TikTok is facing a potential ban in the US over national security concerns and advertisers are avoiding the platform or putting together contingency plans.
TikTok’s US ad revenue is expected to hit $6.83 billion this year from $780 million in 2020. With growing calls from lawmakers pressuring the Biden administration to ban the app over fears that US user data could fall into the hands of the Chinese government, pharma advertisers embracing the app are preparing contingencies.
TikTok’s representatives have been telling advertisers about its ongoing plans to store the user data of Americans separately in the country and in a new division called U.S. Data Security, monitored by US tech company Oracle, which it has called Project Texas. However, the current situation is causing smaller brands with a niche audience to hesitate to experiment with TikTok ads, and larger brands are reportedly building contingency plans should the app be shut off in the US.
TikTok CEO Shou Zi Chew recently appeared before a U.S. House Committee to address national security and other concerns. Both Democrats and Republicans grilled Chew about the app’s data security and possible spying by the Chinese government. House Speaker Kevin McCarthy believes lawmakers will pass bipartisan legislation to address national security worries regarding the app.
References: McCarthy expects US House will pass legislation to address TikTok. March 24, 2023/Reuters.
Potential TikTok ban sends advertisers scrambling. March 23, 2023/Reuters.
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