TikTok’s Potential US Ban and Microsoft’s Race to Save It – What This Could All Mean Going Forward?

TikTok is certainly the topic of discussion right now, with all the headlines on its potential US ban by President Donald Trump due to national security risks presented by the platform in leaking user data to Chinese companies outside of the US.

More importantly, in the last couple of days, Microsoft has suddenly come into the fray as they confirmed talks with the video-sharing app to discuss a potential purchase from parent company ByteDance by 15 September. The tech software giant has also promised to ensure the safety and protection of all American user data to remain in the country.

It’s been a whirlwind period for TikTok, despite it being the largest growing video sharing app in the market today. In Q1 alone this year, the video sharing platform generated $5.6 billion in revenue, a growth of 130% year-on-year. The app also hit over 2 billion downloads across both iOS and Android devices. To add final touches to the growth mix, TikTok saw 315 million installation numbers – driven by users staying at home and using the platform during lockdown as well as advertising, which has seen the app launch its advertising proposition in Q2.

However, while its growth is definitely a standout, the data side of things has caused a lot of issues, particularly in the US where the centre of the discussions are taking place. 

Currently TikTok user data is stored in the US, however, according to sources, the US government and Trump believe the platform is sharing information with the Chinese government, citing China’s establishment of a sweeping new national security law for Hong Kong.

A similar case was raised in India earlier this year which saw the country’s Ministry of Electronics and Information Technology place a blanket ban on 59 mobile apps from Chinese companies, including TikTok with the risk of unlawful engagement activities threatening the integrity and security of the state.

It is believed that the US government is in a similar mindset with the risk of TikTok US users data going outside of the country to other Chinese companies and competitors (WeChat, Baidu etc) as the debate continues. Now with the latest development from Microsoft, there might be a chance to calm the tensions and ultimately prevent disruption for the video sharing app in the States. 

However, in the long-term, if this deal falls through and a ban is imposed, could this trigger a domino effect in other countries, such as the UK?

“It’s worth bearing in mind that TikTok has previously been banned in India and reinstated, so a ban in the US might not necessarily be the end of the road for TikTok there. However, the UK and Australian governments are certainly scrutinising the platform’s data privacy credentials as they rightly are with other social media platforms,” said Mary Keane-Dawson, Group CEO at Takumi.

“US and UK concerns about China and Chinese companies may well be similar – take Huawei for example – but the way the two nations are approaching TikTok seems to be different. This is particularly apparent in the ongoing discussions to potentially establish a global TikTok HQ in London. And, interestingly, if it were to go ahead, Microsoft’s deal would also cover the US, Canada, Australia and New Zealand – all the members of the Five Eyes intelligence alliance, except the UK,” added Keane-Dawson.

How would Microsoft benefit?

News this week confirmed Microsoft has been in talks with TikTok to discuss a potential purchase in the US. With millions of active users and a much younger generation/target audience using the platform, how will this integrate with Microsoft’s existing proposition whilst keeping the US government happy as well with the data handling?

Data will be key here as Microsoft will have access to it and will ensure that “all private data of TikTok’s American users is transferred to and remains in the United States.”

“Of course, data privacy must be a huge priority for all companies and the US government rightly must hold TikTok to the highest safety and security standards to protect consumer data, as should be the case with all brands including Facebook and Alphabet. This is a healthy and necessary process at a time when transparency is more important than ever for consumers and brands to be confident of operating in a secure environment,” Keane-Dawson explained.

“It is positive that Microsoft is seeking to purchase TikTok’s services in the US, Canada, Australia and New Zealand, and operating the app in these markets, as well as conducting a full security review of the app. This will help to protect and regain consumer trust in these markets and allow the platform to continue to grow,” she continued.

However, from a development standpoint and in a competitive market where the likes of Facebook, Instagram and YouTube rival in video services, this could be a blessing in disguise for Microsoft. Aside from the business software aspect, Microsoft’s consumer services could hugely benefit as this has often been a weak spot for the tech giant. The likes of its Xbox products, gaming services and Windows operating system could integrate in an innovative and more seamless way with TikTok. Millions of users are constantly creating content, simply from the use of their mobile devices. This can present Microsoft an opportunity to adopt its products into a more consumer-friendly environment which it has craved for so long.

What does this all mean for brands and influencers using TikTok?

Generally speaking, any ban on TikTok, whether in the US or internationally would be significant for the industry.

With nearly a billion users worldwide, the influencers sharing unique content as well as the advertising opportunities now available to brands, TikTok has brought a lot of positives during this difficult time.

As Mary Keane-Dawson explained, it has changed cultural mindsets, helped shape movements and has infused new inspiration and creativity into the influencer space.

However, Keane-Dawson argued that if the TikTok ban in the US is passed, activity from the video sharing app will likely be channeled into other and emerging platforms.

“For Takumi specifically and many of the influencers and brands we work with, multi-platform campaigns have become the norm and so any activity lost through TikTok’s ban in the US is likely to be channelled into other platforms including new emerging ones such as Triller and Twitch and more established and legacy platforms such as Instagram and YouTube. These are also always updating and modernising their offering including Instagram, which is launching Reels, which resembles TikTok in some respects,” she said.

The future of TikTok and how it can keep or regain consumer trust

Overall, despite the recent headlines, TikTok has already proven itself as an incredibly powerful digital platform with consumers increasingly trusting of creator content on the platform and the commercial opportunities it presents. Takumi’s recent whitepaper found that a quarter of 16-44-year-olds trust a TikTok influencer’s recommendations more than a friend’s.

“It can continue to grow if it is able to reassure consumers and businesses that data protection is practiced as a priority. As an early TikTok creative partner, we are aware that TikTok is working extremely hard behind the scenes to proactively address data privacy concerns and to change perceptions of the company including launching a ‘Transparency and Accountability Center for moderation and data practices’. This will allow experts to observe TikTok’s moderation policies in real-time, as well as examine the actual code that drives its algorithms. This puts them a step ahead of the industry, and others should follow suit,” Keane-Dawson concluded.