Mar 27, 2023 - Technology

Americans hooked on Chinese apps

Data: Apptopia; Chart: Axios Visuals

The standoff between the U.S. government and TikTok underscores a growing problem for policymakers: Chinese apps are booming in America, but most U.S. apps aren't able to operate in China.

Why it matters: Mobile apps are one of the most powerful vectors for expanding trade and exporting soft power, given how widely accessible they are, how much time is spent on them, and how little regulatory oversight there is online.

  • Chinese companies are able to "leverage China’s one billion internet users to test user preferences and optimize their AI models at home, then export the tech overseas," The Wall Street Journal notes. But given censorship demands in China, American tech firms can't reciprocate.

Driving the news: In the past 30 days, four of the top 10 most-downloaded apps in the U.S. across Apple's iOS store and the Google Play store are owned by Chinese companies.

  1. Temu, an online retailer, has quickly become one of the fastest-growing apps in the U.S., giving marketplaces like Amazon and Walmart a run for their money. The company is based in Boston and owned by PDD Holdings, a multinational commerce company that's publicly traded on the Beijing stock exchange. PDD is also parent to Chinese social commerce company Pinduoduo.
  2. TikTok continues to gain traction in the U.S., even amid calls for a possible ban. TikTok was by far the most-downloaded app in the U.S. and globally last year.
  3. CapCut, a video editing app owned by TikTok parent ByteDance, is also gaining ground in the U.S. as a vehicle for young users to optimize their short-form video posts on TikTok, Instagram and YouTube.
  4. SHEIN, a fast-fashion giant based in Singapore but founded in China, has long been one of the most-downloaded e-commerce apps in the U.S. The company was founded by Chinese entrepreneur Chris Xu, and most of its suppliers are in China.

Yes, but: While an increasing number of Chinese apps are becoming popular to download, these apps still struggle to provide American users with the same sense of daily utility as those made by U.S. companies.

  • Case-in-point: TikTok is the only app in the top 20 most-visited apps in the U.S. last month, per Comscore. Eight of the top 10 are owned by Google or Meta. The vast majority of the top 20 are owned by those two firms, Amazon or Apple.

Be smart: Last week's Congressional hearing showed how much bipartisan angst there is around TikTok's growing footprint.

  • TikTok CEO Shou Zi Chew was grilled for hours by lawmakers on both sides of the aisle, making for a contentious event that was broadcast live to millions of people globally online, on television, and of course, on TikTok.

In China, state media called the hearing an "embarrassment," per The Washington Post.

  • The Chinese Foreign Ministry argued that a ban, if TikTok is not sold to a U.S. firm, would constitute “unreasonable suppression” of the app.
  • Online in China, Chew is being described as a "punching bag" for American lawmakers and praised as a hero.

The big picture: The tension between China and Washington has come to a head over the national security risks that U.S. imports of foreign technology could pose.

  • To date, lawmakers have mostly taken aim at hardware and enterprise technology firms like Huawei and ZTE. TikTok is the first major consumer app that lawmakers are publicly threatening to ban.

Go deeper: TikTok's fate may be decided by the courts

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