Abstract
The internet is evolving from a globally connected and lightly regulated network to a ‘splinternet’ governed by diverging national policies. Governments are effectively re-creating national borders in digital space by asserting their authority over areas such as data protection, taxation, censorship, and national security. This increasing fragmentation of the internet creates new challenges for companies that use the internet to offer digital products and services (such as apps) internationally. Rather than addressing global markets more or less by default, these digital firms must make strategic choices with respect to foreign market selection, entry modes, local adaptation, and stakeholder management.
Highlights
TikTok, a mobile app for sharing short videos, appeared to be a global success story for its Beijing-based parent company ByteDance, and a prime example of internet-based internationalization
In July 2020, the US government announced plans to ban the app from the American market, citing national security concerns due to potential Chinese government influence over ByteDance
TikTok, previously the poster child for the seemingly boundless global business opportunities of the digital economy, suddenly became a cautionary tale illustrating the re-emergence of national borders in the digital economy
Summary
TikTok, a mobile app for sharing short videos, appeared to be a global success story for its Beijing-based parent company ByteDance, and a prime example of internet-based internationalization. As many regulators and tax authorities were unprepared to handle intangible digital services and unfamiliar digital business models, digital firms were often able to extend their user base in foreign markets with little regard to local rules. This is not to say that internationalization became trivial or inevitable. The internet is undergoing an important shift from largely ‘ungoverned space’ to a patchwork of regulations that reflect the diverse policy priorities of different countries and regions This digital fragmentation or ‘splinternet’ poses new challenges for digital firms operating internationally.
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