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The author is the creator of ‘Chip Conflict’
At the beginning of this yr, President Donald Trump declared that “enhancing America’s international AI dominance” was a central objective of his presidency. His dealmaking round TikTok’s future within the US market shall be an early check of what “AI dominance” means in follow. That’s as a result of ByteDance — TikTok’s mother or father firm — is China’s main AI enterprise.
ByteDance’s intelligent use of AI suggestion algorithms powers TikTok’s supply of addictive quick movies and efficient adverts. However its experience extends past this. It has additionally produced spectacular work in different AI subfields, together with high-quality large language models and models for robotics.
ByteDance is as central to China’s AI ecosystem as OpenAI or Meta are to America’s. In AI circles, ByteDance has the cachet — and the money — to lure senior executives away from Google. Its alumni have based a slew of start-ups, from cross-border ecommerce to AI for biomedical research.
Although start-up DeepSeek has attracted extra consideration this yr, ByteDance is China’s most profitable AI enterprise. The personal firm’s income was near Meta’s in 2023 and it raked in $40bn in earnings earlier than curiosity, tax, depreciation and amortisation (its most popular metric for profitability), up from $25bn the earlier yr. Whereas a lot of the firm’s income comes from its China-based items, $16bn got here from TikTok’s gross sales to US customers.
ByteDance’s profitability has enabled the corporate to pour cash into buying AI chips. Final yr, it bought roughly as many Nvidia AI chips as Meta, although these had been the lower-quality H20 variant, resulting from US export restrictions. This yr, it plans to spend $5.5bn shopping for AI chips from Huawei and different Chinese language firms, serving to to fund the event of China’s homegrown AI chip business. And it’s not solely buying chips — it is usually reportedly exploring different tech infrastructure, like subsea cables.
As Beijing pushes for its firms’ AI fashions to be adopted overseas, ByteDance’s international footprint is a novel asset.
Trump, who beforehand supported a ban on TikTok earlier than reversing course after crediting the app for serving to him attain younger voters, now confronts a call that can form the AI race. He has set a deadline of April 5 to discover a non-Chinese language purchaser for TikTok, in any other case the app shall be banned on nationwide safety grounds.
Slicing off TikTok’s entry to the US wouldn’t sink ByteDance, in fact, given the profitability of its China-based enterprise. However the US market is profitable, which is why ByteDance has fought onerous to remain in it.
The White Home has rebalanced US dialogue away from the dangers of AI and embraced speedy progress as an alternative. It has prioritised knowledge centre building and streamlined regulation round offering the ability that AI knowledge centres require. The commerce division has tightened guidelines governing chip know-how switch to China. And Trump’s “America First Funding Coverage” requires harder limits on traders placing cash into Chinese language AI.
These strikes match with a method that goals to remain as far forward of China on AI as potential. They’ve additionally given Washington’s China hawks new ammunition towards TikTok. Congress first voted to pressure a full divestment of TikTok over considerations that US consumer knowledge could possibly be accessed by China. TikTok has additionally been criticised for its surveilling of the location of journalists and for encouraging customers to message members of Congress about laws ByteDance opposed.
The AI race offers an extra rationale for staying powerful on TikTok. ByteDance performs a central position in funding China’s AI ecosystem, buying AI computing capabilities and constructing China’s international AI presence. The Trump administration has talked powerful on limiting US cash into adversaries’ tech however TikTok places cash into China’s AI ecosystem each day.
