This precedence could potentially spark a series of coerced acquisition of promising foreign-owned social networking apps in countries that are either worried about their impact on national security or intend to practise trade protectionism.
For a successful technology-based business, their strategic value is a combination of three major components that encompasses its brand, technology and customer data. Value derived from customer data cannot be underestimated. It provides valuable insights of customer consumption patterns, preferences and behaviour where new products and services can be developed.
Given this, the acquisition will be far less attractive and could drive buyers away. Even if the acquisition succeeds, the damage to the business is minimised as they could still operate in other markets. As such, each market will be perceived to be operating independently, signalling the assurance of locally managed data.FILE PHOTO: A person walks past a Microsoft logo at the Microsoft office in Beijing, China August 4, 2020. REUTERS/Thomas Peter
TikTok is owned by the Chinese firm ByteDance, but it says it has never shared -- and will not share -- user data with the Chinese government AFP/GREG BAKER Forced acquisition may be too expensive an option. Even if affordable, the technological infrastructure and brand equity in developing countries may not be ready to leapfrog ahead.For innovations from developing countries venturing into developed economies, tech companies would have to address worries over censorship and control. Effective remedies on data privacy risks should mitigate the threat of being banned or acquired by pressure as discussed earlier.
The move by the Trump administration banning Chinese mobile apps could lead to an American version of China's"Great Firewall" AFP/Lars Hagberg