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TikTok Faces Existential Crisis as U.S. “Divestment” Bill Looms

In a video posted on the X platform (formerly Twitter), Zhou Shouzi looked anxious and tough. His eyebrows were twisted together, completely unlike the multinational CEO who remained personable even after undergoing five hours of high-pressure questioning at the U.S. Congressional hearing last year.
“TikTok has been committed to maintaining user data security over the past few years. If this bill is passed into law, it will cause TikTok to be banned in the United States.”
A few hours ago, TikTok, led by him, approached a turning point in its destiny.

On the evening of March 13, Beijing time, the U.S. House of Representatives passed the TikTok “divestment” bill with an overwhelming vote of 352 votes in favor and 65 votes against. ByteDance is required to divest TikTok’s U.S. business within 165 days, otherwise TikTok will be banned in the United States.
Zhou Shouzi used this video to call on TikTok’s 170 million users in the United States to put pressure on relevant departments. “(Banning TikTok) will take billions of dollars out of the pockets of creators and small business owners, and will put more than 300,000 Americans out of work. We all know how important TikTok is to everyone. 170 million people can benefit from this Speak freely on the platform. It has also empowered more than 7 million business collaborations in the United States.”
Not only that, if TikTok goes offline, it will also cast a shadow on ByteDance’s future performance.
According to The Information, in the second quarter of 2023, ByteDance’s revenue increased by more than 40%, reaching US$29 billion. The largest increase is contributed by overseas markets – TikTok revenue accounts for nearly 20% of ByteDance’s total revenue. In 2024, revenue from overseas markets will most likely exceed US$20 billion, with a growth rate of more than 50% .
On March 15, according to the latest report from “FT Finance”, TikTok’s revenue in the US market will reach US$16 billion in 2023, setting a new historical record. And if TikTok is forced offline in 165 days, it will undoubtedly severely damage ByteDance.

Rescue TikTok
TikTok is indeed approaching a life-or-death moment.
Although the “stripping” ban passed by the U.S. House of Representatives still needs to be approved by the Senate and the President. However, market legal professionals generally believe that given the current situation, the bill is very likely to be approved by the latter two.
Although TikTok quickly issued a “comforting” memo to employees, stating that the company was lobbying the Senate to prevent the passage of the bill – Zhou Shouzi also rushed to Washington to negotiate with the Senate. But so far, only a handful of senators have expressed dissent from the bill.

A person working in Silicon Valley revealed to “City Circle” that TikTok is still recruiting product and e-commerce personnel and issuing offers. Job seekers are more concerned about whether the bill will affect the issuance of work visas. “There are also people who are accepting offers, thinking that after all, there is still a 165-day buffer period, and there are still variables that can push them.”
In the past year, the “divestment” of Byte and TikTok has continued underwater.
According to “Interface” reports, starting from November 2023, TikTok employees working in front-end and back-end development, data, algorithms and other positions in China will successively receive notices of transferring to work overseas. Work locations include Singapore, Australia, Canada and the United States. Some employees said that if they accept the job transfer, they will receive a salary package that is about double that in China and a two-year rental subsidy; if they do not accept the job transfer, they will not be forced to resign.
“City Circle” also confirmed this news from relevant Byte employees. In addition to TikTok’s domestic positions having been significantly reduced, around the Spring Festival, many Byte employees with overseas education background and competent communication and work abilities took the initiative to apply. If they are transferred overseas, their new labor contracts will also be signed to TikTok.
Entering March, the trend suddenly turned tense. On March 7, TikTok, which had sensed danger in advance, sent a pop-up notification in the app to users over the age of 18 in the United States, calling on them to call their congressmen in their regions to withdraw the bill. “Let Congress know what TikTok means to you and let them vote against it.”
In the following 48 hours, U.S. congressional offices felt the turbulent power of public opinion. Protest calls from TikTok users overwhelmed the calls of lawmakers, and some even had to turn off their phones. On March 12, many TikTok supporters gathered at the entrance of the U.S. Congress building and used practical actions to put pressure on lawmakers.
At a congressional hearing not long ago, Zhou Shouzi also said again: In 2024 alone, TikTok will invest US$2 billion in trust and security.
However, it seems that these active cutting actions with ByteDance and the opposition from a large number of local users in the United States have not been helpful in reversing TikTok’s unfavorable situation for the time being.

Several years of conspiracy to “kill”
In the past few years, dealing with the blockage of TikTok by various parties has almost become Zhou Shouzi’s most important task. Since August 2020, when Trump signed an executive order requiring Byte to divest TikTok’s U.S. business within 90 days, Zhou Suizi has been working non-stop.
In December 2022, Biden further signed a ban requiring nearly 4 million federal government employees not to use TikTok on devices owned by their agencies.
On March 23, 2023, Zhou Shouzi was questioned for 5 hours at a U.S. Congressional hearing on TikTok’s ownership division, content review, storage, algorithm technology and other issues. At the meeting, he said that TikTok has invested US$1.5 billion in data localization and has stored U.S. user data in Oracle, and information security will be fully guaranteed.

