The effect of TikTok’s departure on advertising
In 2023 alone, advertising, marketing, and organic reach on TikTok contributed $24.2 billion to the U.S. economy, while TikTok’s operations added another $8.5 billion to the U.S. Gross Domestic Product.
Although it is an opportunity to generate new products, Epistrophy Capital Research analyst Cory Johnson points out that one of the most relevant challenges for TikTok’s competitors will be to generate a learning and recommendations model as deep as that of the Chinese technology company.
“Enabling such complex AI and big data processing at TikTok’s immense scale requires a colossal and expensive technical infrastructure,” Johnson notes in a report.
Under the proposal from US lawmakers, ByteDance has two options. One is to ban the application and the second is to sell TikTok to a company in that country to ensure that the data processing does not go to China.
The parent company has been firm in not considering the second alternative, since this would imply that the United States has access to its source code and, therefore, to the way its algorithms operate globally, something that can be considered a industrial secret.
What is the case of TikTok in the United States?
This Friday, an appeals court rejected ByteDance’s emergency request to temporarily block the law that would require the sale or ban of the application in the country. Following this decision, the company must now appeal to the Supreme Court to avoid the closure of TikTok.
TikTok mentions that the arguments of the connection between the app and the Chinese government do not make sense, because the data of US users is not sent to the Asian giant, but rather remains stored in the North American country, specifically on servers. the Oracle company.
The company had requested the removal of the court order, arguing that it is justified because Donald Trump is moving closer to replacing Joe Biden as president and this pause would give time for the “incoming administration to evaluate this exceptionally important case.”
Days earlier, a federal court rejected the idea that the ban is unconstitutional, noting that the law represents the “culmination of extensive and bipartisan action by Congress and successive presidents.”
The judges said the law was “carefully crafted to address control by a foreign adversary only, and was part of a broader effort to counter a well-founded threat to national security posed by the People’s Republic of China.”
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