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Compared to social media CEOs like Mark Zuckerberg or Elon Musk, TikTok CEO Xu Zicheu keeps a low profile. This is changing rapidly, as the executive is facing an app campaign that could be banned or sold.
This week he was front and center on Tik Tok, telling Americans that the Biden administration could “take Tik Tok away from all 150 million of you.” On Thursday, Chew will appear before the US House Energy and Commerce Committee, where lawmakers are expected to discuss the app’s ties to the Chinese government and how it collects and handles US user data.
A ban on TikTok, first floated and abandoned by President Donald Trump in 2020, is back on Washington’s agenda. The social platform, owned by Beijing-based ByteDance, has become a symbol of deteriorating relations between the US and China. Critics have raised concerns about how the data the app collects on its users will be used by the Chinese government and whether China could use TikTok to influence US politics. Legislation banning Tik Tok from operating in the US has been approved by the US House Foreign Affairs Committee, and the federal government and some state officials and agencies have banned its use. The Biden administration is reportedly pushing TikTok’s parent company, ByteDance, to sell the app to an American company.
The future of TikTok is being closely watched by the fashion industry, where many brands rely on the app to connect with consumers. TikTok’s growth has been rapid; In the year Launched in 2016, it now has 150 million active monthly users in the US. Last year, brands spent $13 billion on TikTok advertising. For thousands of Americans, creating content on TikTok is now their main source of income, and TikTok itself has 7,000 US-based employees.
Not only has the ban sparked both legal challenges and public protests, but even Tik Tok’s staunchest supporters now see it as an option. Now, creators and brands are thinking about a future without it.
“Smart marketers start to develop backup plans and approach other channels,” says Stephanie Harris, CEO and founder of performance marketing agency PartnerCentric.
Construction dispute
The primary charge against TikTok is that because it is owned by a Chinese company and must comply with requests from the Chinese government, Americans cannot be trusted with personal information. Another concern is that the Chinese government could influence the content Americans use on the app — and that could have far-reaching consequences as TikTok continues to grow in America. TikTok has denied the allegations, saying the Chinese government should not have access to US user data. A representative for TikTok did not respond to a request for comment.
Talk of banning TikTok can evoke a sense of déjà vu: the same conversation in 2016. In 2020, when the Trump administration tried to block the app, it encountered legal restrictions and pressured it to sell ByteDance. At one point, Microsoft or software giant Oracle were said to be in acquisition talks.
When President Biden was elected, public talk of a freeze or divestment simmered.
In the background, however, a government investigation into TikTok continues. The Committee on Foreign Investment in the United States, a multi-agency government panel, has been investigating TikTok for years, and it needs to secure their approval in order for TikTok to continue operating in the United States. It is the committee that is pushing to sell to an American company. But the Chinese government would have to approve such a sale, and experts believe it is unlikely to do so, and Tik Tok’s algorithms argue the importance of national security in China.
The current discussion It is happening differently than it was in 2020. Since then, Tik Tok has become more and more popular, not only in terms of user base, but also in terms of business bottom lines. If it were to disappear, the noise would be greater than it was in 2020.
Still, support for a ban or sale has bipartisan support: Sen. Mark Warner, Democrat of Virginia, and Sen. John Tune, Republican of South Dakota, have introduced a bill that would expand the president’s powers and allow him to act. External social media platforms with 10 affiliates in parties.
Blocking apps is not unheard of: India banned TikTok in 2020, and in China, major US platforms like Facebook, YouTube and Instagram are also banned.
But in the US, the First Amendment can prevent the government from shutting down a major form of communication, said Heidi Tandy, an attorney with Berger Singerman who practices technology law. Courts block Trump’s attempt to block Chinese messaging app WeChat. Biden eventually called off the effort in June 2021.
Critics of the ban also argue that the federal government could do more with Americans’ information on all fronts, including domestically. US online privacy regulations are looser than those in the European Union, where GDPR went into effect in 2018.
“It’s very easy to pass a federal law similar to what California or Washington have, balancing people’s rights to interact with companies that have access to people’s personally identifiable information, including location information,” Tandy said.
Banning risks lie beyond US companies’ ties to TikTok: If the US government sets a precedent for banning foreign apps, other countries may feel empowered to take the same approach.
“Facebook, Twitter, Google and Amazon have the ability to fight these restrictions, but the damage to small American companies is huge,” Tandy said.
A lasting effect
Tik Tok has become such a dominant player in the digital advertising space that any other business with a primarily ad-based revenue model could benefit if it were to disappear.
“If it were to disappear tomorrow, those dollars would move to other platforms,” said Amber Wentz Box, president of influencer monetization platform LTK.
Certain players are particularly poised to win big, including Instagram and YouTube, whose Reels and Shorts feature could step in to fill the gap. There may also be new, not-yet-present players who take what’s been learned from TikTok — consumers’ love of short-form video and highly personalized feeds — and apply it.
Creators are also banned from Tik Tok. But for many, Venz Box said, this is simply the latest social media-related curveball. Over the past decade, influencers have had to make constant adjustments, from the introduction of Instagram’s algorithm to the removal of affiliate links by Pinterest in 2015.
For early stage entrepreneurs whose audience is primarily or exclusively on TikTok, the ban will have a major impact.
“The previous generations of creators knew they weren’t a one-platform player,” Venz Box said. “The new generations may feel the urgency to build their audience elsewhere and realize the business need for that.”
Businesses that advertise on TikTok face a similar dilemma. Harris said that if TikTok shuts down in the US, it could lead to higher ad prices on competing platforms, and that marketers need to diversify now to avoid skyrocketing the market later.
Still, many businesses are taking talk of the ban as speculation, and not encouraging them to back away from Tik Tok – quite the opposite, in fact.
“A lot of brands will continue to invest as much or more in TikTok to try and leverage what they can, until it’s gone,” Harris said.
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