However, these efforts have failed to completely resolve the increasing pressure that TikTok faces in the United States from all sides.
The aforementioned Silicon Valley person told “City Circle” that she can feel TikTok’s significant growth in user penetration in the past year. But she also often sees negative reports about TikTok in local media. As for the selective ignorance of the voices of TikTok users in the U.S. political arena, this person said that the main reason is that “TikTok’s core user circle is very young, and they are not the basic base that affects the direction of the election.”
According to media statistics, more than half of TikTok users worldwide in 2022 will be between 13 and 24 years old. Although TikTok stated that its monthly active users in the United States will exceed 150 million in 2023, this person observed that high-frequency users are still concentrated under the age of 25.
At the same time, TikTok’s competitors are coming more fiercely. Around 2022, Meta’s stock price fell sharply due to shrinking advertising revenue and massive layoffs, and its stock price began to rise again. Compared with the lowest point of US$87.59 per share in July 2022, the current price of nearly US$500 per share has increased more than five times.

Meta’s rebirth is largely due to the money-attracting effect of its own short video product, Reels, and its continuous troubles for TikTok’s global expansion.
At the 2023 Q2 financial report meeting, Zuckerberg revealed that on Facebook and Instagram, Reels is played more than 200 billion times a day, with annual advertising revenue exceeding US$10 billion. On March 6 this year, Facebook Director Tom Allison pointed out at the Morgan Stanley Industry Conference in San Francisco that Reels’ viewing time on the Facebook platform increased by 8% to 10%.
In addition, TikTok was banned by India in 2020, and its biggest beneficiary was Meta. As Instagram took the opportunity to vigorously promote Reels in India, by the beginning of 2023, Instagram’s user base in India had climbed to 230 million.
At the e-commerce level, TikTok is also in trouble because it has taken away the cake from competitors. In October 2023, the Indonesian government officially shut down the TikTok Shop function, just over 2 years after TikTok launched its e-commerce business layout in Indonesia. This move is also seen as the Indonesian government’s concern about TikTok cannibalizing local e-commerce Tokopedia.
Although more than a month later, TikTok reached a strategic cooperation with local technology company GoTo, integrating the two parties’ e-commerce departments TikTok Shop and Tokopedia into a new entity, and was finally able to return to the Indonesian e-commerce market before Double 12. However, in recent months, voices from Indonesian officials regarding further restrictions on TikTok have still been heard.

Does Zhou Shouzi still have a trump card?
If these unexpected incidents had not occurred frequently, 2024 could have been the year for TikTok to further develop its ambitions.

In North America, TikTok is trying to copy the successful experience of Douyin e-commerce to TikTok starting in 2023. At the beginning of 2023, TikTok launched a “semi-managed” model and is currently gradually upgrading it to a closed-loop “local store”.
According to the aforementioned reports, TikTok’s revenue in the US market will reach US$16 billion in 2023. Recently, TikTok’s revenue scale has begun to be revalued by the market. In 2023, eMarketer, a market research organization, lowered its revenue forecast of US$18 billion for TikTok in 2023 to US$13.2 billion due to the ban on TikTok in some markets. In 2024, if TikTok fails in North America, the numbers will be even less optimistic.
Under the heavy “suppression” from various forces and regions around the world, TikTok’s growth has also begun to reach a bottleneck in 2023. The suppressed TikTok traffic is also flowing to giants such as Meta.
According to data from the Sensor Tower market research agency: Instagram’s total downloads will increase by 20% year-on-year in 2023, reaching 768 million times, becoming the most downloaded application in the world. TikTok downloads increased only 4% during the same period to 733 million times.
Recently, media reported that the former CEO of Blizzard intends to acquire TikTok for US$100 billion. In response to this, ByteDance immediately stated on its official account: The report was untrue, and Zhang Yiming had not communicated with anyone about the relevant matters.
In fact, in August 2020, after Trump first issued a “divestment” request for TikTok, foreign media reported that companies such as Microsoft and Oracle were ready to “share” TikTok.
A few days later, on August 28, China’s Ministry of Commerce and Ministry of Science and Technology adjusted the “China’s Catalog of Export-Prohibited and Restricted Technologies.” “Personalized information push service technology based on data analysis” and “artificial intelligence interactive interface technology (including speech recognition technology, microphone array technology, voice wake-up technology, interactive understanding technology, etc.) are included in the export control.
It can be said that since then, TikTok has been sold directly to overseas companies, and a red line has been drawn at this level.
For Zhou Shouzi, facing the North American market that may be “taken away”, in addition to trying his best to lobby and mediate, he is working hard to open up new market blue oceans.
On March 6, Zhou Shouzi appeared at the Middle East technology event “LEAP 2024” and delivered a 20-minute speech. This is also seen as TikTok is preparing to take advantage of the current “Middle East Nuggets” craze to accelerate the development of the local live broadcast and e-commerce ecology.
At the moment, TikTok’s biggest friend in the United States is actually Trump, its former enemy. In January 2021, Facebook banned Trump’s account, and the two sides have been at odds with each other for a long time.
Recently, Trump, who had twice banned TikTok during his term, publicly changed sides. In an interview with the media, he said: “If TikTok is eliminated, Facebook and Zuckerberg’s business will double. I don’t want to Facebook, which cheated in this election, did better. They are the real enemy of the (American) people.”

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