texas-based home for the app. In 2020, when then-president Donald Trump announced a deal to move TikTok’s US operations to Texas, Mr Abbott tweeted: “Texas would be the perfect place for the HQ.”
Since then, more Republicans and Democrats have joined a chorus demanding more transparency from the app and calling for a more widespread ban in the US.
Lawmakers did not seem particularly swayed by Mr Chew’s testimony in Congress, highlighting concerns not just about the app’s data usage but its addictive content and potential impact on younger users.
“With all due respect, the ‘No company can be perfect’ line has been used way too much today,” said Democratic Congresswoman Angie Craig, Minnesota.
“Clearly, in the three-plus hours you’ve been before us today, what you’re saying about Project Texas just doesn’t pass the smell test.”
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
