From: allin

The debate surrounding TikTok in the United States is intensifying, taking place within a broader context of global decoupling between China and the U.S. [01:22:16] This issue is drawing significant attention, with a congressional hearing on TikTok scheduled for March 23rd. [01:22:22]

The TikTok Situation

ByteDance, TikTok’s parent company, reportedly has a revenue of approximately 25 billion, a size nearly identical to Meta. [01:23:12] Of this, TikTok accounts for about 3-4 billion, though it currently operates at a loss. [01:23:32]

On March 2nd, the White House directed all government agencies to remove TikTok from federal devices within 30 days, following similar actions by Canada, the EU, and Taiwan. [01:25:07]

Views on TikTok’s Future

  • Brad Gerstner, a shareholder in ByteDance, believes that while there isn’t necessarily a “nefarious plot” by TikTok, if the U.S. Congress wants to ban it or force a spin-off/sale, it should be done. [01:24:35] He emphasizes that the larger conversation is about a hard or soft decoupling with China, viewing TikTok as a “canary in the coal mine.” [01:24:57] He also advocated for parental controls on the app, including time limits and content sliders for educational videos, which TikTok announced just prior to the discussion. [01:23:58]
  • Chamath Palihapitiya states that while he believes in a free market and doesn’t think TikTok should be banned, he expects it will be banned. [01:25:54] He sees it as the “most obvious cultural way to pick a fight with China without actually picking a fight with China.” [01:26:10] Chamath advises shareholders to sell, categorizing it as being in the “two hard bucket.” [01:26:22] He also suggests that if ByteDance does not spin out TikTok to make it a publicly traded American company, it indicates they are prioritizing national security interests over shareholder value. [01:34:01]
  • David Sacks believes TikTok will get caught up in “Great Power Competition” (GPC), which he predicts will become the dominant organizing principle of American foreign policy. [01:27:06] He would like to understand exactly what security risks TikTok poses, rather than relying on vague accusations. [01:27:13] Sacks suggests a “reciprocation test” for TikTok’s presence in the U.S.: if TikTok is allowed, then U.S. companies like Twitter, Facebook, Meta, Instagram, and LinkedIn should be allowed in China. [01:26:42]

Broader US-China Relations and Business Impact

The consensus in Washington is shifting, with a growing realization that China, not Russia, is the central global competitor and adversary to the United States. [01:27:36] There is a belief that the Ukraine war is a “misdirect,” and the U.S. needs to return to its strategy of pivoting to Asia. [01:28:01]

Decoupling and Economic Impact

  • Chamath Palihapitiya explains the “Chips Act” as an example of GPC, where the U.S. aims to near-shore or onshore critical semiconductor manufacturing capabilities. [01:28:27] This strategy provides an “option to not have to defend Taiwan” if it were to be invaded, reducing the U.S.’s involvement in a potentially dangerous conflict. [01:28:48]
  • The debate is whether to pursue a “hard decoupling” or to define a “circumference around national security” for selective decoupling. [01:30:35] This circumference is expanding from sophisticated computer chips to include batteries, energy, food supply chains, and vital materials, making it almost as large as the economy itself. [01:30:50]
  • The Inflation Reduction Act (IRA), an additional trillion dollars in funding for onshore supply chains, is also seen as part of this decoupling. [01:31:14]
  • While decoupling may not be bad for growth, it could lead to higher inflation due to increased redundancy and reliance on countries with higher production costs (e.g., Central and South America) instead of China. [01:32:04]
  • China has already retaliated with its own tariffs, such as slowing the export of materials for solar wafers, recognizing that abundant, cheap energy from solar could give the U.S. a significant cost advantage. [01:32:34]

Diplomatic Strategy and Foreign Policy

  • David Sacks argues that the war in Ukraine benefits China by distracting the U.S. from its pivot to Asia, depleting U.S. weapon stockpiles, and allowing China to benefit from discounted Russian oil, gas, and minerals due to sanctions. [01:36:32]
  • Sacks suggests that the U.S. has pushed naturally suspicious regimes like China, Russia, and Iran closer together by adopting an “overly moralistic view of foreign policy.” [01:37:31]
  • Jason Calacanis counters that these authoritarian regimes (e.g., China, Iran, Pakistan working on nuclear technology) act in their own self-interest and do not care about human rights. [01:38:32] He advocates for the West to act in unison to spread and defend democracy. [01:39:08]
  • Brad Gerstner supports discussions with China and avoiding isolation, emphasizing collaboration on issues like the environment and technology. [01:45:00] He believes every country should strive for resilience and avoid dependency on others, especially dictators. [01:45:27]
  • Sacks argues that the U.S. is not acting as a traditional peacemaker in Ukraine because it is a “co-belligerent” in an American proxy war against Russia, and is not trusted to mediate. [01:35:39] He sees China’s recent peace proposal as a clever diplomatic move to gain moral high ground. [01:34:45]