TikTok Launches its New Ad Platform Under Threat of a U.S. Ban

TikTok : Illustration
Photo by Chesnot/Getty Images

The takeaways

  • United States Secretary of State Mike Pompeo publicly threatened TikTok  with banning after India’s government outlawed Chinese apps.
  • The U.S.’s national security concerns over TikTok resurfaced as it launches a new self-service ad platform today.
  • The company also exits Hong Kong voluntarily following a new Chinese law.

What happened?

As TikTok launched a new global platform today offering self-serve advertising, the Trump administration made headlines by threatening to ban Chinese social media apps.

In a televised Fox News interview, U.S. Secretary of State Mike Pompeo stated that the Beijing government could surveil and propagandize TikTok users. Although Pompeo referenced a long-term U.S. agenda to vet Chinese tech companies, he declined to go into specifics. However, Pompeo’s comments carry implications for TikTok’s future performance as it grapples with its global positioning.

Parent company ByteDance reported $5.6 billion in revenue during its first quarter, mainly from ads sales on Douyin, China’s own TikTok. Naturally, this creates high expectations for the new ad platform’s performance. To encourage sign-ups, TikTok pledged $100 million in free global ad credits to aid coronavirus-hit small businesses.

TikTok under the microscope

Last October, Republican Senator Tom Cotton, and Democratic Senator Chuck Schumer wrote to Acting Director of National Intelligence Joseph Maguire, calling for TikTok’s investigation on grounds of national security. In March, Republican Senators Josh Hawley and Rick Scott proposed legislation barring federal employees from using it on government devices.

TikTok was banned from India last week, after which Instagram started testing its own version, Reels, in the same country. Kevin Mayer, TikTok’s new chief executive, told the Indian government that Indian user data would not be given to Chinese authorities now or in future. The company will store all Indian data on a server there and yesterday announced its exit from Hong Kong following China’s new national security law. 

Ad transparency required

Reuters quotes Darren D’Altorio, head of social media at ad agency Wpromote, as saying that TikTok doesn’t offer strong direct response advertising. D’Altorio describes direct response ads as necessary for small business growth, with Reuters citing Snapchat as a successful resource. Furthermore, TikTok’s unclear content moderation and the potential for ads to appear alongside objectionable material complicate matters.

Spiny previously noted TikTok’s measurable growth and popularity, which make the ad service desirable to large and small businesses alike. 

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