There is now a 50% : 22% majority of the U.S. population supporting a ban on @TikTok in the United States, according to a new survey published by Pew Research. Almost every demographic group is in support, except for the younger-than-30 crowd, TikTok users, and those who do not know that the company is based in China. (Among those who do know its provenance, it is 60% : 19% for a ban.)
When both U.S. Congress and the people at large support a ban on TikTok in the United States, it is prudent to assume it will either be banned or forced to spin off its U.S. business into a separate company under majority U.S. control (i.e., majority-owned by U.S. investors).
It is unlikely that a spin-off of the U.S. business will be an option. When reviewing the source code, how could anyone ever be sure to find all the backdoors, all data transfers to China, and all pieces of malicious code that may have been put in place? How does one prove the absence of something in millions of lines of code?
TikTok is quite popular with U.S. advertisers because it is the digital @MTV of the Millennial and Zoomer generations. It made about $6 billion in U.S. ad sales last year, or almost 3% of total U.S. digital advertising, and twice as much worldwide. If TikTok U.S. were to be shut down, advertisers would have to look elsewhere: @Instagram (Reels), @Snapchat (Spotlight), or a yet-to-be-developed @Facebook competitor could be candidates – or a gaggle of black-swan, less well-known services such as @Triller, @Byte, and @Lomotif.
But even if TikTok were given the option to either spin off U.S. operations or be banned outright, that decision would not be made by TikTok or parent @ByteDance, but by the Chinese Communist Party. For the CCP, the upside of a spin-off is to retain a revenue stream to the parent company, but the downside is what will be perceived in China as a serious snub by the United States. On balance, it will likely decide to not lose face and shut down the service altogether.
For advertisers, either way, it is time to prepare alternatives.
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