PROFESSIONAL INSIGHT
Justin Huang, assistant educator of marketing at the University of Michigan’s Ross School of Business, has been attentively observing the TikTok developments—and offers some perspectives on prospective results as the deadline for prohibiting the social media platform approaches.
An announcement of a TikTok sale
“Speculation has arisen regarding a buyout by Blackstone, General Atlantic, and Susquehanna International Group, with Oracle guaranteeing data safety. The key hurdle in this situation will be approval from the Chinese government, as TikTok’s valuable algorithm is restricted under Chinese technology export controls.
“Until now, there has been no sign that China is willing to concede on this without U.S. compromises in different domains as part of a comprehensive economic accord. There’s a slim possibility that TikTok might be sold without its algorithm or via a more intricate licensing deal, given that TikTok’s U.S. operations are already compartmentalized through its investments in TikTok US Data Security and Project Texas.”
TikTok is granted another extension through executive order
“This represents the simplest and most probable scenario. President Donald Trump has indicated he would ‘probably’ contemplate an extension to secure a desirable result and expressed that he would ‘like to see TikTok continue to operate.’ Although several senators and congressional members have raised concerns over the previous executive order extension, it is doubtful they would hinder another extension or enact laws formalizing the ban.
“This temporary solution mitigates short-term disturbances but fails to alleviate the uncertainties for creators, businesses, and advertisers attempting to devise long-term strategies on the platform.”
TikTok faces a ban
“Should this happen, we can anticipate that users, creators, small enterprises, and advertisers will shift to rival platforms such as RedNote, Instagram Reels, and YouTube Shorts. RedNote caught many off guard by becoming the most downloaded app in the U.S. during the initial TikTok ban in mid-January, partly driven by public discontent directed at Congress and Meta.
“This scenario would represent the most unfavorable outcome for numerous small enterprises and creators who would encounter substantial challenges in re-establishing their foothold on rival platforms. I would also like to emphasize some recent findings by my colleagues Dante Donati and Hortense Fong, which indicate that advertising costs on competing platforms increased by 10% following the first ban, adversely affecting businesses that promoted on the platform and imposing disproportionate strains on small enterprises specifically.”