Hi everyone — James here from Hong Kong. The wrangling over TikTok’s fate in the US is a big deal in dollar terms. But more important still is what it says about Washington’s stance in the US-China tech war. If the latest proposal (see The Big Story) is accepted by US authorities, it could signal a softening. The other huge — and controversial — deal this week is SoftBank’s $40bn sale of Arm, the UK chip designer, to Nvidia (see Mercedes’ Top 10 and Best of comment).
In other items, who knew that Tether, a cryptocurrency, is now more actively traded than the Thai baht or Indonesian rupiah? (Smart data). Check out too the plan by Mitsubishi Corp and Singapore’s Temasek to build a high-tech community near Indonesia’s capital. For a fun read, try Elaine Moore’s piece on screen time guilt in Silicon Valley (Top 10). Take care till next week.
The Big Story — exclusive
ByteDance has a new formula to avoid a US ban for TikTok. It has proposed to US officials that it places the global business of TikTok, the popular video streaming app, into a new US-headquartered company with US tech group Oracle as a minority shareholder, write James Fontanella-Khan and Miles Kruppa in the Financial Times.
As part of the proposal, Oracle will have a stake in the whole of TikTok and not just its US operations, while ByteDance, the Chinese group that owns the app used by millions of teenagers, will be the majority shareholder of the new entity.
Key implications: The creation of a new US-based entity shows how ByteDance is attempting to put distance between the company’s Chinese ownership and TikTok’s operations — even as it seeks to avoid the full sale of the app that US President Donald Trump had desired.
Mr Trump had issued an executive order setting a September 20 deadline for the sale of TikTok’s US operations, having threatened to ban the video app in the US. It is unclear whether the proposed new ownership and governance structure will satisfy his demands.
Upshot: The proposal seeks to square the circle between US insistence on data security for American users and ByteDance’s desire to keep control of its powerful algorithm. American data would be managed and stored in the US to address national security concerns there, according to people familiar with the proposal.
Check out here differing views on TikTok in Asia beyond China.
Mercedes’ Top 10
Runner-up for big deal of the week is the Nvidia-Arm sale. The FT breaks down the ramifications of what could end up as the semiconductor world’s largest-ever deal in the Best of Comment section below. For a look at what the deal means for Asia — especially in China — this piece in the Nikkei Asian Review is essential reading.
Yoshihide Suga, Japan’s famously hardworking new prime minister, is losing little time. “I want to do work,” he said on Monday. Among items on his agenda is a desire to cut mobile phone bills.
You knew that the pandemic has meant boom time for gamers. But this exclusive story from the Nikkei Asian Review will tell you just how good it has been for Japan’s Nintendo. It is boosting its output of the Switch game console by 20 per cent to 25m units.
I wrote about how large Chinese technology and financial services companies including Ant Group and Haitong are stepping up their expansion in Singapore. Tencent is also reportedly set to move international operations to the Asian finance hub.
SoftBank’s Masayoshi Son has dropped his opposition to a merger between south-east Asia’s Gojek and Grab. That would create the world’s third-biggest ride-hailing company. Sticking with SoftBank, the Japanese conglomerate has revived discussions about going private, according to an FT scoop.
TechCrunch has an interesting, wide-ranging interview with the chief executive of Indian education decacorn Byju’s, which has a valuation of nearly $11bn.
The FT’s Yuan Yang and Qianer Liu travelled to Dongguan to see if Huawei could answer a difficult question: can the Chinese group continue making apps for its devices when it may not be able to continue making smartphones?
Indonesia’s digitisation drive has attracted investments from foreign companies including SoftBank. The Nikkei Asian Review has the story on how Japanese trading house Mitsubishi will partner with Singapore’s state-backed investor Temasek to build a high-tech community near Jakarta.
Nanny state? Singapore has teamed up with Apple as part of a health programme that provides financial incentives for completing weekly activity goals.
