Why TikTok may not survive being sold

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TikTok is in trouble. Over the course of less than a day, the company lost its CEO and gained a surprising new suitor. The breakout social app could be within days of making a deal to sell itself to an American company — but the turmoil surrounding the sale threatens to leave the company permanently damaged.

First, the CEO. In May, longtime Disney executive Kevin Mayer left the company to become chief operating officer at ByteDance and CEO of TikTok, its popular US subsidiary. “As one of the world’s most accomplished entertainment executives, Kevin is incredibly well placed to take ByteDance’s portfolio of products to the next level,” ByteDance founder and CEO Yiming Zhang said at the time.

Mayer was coming off the wildly successful launch of Disney Plus, which rocketed to more than 50 million subscribers in less than six months. Disney’s board of directors had passed Mayer over for the CEO job anyway, though, and so he had reason to leave. Thus began Mayer’s brief and mostly silent reign at TikTok, which was thrown into disarray earlier this month when President Trump ordered ByteDance to sell it within 45 days.

The sale could have left Mayer the COO of China’s ByteDance and also the CEO of its newly independent American spinoff company, which seems untenable. And even if Mayer had wanted to become CEO of TikTok, at the moment it remains unclear what TikTok will even be. One global company based in America? Multiple companies operating independently? A wholly owned subsidiary of a big-box retailer?

Whatever the answer is, Mayer said the hell with it. He wrote in a letter to employees:

In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for. Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company.

It’s hard to imagine Mayer didn’t see at least some of this coming. The investigation into ByteDance by the Council on Foreign Investment in the United States has been underway for almost a year now, and I wrote about the growing likelihood of a forced TikTok sale as far back as January. The pressure on ByteDance to sell was only ever going to ratchet in one direction so long as Trump is president, and it’s hard to believe Mayer hadn’t taken that into account when he signed up to become COO.

At the same time, even people who have mostly gotten used to Trump’s chaotic rule-by-whim can still occasionally find themselves surprised by one of his decrees. Certainly I do! Had the president not thought to act against ByteDance before the election, it’s possible Mayer would have had a longer and more productive run. At it stands, he’ll become a strange footnote in the story of TikTok and whatever becomes of it.

In the meantime, Vanessa Pappas, a former YouTube executive and the current general manager of TikTok in North America, will become interim CEO. Pappas is whip-smart and has acquitted herself well in a series of recent interviews; I hope she’ll get a chance to put her stamp on TikTok as its leader.

But there’s still the question of who will own TikTok, and today an odd new challenger appeared. America’s two hottest teen tech brands, Microsoft and Walmart, are teaming up for a bid. Here’s Melissa Repko at CNBC:

In a statement, the big-box retailer said TikTok’s integration of e-commerce and advertising “is a clear benefit to creators and users in those markets.” It did not say how it would use TikTok or whether it would be part of Walmart+.

“We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” it said. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”

I’m including the awful corporate jargon here to illustrate just how tone-deaf Walmart’s entry into this race has been. Perhaps TikTok’s destiny was always to turn into a kind of QVC for Generation Z, but Walmart’s language doesn’t inspire much confidence that it will be executed with much style or finesse.

That said, a Microsoft-Walmart pairing still seems preferable to me (and reportedly to Zhang) than the other big player in the hunt: Larry Ellison’s Oracle, which has spent the entire Trump Administration flattering the president’s ego and may now be poised to reap the rewards. (Among the people who Ellison’s support has offended are his employees, who walked out on the job in February after he announced he was throwing Trump a fundraiser.)

What are the possible paths ahead for TikTok? Mike Isaac lays them out in the New York Times:

A deal with Microsoft and Walmart could draw on Walmart’s digital sales background to turn TikTok into a kind of e-commerce app for both creators and users, people involved in the talks said. That could make TikTok more like Douyin, ByteDance’s TikTok-like Chinese-language video app, which already has e-commerce integrated into it.

A deal with Oracle, the enterprise software company, would be more of a data play. Oracle could use TikTok’s data about social interactions to benefit its cloud, data and advertising businesses, the people said.

