This move will do little to alleviate the monopolistic position of the tech giants and more to entrench their power and dominance than any taken to check the industry in the past ten years.
Meanwhile, Zhang – a genuine entrepreneur and innovator – is being forced to bin his boldest ambitions. Building a global rival to Facebook is an ambition many people would welcome.
ByteDance had been planning an IPO. A big chunk of its projected value was staked on the extraordinary global growth of TikTok, but any IPO now will be far less appealing with the company besieged by geopolitical problems.
Moreover, ByteDance is no Huawei – the other Chinese company to have emerged as a political football in the geopolitical fight between Washington and Beijing.
While Huawei – a company founded in the 1980s – has links to the Chinese state and military through its founder Ren Zhengfei, a former Red Army officer, ByteDance retains a very different profile.
Zhang has clashed with the regime in the past and it would be a stretch to portray him as a Communist Party stooge.
Instead, a genuinely innovative and successful Chinese start-up, which had grown through its sheer global popularity among young people, has been shredded in a geopolitical mincer.
The problem now is that the fate of TikTok and Huawei are unlikely to be the end of the story.
While Microsoft is set to gain a hot social media property which will allow it to grab valuable insights from user data, US technology firms can expect Chinese retribution too.
Either way, one thing seems clear. This fairytale is unlikely to have a happy ending.