August 16, 2022

TikTok Warns Half Its User Base at Stake Under Trump Ban, Says Fashion Strategy Won’t Change

TikTok filed a preliminary injunction Wednesday in a Washington D.C. court to block the Trump administration’s ban on downloads, now postponed to this Sunday just before midnight.

The developer is playing defense, hoping to keep the TikTok app available in app stores run by Google and Apple, while a proposed deal by Oracle and Walmart continues playing out. Interim head Vanessa Pappas painted a bleak picture, warning that the ban would cause “irreparable harm” to the business.

According to the filing, “If allowed to remain in place, the Prohibitions will irreversibly destroy the TikTok business in the United States: They will devastate TikTok’s user base and competitive position, destroy the goodwill necessary for TikTok to maintain commercial partners in the United States and cripple Plaintiffs’ ability to attract and retain talent.”

Pappas disclosed that a ban may cost TikTok as much as half of its user base — which numbers more than 100 million in the U.S. — in just two months’ time. And over six months, the exodus could swell to a massive 80 to 90 percent. Already, a dozen brands have already put off or backed out of advertising, she noted, to the tune of $10 million in lost revenue in August.

A long-term prohibition of the app looms as a distinct possibility, considering the often confusing twists and turns with Oracle and Walmart’s bid.

The American companies, along with President Trump, are under the impression that U.S. companies will have a majority controlling interest in the business. Meanwhile, current owner ByteDance has communicated its intention to hold onto 80 percent of the resulting TikTok Global organization. The Beijing-based company went so far as to describe it as its U.S. subsidiary — which doesn’t little to ease the Trump administration’s stated concerns about national security.

The other wrinkle is that Chinese media, which often communicates sentiments out of Beijing, sees the bid as “unpalatable,” calling it a “dirty” deal in recent coverage.

However things play out on the world stage, sources inside TikTok tell WWD that its business strategy — including recent moves to court apparel brands — hasn’t shifted to any sort of emergency mode yet. It remains unchanged, at least for now.

That makes some sense. Preemptively preparing for doom could further undercut the business, which has been growing in popularity among the fashion crowd over the past year.

The platform made a splash this spring, offering plenty of content during Fashion Week then and leading up to its first coordinated Fashion Month now, this month. In between, it has collaborated with brands from IreneIsGood to Levi’s.

Such efforts have been less about an iron-clad strategy, or calculated pursuit of fashion, than an organic movement arising from its community. “We don’t have to define our own strategy. Users really do that for us,” they said. “So we can go into our app and see every day what users are interested in, what they’re talking about, what’s trending. And then we can actually align our strategy with where we’re seeing those trends happen.”

As for whether the trends, or even the user base itself, dissipates or how the shifts in TikTok’s potential ownership may pan out, no one can say, not even inside the business. That’s not uncommon with multinational companies that have leadership and divisions straddling domestic and overseas interests and cultures.

Among rank-and-file TikTok employees in the U.S., if anyone believes the worst is yet to come, it doesn’t seem to be apparent day-to-day activities. Representatives are continuing to court brands, as others train them on how to produce TikTokable content. This month even saw the introduction of a new marketing partner program, TikTok for Business.

It’s a brand of optimism that may either speak to a deep trust in TikTok leadership’s ability to pull off a deal, or a mass denial of the app’s potential demise. But now that Pappas herself has mapped out what the latter could look like, it could get harder to ignore shifts that could lie ahead.

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