The Risk For Brands On TikTok Keeps Growing

Earlier today, Axios reported that Senator Josh Hawley, Republican of Missouri, in a letter to Treasury Secretary Janet Yellen, says a TikTok whistleblower describes “TikTok’s access controls on U.S. data as ‘superficial’ at best, where they exist at all.”

Hawley also quotes the whistleblower saying, “I have seen first-hand China-based engineers flipping over to non-China datasets and creating scheduled tasks to backup, aggregate, and analyze data.” He is claiming that certain Chinese TikTok employees can access data on U.S. consumers anytime they want.

Hawley points out these claims are in direct contravention to the congressional testimony of Vanessa Pappas, COO of TikTok who said, “there are strict access controls around the data that is accessed in the United States,” and “the data is sorted and housed in the United States.”

Hawley also references a Forbes article about TikTok monitoring of Americans’ physical locations and a Reuters article about TikTok accessing U.S. journalists user data.

TikTok Is Part Of The System Now

The problem with all these claims is that if there winds up being limits put on TikTok or a ban on it in the U.S. as Hawley and others are seeking, it will significantly impair the ability of U.S. brands and retailers to attract customers.

TikTok is based on short-form video and increasingly, that’s what users want and what attracts consumers to brands most effectively right now. TikTok users spend more time on it than users of other social media and the power of it is only growing every day.

Risk and Backlash

There are two ways TikTok is increasingly risky for brands.

First, as more time and money is spent on TikTok to reach new customers, there’s a risk brands become dependent on it. If TikTok is banned, their new customer development will hit a significant speed bump.

More important, if there’s a tipping point reached about consumers’ concerns about privacy, the backlash against brands who overstayed on TikTok will be significant.

All of these concerns are driven by the rapid changes in customer acquisition costs for brands and retailers. For many reasons, the cost of finding new customers on social media has exploded in the last two years. Short videos on TikTok have become one way to reduce cost and improve effectiveness, engagement and new customer development. Brands have embraced it.

Momentum for brands on social media began with Facebook, moved to Instagram and has now shifted to TikTok, all within a few years.

A key driver of TikTok is the trend in short-form, entertaining, brand videos and most brands are just getting started with the format.

Mahy of the changes in social media’s value to brands felt permanent but proved over time to be temporary.

The dependence on TikTok for reduced marketing costs and increased effectiveness may likewise be short-lived. We don’t know what will hurt it, it could be costs, it could be political backlash against China, or it could be consumers’ resistance to having their privacy compromised.

One thing is certain: changes will happen in social media and nothing we’ve seen so far is permanent. TikTok at the center of the political bullseye is a signal about risk and brands would be wise to take note that changes could be coming.