And so the most vibrant consumer app of the moment now seems destined to fall into the hands of one enterprise software company or another. Yes, Microsoft has demonstrated that it can acquire a big consumer property and keep it stable — some people may not even realize that it owns Minecraft or LinkedIn. But the TikTok challenge promises to be much harder — the company will have to somehow recreate ByteDance’s powerful algorithmic feed, design a steady stream of new features and experiences to keep influencers engaged, and fend off fierce competition from Facebook, Snapchat, and a host of TikTok clones along the way.

In the past, TikTok was able to power through the many challenges facing it by relying on a remarkably adept and focused ByteDance team that was born in an environment of hyper-competitive fast following. Nothing in the history of Microsoft, Walmart, or Oracle inspires much confidence that any of them is up to replicating that culture.

TikTok has surprised me with its cleverness before. But after the Trump administration finishes mugging ByteDance, it’s unclear to me how many of the elements that have made it so successful to date will survive. Perhaps one of the companies now circling it can replicate them eventually. But it seems just as likely to me that they will fail to grasp what made TikTok tick in the first place.

Today in news that could change public perception of the big tech companies

⬆️ Trending up: Twitter will now hide tweets containing text that has been copy and pasted without any modifications from the source. The news comes shortly after a number of accounts shared a viral message claiming to be a Black Lives Matter protester deciding to vote Republican. (Shubham Agarwal / Digital Trends)

⬇️Trending down: Twitter needs to act much faster to take action on tweets that spread false information about the election. An analysis of a Trump tweet that contained misleading information about mail-in voting shows most of the spread had likely already occurred by the time Twitter stepped in. (Election Integrity Partnership)

⭐ Multiple threads on Facebook and Reddit encouraged militiamen to head to Kenosha, Washington, ostensibly to protect local businesses from protesters. In some cases, the discussions encouraged acts of violence. The conspiracy website InfoWars amplified the call to arms. The Digital Forensic Research Lab reports:

Approximately 13 hours prior to the shootings, a Facebook page that has since been removed by the platform actively solicited armed individuals to protect neighborhoods that evening. At 10:44 a.m. local time, the administrator of the “Kenosha Guard” page asked if any members were willing to “take up arms and defend out [sic] City tonight from the evil thugs.” They continued, “Nondoubt [sic] they are currently planning on the next part of the City to burn tonight!”

The page also circulated a now-deleted event RSVP titled “Armed Citizens to Protect our Lives and Property.” It would eventually garner more than 300 RSVPs, with an additional 2,300 people interested in attending.

See also Facebook’s Brian Fishman on what the company has found so far on the Kenosha shooting.

In January, the 17-year-old charged with killing two people and injuring another in Kenosha, Washington appeared in the front row at a Donald Trump rally. His social media presence is filled with him posing with weapons, posting “Blue Lives Matter,” and supporting Trump for president. (Ellie Hall, Amber Jamieson, Tasneem Nashrulla and Kadia Goba / BuzzFeed)

The technocratic language Facebook uses in its takedown numbers hides the fact that the platform helped create the very problem it’s talking about solving. Every time Facebook releases these numbers, it is asking us to think about all the people the company didn’t harm, this author says. (Chris Gilliard / OneZero)

A meaningful percentage of Americans are living in an alternate reality powered by a completely separate universe of news and information. The phenomenon was on full display at this week’s Republican National Convention. (Charlie Warzel / The New York Times)

A coalition of voting rights and watchdog groups is suing the Trump administration over its Section 230 executive order. The groups say the order is “fundamentally incompatible with the First Amendment” and is meant to limit voters’ right to receive information about the election. (Issie Lapowsky / Protocol)

Rep. David Cicilline, the Democrat leading the investigation into the tech giants, is poised to deliver recommendations as soon as next month. One possibility might be a Glass-Steagall law for tech platforms, which would prohibit them them from running a platform and competing on it at the same time. (David McLaughlin / Bloomberg)

Government officials Investigators building an antitrust case against Google are investigating whether the company engages in tying: the practice of bundling different products together in a way that can block out competitors and give the seller an unfair advantage. (Gerrit De Vynck and Mark Bergen / Bloomberg)

US companies operating in China say Trump’s WeChat ban could hurt their ability to effectively communicate with staff and local authorities. More than a dozen firms, including Apple, Walmart, and Ford, have approached the White House in recent weeks to voice their concerns that the order could extend into China. (Liza Lin / The Wall Street Journal)

