Reason TikTok may not survive after being sold
The intelligence that makes the app standout is from China — and it’s not clear that Microsoft, Walmart, or Oracle can replicate it
Surprisingly TikTok is in its most defining moment. In less than a day, the company lost its CEO and gained a surprising new suitor. The breakout social app now appears to be under pressure to reach a deal with an American company to sell itself.
However, this impact might leave the company permanently damaged.
First, the CEO. In May, longtime Disney executive Kevin Mayer left the company to was announced the chief operating officer at ByteDance and CEO of TikTok, its popular US subsidiary. “As one of the world’s most accomplished entertainment executives, Kevin is incredibly well placed to take ByteDance’s portfolio of products to the next level,” ByteDance founder and CEO Yiming Zhang said at the time.
Mayer just concluded a very successful launch of Disney Plus, which accumulated over 50 million subscribers in less than six months.
And even if Mayer had chosen to become CEO of TikTok, currently it remains unclear what TikTok will even be. One global company based in America? Multiple companies operating independently? A wholly owned subsidiary of a big-box retailer?
Whatever the answer is, Mayer said the hell with it. He wrote in a letter to employees:
It’s difficult to imagine Mayer didn’t see at least some of this coming. The investigation into ByteDance by the Council on Foreign Investment in the United States has been underway for almost a year now, and I wrote about the growing likelihood of a forced TikTok sale as far back as January. The pressure on ByteDance to sell was only ever going to ratchet in one direction so long as Trump is president, and it’s hard to believe Mayer hadn’t taken that into account when he signed up to become COO.
At the same time, even people who have mostly gotten used to Trump’s chaotic rule-by-whim can still occasionally find themselves surprised by one of his decrees.
For now, Vanessa Pappas, a former YouTube executive and the current general manager of TikTok in North America, will become interim CEO. Pappas is whip-smart and has acquitted herself well in a series of recent interviews; I hope she’ll get a chance to put her stamp on TikTok as its leader.
However a question still stays on who will own TikTok, and today an odd new challenger appeared. America’s two hottest teen tech brands, Microsoft and Walmart, are teaming up for a bid. Here’s Melissa Repko at CNBC:
In a statement, the big-box retailer said TikTok’s integration of e-commerce and advertising.
“is a clear benefit to creators and users in those markets.” It did not say how it would use TikTok or whether it would be part of Walmart+.
“We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” it said. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”
On the note, a Microsoft-Walmart collaboration still seems preferable to me (and reportedly to Zhang) than the other big player in the hunt: Larry Ellison’s Oracle, which has spent the entire Trump Administration flattering the president’s ego and may now be poised to reap the rewards. (Among the people who Ellison’s support has offended are his employees, who walked out on the job in February following his announcement of throwing Trump a fundraiser.)
What are the possible paths ahead for TikTok? Mike Isaac lays them out in the New York Times:
A deal with Microsoft and Walmart could draw on Walmart’s digital sales background to turn TikTok into a kind of e-commerce app for both creators and users, people involved in the talks said. That could make TikTok more like Douyin, ByteDance’s TikTok-like Chinese-language video app, which already has e-commerce integrated into it.
A deal with Oracle, the enterprise software company, would be more of a data play. Oracle could use TikTok’s data about social interactions to benefit its cloud, data and advertising businesses, the people said.
Although, Microsoft has shown that it can buy a big consumer property and keep it stable — some people are not even aware that it owns Minecraft or LinkedIn. But the TikTok challenge promises to be much harder — the company will have to somehow recreate ByteDance’s powerful algorithmic feed, design a steady stream of new features and experiences to keep influencers engaged, and fend off fierce competition from Facebook, Snapchat, and a host of TikTok clones along the way.
So far, TikTok has overcome it’s challenges by relying on a remarkably adept and intelligent ByteDance team that was born in an environment of hyper-competitive fast following.
Nothing in the history of Microsoft, Walmart, or Oracle brings so much confidence that any of them is up to doing again.
TikTok’s cleverness has hit me as a surprised. But after the Trump administration finishes bringing down ByteDance, it’s remains unknown now if many of the elements that have made it so successful to date will survive.