Wavelet Strategy’s Ivy Yang writes about TikTok’s American reality, its missed opportunity to reset the narrative in the US and some PR dos and don’ts. 

I’ve written a lot about TikTok because it really has all the elements of intrigue. Here are a few reasons:

  1. It found success in the social media and culture arena, a feat none of its Chinese peers have managed to conquer. TikTok has taken hostage of American millennials and Gen Z’s short attention span, boasting an engaged user base that spends an average of over 90 minutes daily on a platform that started with silly dance videos.
  2. TikTok has an internet-famous, heartthrob CEO who gives you advice on the millennial pause
  3. TikTok is the poster child for Chinese companies expanding to US markets. The policy and regulatory treatments it receive will set the precedent for others and be the likely fate of many after it. Amid ongoing political debates about Chinese firms, it’s set to be a key issue in the upcoming US presidential election.

TikTok’s American reality 

TikTok is redefining what it means to be a ‘global company’ in an era marked by geopolitical rivalry. It’s still trying to figure out how to be Chinese and American at the same time, and faces an insurmountable challenge to prove its compatibility with “American values.”

TikTok’s parent company Bytedance is pouring millions into lobbying to address negative perception, building Project Texas (an initiative to work with American software company Oracle to store all American user data in the US), and even a X account called TikTokComms to give updates on the PR they are actively doing.

This week, Forbes published an article titled ‘A Draft of TikTok’s Plan to Avoid a Ban Gives the U.S. Government Unprecedented Oversight Power’ by long time TikTok critic and a journalist who has consistently broken stories (including the one that TikTok spied on journalists) and exposed issues that lawmakers are now actively investigating. The article is largely favorable and provides some supportive points to TikTok’s argument:

  • The year-old draft outlines TikTok’s negotiations with the Biden Administration and its impact on US operations, casting the company almost as a victim due to the strict terms.

“The draft agreement would make TikTok’s US operations subject to extensive supervision by an array of independent investigative bodies, including a third-party monitor, a third-party auditor, a cybersecurity auditor and a source code inspector. It would also force TikTok US to exclude ByteDance leaders from certain security-related decision making, and instead rely on an executive security committee that would operate in secrecy from ByteDance.”

  • The article features expert opinions suggesting that some draft language may border on US government overreach.

“Ama Adams, a managing partner and CFIUS expert at Ropes & Gray, said that some of the government powers in the draft agreement were somewhat typical  including the right to inspect a company’s facilities and materials, and the use of a third-party monitor. But “setting up a structure that has allegiance to the United States  I’ve never seen language, per se, to that extent.”

  • The piece even acknowledged the potential regulatory double standards TikTok is up against, a point I argued in a piece back in March

“If finalized, the draft agreement would mean TikTok is subject to significantly more government oversight than domestic competitors like Facebook, Instagram, YouTube and Twitter, which operate largely free from government intervention in their policymaking, contracts and internal affairs  so long as they avoid violating existing U.S. laws.”

  • The government agencies’ statement lacked groundbreaking details, leaving room for TikTok to offer its take. Also opens the door for TikTok to address the five demands below: 

The draft agreement, as it was being negotiated at the time, would give government agencies like the DOJ or the DOD the authority to:

    1. Examine TikTok’s US facilities, records, equipment and servers with minimal or no notice,

    2. Block changes to the app’s US terms of service, moderation policies and privacy policy,
    3. Veto the hiring of any executive involved in leading TikTok’s US Data Security org,
    4. Order TikTok and ByteDance to pay for and subject themselves to various audits, assessments and other reports on the security of TikTok’s US functions, and,
    5. In some circumstances, require ByteDance to temporarily stop TikTok from functioning in the United States.

    TikTok comms’ missed opportunity

    The piece sets the stage for a substantive statement from TikTok, offering the company an opportunity to redefine the issue and potentially reset the narrative. The main point of rebuttal should zero in on the demanding nature of these conditions and question the practicality of execution. TikTok should forcefully reiterate that this isn’t just about privacy or data access anymore; it’s about governmental oversight to an extent that could tip the scales against TikTok’s business operations.

