News Analysis
The Gist
- Goodbye, TikTok? US House of Representatives passed Protecting Americans from Foreign Adversary Controlled Applications Act, a bill that effectively would implement a TikTok ban in the United States.
- Really all about privacy? The reason for the bill is to remove the possibility of compromised data privacy and US security.
- US Senate holds the cards. While the TikTok ban seems unlikely to pass the US Senate, marketers must look at contingency plans within influencers and brand audiences if platforms are looking at big changes.
The US House of Representatives passed this week the Protecting Americans from Foreign Adversary Controlled Applications Act, a bill that effectively implements a TikTok ban in the United States and leaves marketers contemplating their next move.
The prospects of losing access to 1.5 billion monthly active users is no joke, and marketers need to prepare for life without this social media platform, its billions of prospects and the thousands of successful brand influencers — even if a TikTok ban seems unlikely to make it through the US Senate.
Potential TikTok Ban: 3 Takeaways for Marketers
Right off the jump, here are three crucial takeaways for marketers and potential action steps:
Prepare for Shifts in Consumer Engagement
Marketers must anticipate and plan for changes in how younger audiences engage with content. The TikTok ban could significantly alter digital consumption habits, necessitating a pivot to alternative platforms where these demographics are likely to migrate.
Rethink Influencer Partnerships
With TikTok's potential exit, the value and reach of influencers who primarily use the platform may diminish. Marketers need to reassess their influencer strategy, exploring partnerships across a broader range of platforms to maintain influence and engagement.
Diversify Marketing Channels
To mitigate the impact of the TikTok Ban, marketers should diversify their social media presence and content distribution strategies. Investing in emerging platforms and enhancing presence on established ones like YouTube, Instagram, and Snapchat can safeguard against future platform-specific disruptions.
Related Article: Did TikTok Just Change the Ecommerce Game?
What Does This Proposed TikTok Law Say?
The act requires TikTok's parent company, ByteDance, to divest from the platform within six months. ByteDance must find a buyer for the app. If ByteDance can't sell TikTok, the act would force web-hosting companies and app stores to remove the app from the app stores and to ban access through any internet portal. The restriction would remain as long as TikTok is owned effectively by a "foreign adversary," namely China.
While ByteDance is not owned by the Chinese government, US legislators believe that through ByteDance the Chinese government could access TikTok data for a range of invasive activities, such as collecting personal data shared by American citizens, issuing pro-China propaganda, or using algorithmic programming to interfere in messaging aimed at the U.S. elections. TikTok has denied that they have received any request for US data.
The bill still has to be approved by the US Senate. US President Joe Biden has stated in earlier reports that he will sign the bill if it reaches his desk.
TikTok Ban Attempt Nothing New for US Government
This is not the first time ByteDance faced forced divestment. In 2020, former President Donald Trump ordered ByteDance to divest from TikTok within 90 days. However, the executive order faced legal challenges immediately.
President Biden rescinded the TikTok ban order, replacing it and two others with an executive order that calls for a collaborative review of foreign-owned applications among government agencies on the risks that the applications pose to personal data and national security.
Last year the Montana state legislature passed legislation banning TikTok statewide. Many states and the U.S. government had barred TikTok on government-owned devices, but Montana was the first and so far only state that sought a comprehensive ban that includes consumer usage. However, last November, a federal judge blocked the TikTok ban before it was to take effect this year, calling it “unconstitutional." The legal battles are ongoing.
Meanwhile, TikTok has taken actions to alleviate the political concerns. NPR reported that TikTok launched Project Texas, a major data-op initiative in which all US user data is managed on Oracle servers in Austin, Texas. The data is monitored by third-party US auditors.
To complicate things further, China’s stance adds headwinds to a TikTok divestiture. The Chinese government has to approve any acquisition of a Chinese firm; China has said it would strongly oppose the forced sale.
Related Article: What Happens Next to TikTok?
