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TikTok isn’t going away, but…

TikTok Shop
TikTok launched U.S. e-commerce in fall 2023.

It is unlikely TikTok will disappear from the U.S., but it is also unlikely it will continue operating without significant changes.

As part of a military foreign aid bill signed into law by Joe Biden on April 24, ByteDance, the Chinese owner of TikTok, was given 270 days (and counting) to divest its U.S. operation or face a ban here. The provision is the end result of longstanding federal government concerns over possible connections between TikTok parent ByteDance and the Chinese Communist Party

Restrictions can now also be applied to applications operated by any other social media company that is controlled by a "foreign adversary" and has been determined by the president to present a "significant threat to national security.

In January, I included TikTok in a list of technologies poised to have a major impact on retail in 2024. And I still stand by that assertion. While there are geopolitical considerations at play that make firm predictions about the future of TikTok in the U.S. difficult, this week I will explain why I think TikTok will remain a fixture of social media in this country and how I think the short-form video platform will change here.

Built to last

TikTok operates a successful e-commerce store in the U.S., has an estimated 150 million U.S. users, was ranked the second-most-used social platform by American teens by the Pew Research Center, and regularly partners with Tier I U.S. retailers like Walmart

Its disappearance would cause not a ripple but a major tear in the increasingly connected and social media-centric fabric of American life (Biden’s re-election campaign even has a TikTok account). And TikTok, which presumably can afford some pretty good lawyers, has indicated it will challenge divestiture in court on grounds it violates Constitutional freedom of speech guarantees.  

Let’s assume the ban passes legal muster. TikTok may already be taking a new look at creating a separate U.S. operation that would include Walmart and Oracle. 

Media reports have also indicated that U.S.-based buyer groups including celebrities such as “Shark Tank” star and venture capital investor Kevin O’Leary and former U.S. Treasury Secretary Steven Mnuchin are considering making offers to acquire TikTok’s U.S. operation. 

Considering how many billions of dollars its U.S. business will likely fetch, it’s hard to imagine TikTok simply closing up its American shop. That said…

The algorithms will change

The biggest change to TikTik under new government-approved ownership would be the underlying algorithms that determine what videos a user is served at what time and for what reason. 

While I do not claim to have any inside knowledge into how the U.S. TikTok platform selects videos to display to individual users, one of the biggest concerns over TikTok is that with Chinese government encouragement it allegedly creates video streams designed to cause social disruption and psychological harm to users.

I’m not suggesting U.S. retailers have any nefarious purposes when they run promotions or sell products on TikTok. But any change to TikTok’s algorithms will require them to carefully study the new patterns underlying video streams and figure out how to best modify their strategies to reach the right consumers at the right times with the right content.

Retailers active on X (formerly Twitter) have been dealing with these issues as owner Elon Musk has made a number of significant changes to the algorithms governing the flow of its content. 

Privacy controls will be stricter

Critics of TikTok also claim the app gathers sensitive data about users which could be used for a variety of unethical and illegal purposes. While it’s hard to pinpoint any specific privacy guideline that would be strengthened or added with a change in ownership, it’s safe to assume the way data about users is collected and stored will be altered in ways that provide individual consumers with more anonymity.

Retailers that are active or planning to be active on TikTok should start preparing for this eventuality now, looking at ways to maximize the insights they can obtain from a less granular consumer dataset. 

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