Legeres Tax Realcy, Lax Data Protection: Why Tiktok Is Moving to Ireland

While the Chinese video platform Tiktok is under severe pressure in the USA, the company wants to strengthen its activities in Europe.

In a Blog Roland Cloutier, Tiktok’s global security chief, announced the construction of a data center in Ireland. It is expected to cost €420 million and “play a key role in further strengthening the protection and security of Tiktok users.”

From the beginning of 2022, the data center will store the data of all European users. So far, the data of all users worldwide is stored on servers in the USA and Singapore, as the Chinese Tiktok mother Bytedance repeatedly assured.

Tiktok has problems in the US and looks to Europe

The announcement comes after the Trump administration issued an order this week that Tiktok must sell its U.S. business by September 15 or be banned in the U.S. Trump justified the claim by saying that Bytedance was a Chinese company and that the app posed a threat to US national security. Previously, there had been several fears that the data of TikTok users could also be used by the Chinese Communist Party, which controls all of the country’s companies.

On Friday, Trump again increased the pressure by banning U.S. companies from doing business with the Chinese companies behind WeChat and TikTok. The companies – Tencent and Bytedance – reacted sharply.

With Microsoft, one of the largest companies in the US has already expressed interest in acquiring TikTok’s business in the US, Canada, Australia and New Zealand.

Tiktok wants to split its business

Bytedance’s announcement is not the first signal that Tiktok wants to reorganise its business in Europe. In June, the company announced that it would be tending the Irish and British Tiktok offshoots to protect the data security of its European users.

Now the company seems to want to expand its operations in Europe and build a new headquarters here. Bytedance told the news agency “Reuters“Given the current situation, the company is considering the possibility of a corporate headquarters outside the United States,” he said.

Initially, London was still at the top of the network’s favourites list. Meanwhile, the signs are pointing towards Dublin.

Although Tiktok is not subject to the same criticism in Europe as in the US, the company still has to overcome some hurdles. The EU set up a working group at the beginning of June to examine the company’s data processing.

On Wednesday, Helen Dixon, head of Ireland’s national data protection authority, called for deeper insights. Among other things, it wants to get to the bottom of Tiktok’s decision to manage its British and Irish offshoots with the security of the private data of European users. Nevertheless, it is precisely the Irish handling of data protection that could be a motive for Tiktok to spread in the EU country.

GDPR and taxes: Tiktok moves to Ireland

Speaking to Tech Stalking, economist Marcus Bravidor of Heinrich Heine University (HHU) in Düsseldorf says he could well understand why Tiktok chose to “build a data center in Ireland, where other tech giants such as Amazon, Google and Facebook have also built data centers.” “In particular,” says the economist, “because the Irish data protection authorities tend to be more casual in their approach to GDPR enforcement.”

From an economic point of view, this is certainly an important motive for Bytedance to choose Ireland: “This is of course a very important factor for companies whose main business is the evaluation and exploitation of user data, even if they do not end up in regions that interpret the GDPR very strictly.”

Just as lax as Ireland interprets the GDPR guidelines, according to Bravidor, one also takes it with tax law in the country: “Similar to the GDPR, Ireland also interprets the (few) European requirements in tax law rather far,” as the junior professor diplomatically states. The Irish handling of taxes is certainly a positive factor “which companies include in their decision.”

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