Epic secured a temporary restraining order to protect the business in the short term, but the fate of the Unreal Engine is still up in the air. If Apple prevails, it could endanger an entire ecosystem of third-party tools that rely on the engine. (Nick Statt / The Verge)

Facebook filed a lawsuit against MobiBurn, an app it says harvested user data without permission. The move comes after Facebook launched an investigation into two third-party software development kits that security researchers found were collecting data without consent. (Alfred Ng / CNET)

⭐ Employees at some of the biggest businesses in the US say management has banned them from alerting colleagues or customers about COVID-19 outbreaks. Some companies have retaliated against workers who spoke out — including on social media. Josh Eidelson at Bloomberg has the story:

Workers at Amazon.com, Cargill, McDonald’s, and Target say they were told to keep Covid cases quiet. The same sort of gagging has been alleged in OSHA complaints against Smithfield Foods, Urban Outfitters, and General Electric. In an email viewed by Bloomberg Businessweek, Delta Air Lines told its 25,000 flight attendants to “please refrain from notifying other crew members on your own” about any Covid symptoms or diagnoses. At Recreational Equipment Inc., an employee texted colleagues to say he’d tested positive and that “I was told not to tell anybody” and “to not post or say anything on social media.”

Amazon, McDonald’s, and Target dispute the allegations. REI says it doesn’t prohibit employees from, or punish them for, raising concerns or discussing their own health. General Electric Co. says it hasn’t threatened employees for discussing Covid-related concerns, and Delta says it hasn’t punished staff for sharing diagnoses. Smithfield Foods Inc. says its policy “is the opposite of the allegations in the complaint.” Urban Outfitters Inc. says it encourages employees to report concerns and that OSHA has found no wrongdoing on its part. Cargill Inc. says it considers health information private.

The Daily Wire, the conservative blog started by Ben Shapiro, was the top publisher on Facebook in July 2020. It was followed by CNN and Fox News. (Benedict Nicholson / NewsWhip)

Discord has grown to more than 100 million monthly active users during the pandemic, and the number of reports the Trust and Safety team has received has almost doubled. Of those, 36.6 percent had to do with harassment. The platform is also dealing with an influx of spam, according to their latest transparency report. (Discord)

There’s now an economy around viral videos of adults throwing tantrums, where clips of various Karens flipping out can be sure to get tons of traffic. The process isn’t entirely organic. (Kaitlyn Tiffany / The Atlantic)

“Criminal Minds” TikTok, where fans share videos about the CBS crime procedural, is blowing up and prolonging the the series’ lifespan. Videos marked with the #criminalminds hashtag have been viewed over 1.5 billion times on the app. (Tracy Brown / Los Angeles Times)

Disability activists are speaking out against a TikTok challenge that involves parents showing their kids photos of a disabled person and saying it’s their new teacher. “Disabled people aren’t here for your ridicule. We’re not punchlines. We’re people,” the author writes. (Melissa Blake / Refinery29)

Tens of thousands of Fortnite accounts are being sold everyday in a black market of stolen video game credentials that generates $1 billion annually. Criminals use automated tools that can check 500 accounts a second to discover if login data stolen in recent data breaches unlock any Fortnite accounts. (Olga Kharif / Bloomberg)

Stuff to occupy you online during quarantine

Watch the trailer for The Social Dilemma, a documentary coming to Netflix next month. A variety of tech apostates and critics, including Tristan Harris, Renee DiResta, Roger McNamee, and Jaron Lanier share their concerns about life under algorithms.

Microsoft Flight Simulator players are hunting down Hurricane Laura as it approaches the US Gulf Coast. The real-time weather inside Microsoft Flight Simulator is providing a surreal spectacle for players. (Tom Warren / The Verge)

when the Zoom call ends and I am left with my thoughts pic.twitter.com/BBp6NEDg4C

I’d love to get in touch with Emilio Esteves. Does anyone have his emailio addressteves?

IKEA may also be interested in TikTok but they are still trying to put together a bid.

Lake Charles, Louisiana voted 10 to 5 to leave up the Confederate South’s Defenders Monument.

Hurricane Laura toppled the statue atop of the monument overnight.

Photo: @davantelewis pic.twitter.com/Y3HpxbUgZo

Send us tips, comments, questions, and TikToks set inside a Walmart: [email protected] and [email protected]

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