Wendy Lee
Los Angeles Times
WWR Article Summary (tl;dr) As Wendy Lee reports, “Its exponential growth became significantly threatened when Trump last summer highlighted potential security risks because of the app’s ties to China.”
Los Angeles
Last summer, TikTok appeared to be on the ropes. The company lost its CEO. Rivals were swooping in. And the Trump administration looked determined to drive it out of business.
Now, the viral video-sharing app seems to have rebounded.
This month, TikTok announced an expanded partnership with Universal Music Group, accessing all of its music catalog, a blow to its archrival, L.A.-based Triller.
The company, which has a large presence in Culver City, continues to generate buzzworthy pop culture trends; for example, what began as videos suggesting songs for a musical about the popular Pixar movie “Ratatouille” became a real virtual musical last month starring actor Tituss Burgess.
And threats by the federal government to yank TikTok from U.S. app stores due to security concerns over its ties to China appear to have abated — at least for now.
White House Press Secretary Jen Psaki on Wednesday provided no timetable on any action against TikTok or a sale of TikTok’s U.S. operations to American companies. “We are comprehensively evaluating … the risks to U.S. data including from TikTok, and we’ll address them in a decisive and effective fashion,” she said.
TikTok sued the federal government last year. On Thursday, the Department of Justice asked to pause the appeal process until new agency officials can become familiar with the issues in the case, adding such a review “may narrow the issues presented or eliminate the need for judicial review entirely.”
Although it’s uncertain how the Biden administration will ultimately respond to the alleged security threats posed by TikTok, analysts said the developments give the company some much-needed breathing room.
“I don’t think they’re out of the woods, but I do think it’s probably less threatening or seems less threatening than the previous administration,” said Ray Wang, principal analyst of Palo Alto-based Constellation Research. “There’s still a lot of interest from advertisers, they’re still gaining monthly active users, and I think that’s the most important thing.”
After a steady decline in monthly installs, TikTok in the U.S. began to see an uptick again in December, with a 33% increase over November to 5.7 million installs, according to San Francisco mobile research firm Sensor Tower. That boost continued into January, with a 5% increase in installs, the firm estimates.
“It’s possible that the recent increase in installs is due to predicted stability in TikTok’s situation, or it could be due to other variables such as marketing campaigns,” wrote Stephanie Chan, a Sensor Tower mobile insights strategist, in an email.
TikTok, which reported 100 million users in the U.S. last year, declined to make executives available for an interview.
The company’s executives have long touted their ambitions to become a cultural hub, the place where trends begin. During the pandemic, the popularity of the app surged, as people stuck at home uploaded funny videos of themselves dancing to music or spent hours just watching the steady stream of clips. The app became a platform where people discover new music and the next big stars.
“We’ve seen everything from personal finance to cooking tips to people hanging out with their family, and all these other trends just really start to adapt and become part of the culture in a way that we’ve never seen with any other platform,” said Nick Tran, TikTok’s head of global marketing, at a session at virtual trade show CES last month.
The company recruited Hollywood executives from prominent companies, including Kevin Mayer, a key architect behind streaming service Disney+, to serve as its CEO. And it became a key force in making songs popular.
TikTok also became a thorn in the side of Donald Trump.
Some of its users, in an effort to thwart Trump, ordered tickets to a Trump rally in Tulsa, Okla., with the intention of not showing up. That may have played a role in the rally’s less-than-expected attendance — a factor TikTok believes caused the former president to target the app.
Its exponential growth became significantly threatened when Trump last summer highlighted potential security risks because of the app’s ties to China.
Trump raised concerns about whether the parent company, China-based ByteDance, would give U.S. user data to the Chinese government. TikTok says it has not and will not do so.
Trump then issued executive orders, including calling for TikTok to divest its U.S. holdings or face a nationwide ban. The Treasury Department’s Committee on Foreign Investment in the United States also recommended ByteDance’s divestiture of U.S. TikTok operations, causing the company to explore selling ownership stakes to Oracle and Walmart to satisfy security concerns.
The uncertainty of the company’s future put TikTok in a potential free fall as advertisers pulled their spending on the app, new hires worried about their employment status and Mayer left after three months on the job as TikTok’s global ambitions appeared thwarted. Vanessa Pappas, the former general manager of TikTok U.S. who became the interim head, spoke of the damage to the company’s business in a court declaration.
Rival companies like Triller rushed to poach popular TikTok creators to move onto their platforms, while companies including Instagram and YouTube launched their own versions of short-form video. On Aug. 1, Triller suddenly became the No. 1 app for iPhones in the U.S.
The company is majority-owned by Proxima Media, the investment firm led by Ryan Kavanaugh, the once high-flying media mogul who previously ran the studio Relativity Media, which filed for bankruptcy in 2015.
Seeking to assure worried video creators, Pappas declared in a TikTok video, “We’re not planning on going anywhere.”
So far, her message has proved true.
TikTok and its creators challenged the executive orders in court, winning some legal victories that put a pause on an app ban and called into question the legality of Trump’s executive orders.
It’s unclear how the Biden administration will respond or whether the company will be forced to divest its U.S. operation.
Last week, the Wall Street Journal reported that a proposed deal for ByteDance to sell ownership stakes to Walmart and cloud computing company Oracle has been shelved. Oracle did not respond to requests for comment. Walmart declined to comment.
For now, TikTok continues to be popular among users and brands. It has deals with major labels, including Warner Music Group and Sony Music Entertainment, and recently expanded its agreement with UMG to include its entire music catalog.
“For us, it’s really exciting that our artists get to engage directly with their fans on the platform in all these really unique ways,” said Michael Nash, executive vice president of digital strategy at Universal Music Group. “It’s where the new is embraced, but it’s also where great songs from the past are rediscovered.”
The deal was a blow to Triller, which had once envisioned itself replacing TikTok in the U.S.
Earlier this month, UMG pulled its music from Triller after the music label said the app withheld payments from artists, a charge Triller denies. On Thursday, Triller dropped to a ranking of 957 in the nation for iPhones, according to San Francisco app analytics firm App Annie.
“If TikTok had been banned, they would have had a lot better opportunities to jump into it,” Wang said. “If you got the content creators, you got the influencers, you win.”
Distributed by Tribune Content Agency, LLC.
