TIKTOK, the social media app owned by China's ByteDance Ltd, is giving its top US talent a reason to stick around, even as President Donald Trump threatens a ban.
TikTok created a $200m (€172) fund that will be distributed to some US users with large followings to encourage them to continue providing innovative content, the company said. TikTok already helps its stars find advertising partnerships and deals with Hollywood talent agencies. Now the fund will help ensure US creators earn livelihoods directly from TikTok, too.
US creators will have to apply for the fund starting in August. They must be over 18, post consistently and meet a certain follower threshold.
TikTok stars' "ability to connect with and bring joy to large audiences has already propelled thousands of creators into brand partnerships, sponsorships, and representation deals with some of Hollywood's biggest talent agencies," Vanessa Pappas, the app's U.S. general manager, said in a blog post.
"In a relatively short time, TikTok has grown to become a source of income and opportunity for creators and their families." Eventually, TikTok will explore similar funds in other countries.
TikTok has also signed a couple of deals with music companies this year that increase payment for use of songs, and is in the process of negotiating deals with the largest music companies.
The extra incentive comes as TikTok's users fear what will happen to their habit - and in some cases, their budding fame - if Trump follows through on threats to ban the app.
Earlier this month, the president said he might do so as a retaliation against China over the spread of Covid-19.
Other US government officials, including Secretary of State Michael Pompeo, have warned against using TikTok for data security reasonsTikTok has repeatedly said no US data is stored on Chinese servers or sent to Beijing. The company has been hiring aggressively in the US and seeking to reduce association with its owner. Meanwhile, the app has gained in popularity. In the US, TikTok has been downloaded more than 165 million times, according to Sensor Tower.
The US has turned its attention to Tiktok as trade and geopolitical tensions with China have risen sharply and have now spread to other parts of the world.
According to analysis from Deutsche Bank, globally, China has about 13pc of revenues of the ICT sector amounting to around $730bn a year, although this number is likely inflated.
"While we estimate the potential impact of a full blown tech cold war at $3.5 Trillion over a five year period, the actual outcome will obviously be path dependent on how both countries approach the economic and geopolitical trade-offs," Apjit Walia, the German investment bank's global technology strategist wrote in a recent report.
It is not just in America that TikTok has run into trouble0. It and other Chinese apps were banned in India after troops from the two countries skirmished in the Himalayas.
Bytedance said it could headquarter its non-Chinese operations in London and put a back office in Dublin where it would be regulated by the EU.