Nothing gets people in Silicon Valley going more than asking about the right amount of screen time for children. A delightful read from the FT’s Elaine Moore looks at why screen addiction is treated as a real affliction.
When sages speak
Adam Segal has a fine piece here on the tech cold war between the US and China. By some estimates, the tussle could cost more than $3.5tn over the next five years.
Rui Ma and Ying Lu of Tech Buzz China provide a nuanced and detailed take on Ant Group in this podcast. The amount of little-known context makes it worthwhile listen.
Here is an in-depth take on how China uses big data analytics from authors led by Derek Grossman at Rand. Well worth a read if this is your area.
Best of comment
Rene Haas, head of the intellectual property group at Arm Holdings, spent much of Monday trying to reassure customers that the SoftBank-owned chip design company was not about to turn them into second-class citizenswrites Richard Waters in Los Angeles. His efforts followed news the previous day that SoftBank had agreed to sell the UK company to Nvidia for up to $40bn, in what could end up as the semiconductor world’s biggest-ever deal.
The deal was tantamount to dropping a bomb in the middle of the chip industry. Companies that license Arm’s designs — which are used in most smartphone processors and many other devices that require chips with lower power consumption — are worried they will be “disadvantaged” once the UK group falls under the control of one of their competitors, Mr Haas admitted.
Arm’s customers may find themselves at the back of the queue when trying to get the company’s newest designs, said Mark Lippett, chief executive of chip start-up Xmos. “You’ll find Nvidia will be the first out on to the market with the latest Arm architectures,” he said. If it can head off those worries, however, buying Arm could set the stage for Nvidia’s next big act.
South-east Asia’s next potential unicorn — or “soon-icorn” — might be Carousell. The Singapore-based classified ads marketplace has bagged $80m — no small amount for the region — from a consortium led by South Korea’s Naver. That takes its valuation to more than $900m.
Carousell co-founder and chief executive Quek Siu Rui said the past six months “have been challenging” but that there had been an acceleration in ecommerce adoption. The platform allows customers to sell and buy fashion, electronics, accessories, furniture and even Rolexes. It has also capitalised on the Marie Kondo “decluttering” trend as a place to sell unwanted items (Ikea furniture, anyone?) fast.
Carousell began in Singapore in 2012 and is now in eight markets across south-east Asia, Taiwan and Hong Kong. It is backed by Telenor Group, Rakuten Ventures, Naver, Sequoia Capital and Naspers.
Art of the deal
Bloomberg reports that Alibaba is in talks to invest $3bn in Grabin part by buying some of Uber’s stake. There’s a lot of interesting tie-ups that could come from this, including one with LazadaAlibaba’s south-east Asia ecommerce platform. What could this mean for a merger with Gojek? Watch this space.
China Evergrande New Energy Vehicle Group plans to raise HK$3.99bn (US$516.1m) by selling new shares to a group of investors that includes Tencent and Jack Ma-backed Yunfeng Capital.
Dream Sportsthe Indian parent firm of fantasy sports app Dream11, has raised $225m in new funding as it builds an “end-to-end sports tech company” in the world’s second largest internet market. Tiger Global Management, TPG Tech Adjacencies (TTAD), ChrysCapital and Footpath Ventures financed the round through primary and secondary investments.
Tether is an emerging cryptocurrency issued by a Hong Kong company, Tether Limited, and it now has a larger presence than bitcoin, write Keita Sekiguchi and Kazuya Manabe of Nikkei. As the chart shows, the cryptocurrency has carved out quite a niche. Tether’s average daily transactions between January and August were worth at least $40bn, more than those carried out in Thai baht or Indonesian rupiah.
Tether is a stablecoin: a new type of cryptocurrency whose value is fixed against a certain asset. One Tether coin has the same value as one US dollar. By paying $1 to Tether Limited, a person receives one Tether. Nevertheless, there are concerns. One of them comes from China, which is worried that people are using Tether to smuggle money out of the country.