    TikTok should have crisply outlined its position on 1) the US government’s approach to the TikTok issue and 2) its stance on the five unrealistic demands.

    However, in its public statements to Forbes, TikTok straddled both sides and said much ado about nothing.

    “It is inappropriate and completely unfair to be asked to comment on a document that we cannot validate. As has been widely reported, weve been working with CFIUS for well over a year to implement a national security agreement and have invested significant resources in implementing a firewall to isolate US user data. Today, all new protected US user data is stored in the Oracle Cloud Infrastructure in the US with tightly controlled and monitored gateways. We are doing more than any peer company to safeguard U.S. national security interests." 

    Let’s dig in on the language.

    The phrase "completely unfair" evokes a whiny victimhood mentality without offering solutions, and shifts the focus to an emotional appeal than rational discussion. It sets a negative tone and undermines the authority of anything TikTok has to say afterwards.

    It’s true that TikTok has been working with CFIUS, but the absence of recent public updates is also noteworthy. Highlighting CFIUS would refocus attention on the progress – or lack thereof – and the unresolved question of whether TikTok is on the path to being sold or banned.

    “Implementing a firewall” doesn’t quite capture Project Texas’ ethos of “safeguarding, safety and security”. The main objective of doing any of this is to distance TikTok from its Chinese ties. And if anything, the word firewall evokes is China and the Great Firewall

    And Oracle Cloud can’t be bothered, especially if the relationship between Oracle and TikTok/Bytedance is as contentious as described in the follow up reporting:

    “The relationship between ByteDance and Oracle has become deeply untrusting and adversarial, according to five sources. One source with knowledge of the companies’ actions characterized Oracle’s stance toward ByteDance as a “counterintelligence operation,” rather than a normal customer relationship. Meanwhile, some ByteDance employees wonder if Oracle just wants to run up their bill. The TikTok contract, known internally at Oracle as Project Telesis, has made ByteDance one of Oracle’s most lucrative customers.”

    Last but not least, comparing TikTok with peer companies misses the point entirely. The real issue isn’t how TikTok’s efforts stack up against those of Facebook or Snap; it’s that the logic governing TikTok’s regulation is rooted in national security considerations. Making the comparison is equivalent to Google telling China that because they do search better than Baidu, they should get to stay in China. (Google left China in 2010). Both scenarios ignore the distinct regulatory environments they operate in and the geopolitics they can’t ignore.

    Key PR learnings 

    The second piece that followed, ‘As TikTok Ban Looms, ByteDance Battles Oracle For Control Of Its Algorithm’, is as much a PR miss as the first one. Putting back on my comms person hat, here are some universal key takeaways:

    • Be as transparent as you can, and provide as much context and background to frame the optimal story. It’s a terrible look if you have to backtrack and provide more statements AFTER the piece is published. The company at first did not answer questions about when it last met with CFIUS for negotiations, or when the government last updated the draft agreement. After this story was published, Haurek said: “Conversations are ongoing.”
    • Make sure your allies are on board to support your statement. Without it, it’s weak and open for interpretation. TikTok spokesperson Alex Haurek initially did not comment on the relationship between TikTok and Oracle or the draft agreement, nor did he answer a detailed list of questions. Instead, he provided this statement: [redacted]…”We have reached a working-level agreement with Oracle on camera placement and usage and, importantly, Oracle will have complete freedom to conduct its code review and its other work confidentially.” Oracle and the U.S. government declined to comment.
    • Avoid contentious debates with reporters at all costs. Because they have every right to be snarky and publish something that makes the process the story. It’s rare a spokesperson’s name is mentioned 5 times in one article, and it negatively impacts TikTok’s corporate reputation by association.
    • Own up to the reality of increasing protectionism and politics. These will affect its future in the U.S. That is the macro reality TikTok is dealt with. As CEO Shou Zi Chew remarked during the congressional hearing: “I don’t think ownership is the issue here.” Maybe TikTok should take a page out of Nio CEO William Li’s strategy, calling out the U.S. government to grant equal access for Chinese electric vehicle makers. “The world should be more open and stop politicizing business.” A broadly applicable zinger.