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Adapting Marketing Strategies in the Wake of a TikTok Ban
A sale of TikTok creates questions among marketers about how their marketing strategy should be deployed on the platforms. TikTok currently has the lion's share of the younger generation of consumers and many brands have developed customer experiences around TikTok.
Business owners from all industries are imagining what a potential disruption a TikTok ban would bring.
Piyush Saggi, co-founder and CEO of Parmonic, told me in an email interview a TikTok ban would have widespread impact on consumers who casually use the app and marketers who rely on influencers to connect to those users. “Among consumers," he said, "a ban on TikTok would do more than leave people wondering what they should do with their spare time. Doctors, lawyers, VCs, and, of course, teens will be affected, with a humongous impact on influencers who rely on video for earnings. Those influencers will take a sudden earnings hit.”
Saggi felt that the B2B marketing world may not immediately notice TikTok’s absence. Parmonic’s recent research on online video engagement found that “less than 2% of B2B brands are active on TikTok.” Saggi expects the current B2B ad spend will shift, with YouTube “likely gaining a small bump.” Others have different takes on B2B marketing opportunities on TikTok.
Scott Opiela, chief marketing officer of Acoustic, said a potential TikTok ban in the US would be “an opportunity for brands to reevaluate how they approach customer relationships. By relying on third-party platforms like TikTok, brands relinquish control of their customer relationships and how customer data is handled. Data breaches can happen, algorithms can bury content and instead of prioritizing brands’ marketplaces, users can shop directly on the platform. Each of these factors has a profound impact on the brand-consumer dynamic.”
While social media platforms like TikTok can complement a digital marketing strategy, owned channels like email, SMS and mobile push notifications are reliable, controllable, and future proof, according to Opiela.
"As Big Tech thrash continues, brands must invest in their owned properties to create consistent customer engagement driven by a privacy-first mindset," Opiela said. "The potential TikTok ban in the U.S. is an opportunity for brands to reevaluate how they approach customer relationships. Authentic, secure connections and respect for consumer privacy are paramount."
Related Article: Marketers Brace for Impact as Potential US TikTok Ban Looms
Future-Proofing Marketing in a World After the TikTok Ban
If ByteDance does have to sell TikTok, who would purchase it? Very few companies would likely match the potential billions of dollars that it would have to offer. TikTok is one of the most popular social media apps in the world, so ByteDance would not undersell TikTok.
When Trump issued the presidential order, ByteDance explored several partnerships to establish a shared entity that would own TikTok in the US, but no solid deal emerged.
Large tech companies, such as Google, Meta, Microsoft and Amazon, could afford to make an acquisition, but such a purchase would raise antitrust concerns in many instances. The big driver of TikTok’s value is its algorithm, and every one of the aforementioned large tech companies would certainly look into leveraging that algorithm into their own AI and machine learning services. In doing so their mere presence would potentially dominate how services are programmatically delivered in a given marketplace.
Congress and the Biden administration have a heightened awareness of the potential reach of the tech industry. Any mergers that inflate the size and influence of a massive tech company would be unwelcome.
More than likely an investment group would acquire TikTok, similar to Elon Musk’s Twitter acquisition. Musk spearheaded the acquisition, leading other investors in creating a financial deal that supported the acquisition funding.
One such pitch comes from former Treasury Secretary Steven Mnunchin. Mnunchin encouraged Trump to issue the 2020 presidential order against TikTok. He also said on CNBC he is exploring an investment group to purchase TikTok if the Protecting Americans from Foreign Adversary Controlled Applications Act becomes law.
The story of whether a divestment from TikTok in the US is still unfolding, and it may very well be unlikely that a divestment happens, given the recent track record.
Yet the subject is a clear reminder that social media’s value, both commercially and on the social fabric of the country, is not simple to unwind. Marketers should bet on that complexity and start thinking about how to adjust their campaigns in a TikTok-less world.
Featured image: Creative Commons TikTok exhibition stand at Gamescom 2022 in Cologne, Germany by dronepicr is licensed under CC Attribution 2.0/cropped from original.
