Speculation is mounting that the international headquarters of the Chinese-owned video streaming app TikTok will be set up in London, a move expected to cause further diplomatic friction between the UK government and the Trump administration.
ByteDance, the owner of TikTok, is expected to make the announcement formally next week, the British press has reported.
A Downing Street spokesperson on Monday said that the location of ByteDance's headquarters is a commercial decision for the company to make.
“It would be a commercial decision, and I’m not aware that one has been taken,” the spokesman said.
Although some may see the move as an attempt to establish London's credentials in a post-Brexit world, others may be more inclined to view it as a geopolitical bear trap.
The company had spent months negotiating with the British Department for International Trade and government officials to expand operations in London, creating another 3,000 jobs. But talks stalled in mid-July as tensions increased between London and Beijing over Britain's decision to stop working with Chinese telecoms firm Huawei on its high-speed 5G mobile phone network.
The wildly popular streaming app has become a go-to for teenagers, allowing them to share video clips of up to 15 seconds. Available in more than 140 countries, it has more than 800 million active users.
TikTok has already made the UK capital its main European hub but its 800 or so employees are operating out of temporary WeWork offices in the centre of the city.
The establishment of a new London headquarters may widen rifts between the UK and the US, which has accused TikTok of passing personal data to the Chinese government. It comes as British and US officials meet in Washington this week to discuss a post-Brexit trade deal.
On Friday, US President Donald Trump said he would ban TikTok from America after intelligence officials raised security concerns. His Secretary of State, Mike Pompeo, said two days later that the president would take action on what he views as several national security risks presented by firms connected to the Chinese Communist Party. ByteDance denies any links to the Chinese government.
“These Chinese software companies doing business in the United States, whether it's TikTok or WeChat - there are countless more... are feeding data directly to the Chinese Communist Party, their national security apparatus,” Mr Pompeo told the Fox News channel on Sunday.
“Could be their facial recognition patterns. It could be information about their residence, their phone numbers, their friends, who they're connected to. Those - those are the issues that President Trump has made clear we're going to take care of,” he added.
Although London hopes that opening its doors to TikTok's planned international headquarters will help heal relations with China over the Huawei move and Hong Kong, analysts who have spoken to The National are sceptical.
Professor Steve Tsang, director of the China Institute at London School of African and Oriental Studies, said: “The government is probably hoping this will ease the pressure from the Chinese in terms of retaliation over both Hong Kong and Huawei. I don't think it will work. TikTok is not Huawei.
“Although I wouldn’t dismiss [security risks posed by] TikTok, because it’s mainly teenagers who use it rather than older demographics, it is not critical infrastructure for the Chinese government in the way that Huawei is. So we're are not comparing like with like.”
British political analyst David Downing told The National that in the long-term a TikTok headquarters in the UK capital would be unlikely to heal rifts between Beijing and London.
“However, in the short term, it will likely allow both sides to claim there is a return to a semblance of business as usual after the Huawei decision,” Mr Downing said.
Prof Tsang added that China’s “aggressive misinformation” over the coronavirus pandemic was causing the country to become less popular in the eyes of Britons. He added that the British mindset towards Brexit may also influence the TikTok decision.
“We are in a slightly worse position in relation to China and we are trying to have the cake and eat it," he said. "We want a good economic relationship with China but we also want to stand by our principles and the Chinese won't let you have both. From their perspective, you're with us or you're against us."
In terms of how the move will affect UK-US relations, Mr Downing said it could initially sour relations.
“This rift, however, is partially made worse due to the mercurial instincts of the current president. Trump and the UK differ on a number of key measures, for instance Russia and indeed even on the idea of the current rules-based global co-operative order set up by the UK and US-post WW2.”
He said that any rift between the two allies could be minimised in November, if Democratic candidate Joe Biden wins the election.
“The US will likely be concerned by the re-location of TikTok to the UK but also they may tacitly acknowledge it is something of a quid pro quo, and longer term is better for Western security and the current democratic world order than allowing Huawei to build the 5G network of a key ally.”
Meanwhile, it was announced over the weekend that Microsoft is in discussions to acquire Bytedance, with the tech giant looking to round-off negotiations by September 15.
The potential acquisition would result in Microsoft owning and operating TikTok in the US, Canada, Australia and New Zealand.
The US technology company has pledged to increase security, privacy and digital safety tools on TikTok if it acquires the app.
Kevin Mayer, TikTok CEO, hit back at criticism from US politicians earlier this week regarding the app’s security, saying it was “disguised as patriotism and designed to put an end to our very presence in the US”.
TikTok announced last Tuesday that it wanted to hire another 10,000 staff in the US over the next three years, adding to its America-based workforce of almost 1,400.
'We are not political, we do not accept political advertising and have no agenda - our only objective is to remain a vibrant, dynamic platform for everyone to enjoy,' Mayer said.
“TikTok has become the latest target, but we are not the enemy.”