Chinese spy balloon scrutiny and Texas crackdown ‘a wake-up call’ for marketers on TikTok

At the same time, however, scrutiny of the app – which is owned and operated by Chinese technology firm ByteDance – is reaching a fever pitch.

Yesterday, Texas governor Greg Abbott announced a new plan to ban TikTok use in the state, citing data security and privacy concerns. “The security risks associated with the use of TikTok on devices used to conduct the important business of our state must not be underestimated or ignored,” Abbott said. “Owned by a Chinese company that employs Chinese Communist Party members, TikTok harvests significant amounts of data from a user’s device, including details about a user’s internet activity.”

And he’s not the only government official expressing growing concerns. Cory Booker, Democratic Senator from New Jersey and one-time presidential hopeful, addressed the issue on CBS’ ‘Face the Nation’ Sunday, explaining that TikTok is cooperating with US intelligence authorities on new plans to establish data security safeguards around the app. Just days before, Republican Senator Josh Hawley introduced a new bill seeking to ban downloads of TikTok in the US and prohibit US commercial deals with ByteDance. It’s not the first bill of its type. Plus, Congress already prevents TikTok from being installed on any government-owned devices.

Chinese balloon scandal adds more hot air to the argument

Concerns about the popular video-sharing platform are only growing in light of the Biden administration’s decision to shoot down a Chinese aerial balloon suspected to be a surveillance device over the East Coast last week. (Some social media users pointed out the irony of TikTokers condemning Chinese spying in videos posted to the ByteDance-owned platform).

TikTok, for its part, is aiming to win over the trust of US officials. Over the course of the last three years or so, the app has been negotiating with the US Committee on Foreign Investment to develop a plan that aims to answer national security concerns while allowing the company to continue operating in the US. The two groups are coming close to reaching an agreement but have not yet crossed their ‘t’s and dotted their ‘i’s.

Even if the US and TikTok come to a consensus soon, however, lawmakers’ concerns about Chinese surveillance and national security won’t be quelled. That's because “all the controversy over TikTok fits into a bigger picture,” as Justin Sherman, a senior fellow at Duke’s Sanford School of Public Policy, puts it.

“The D.C. debate about TikTok speaks to larger questions about Chinese tech companies and products, privacy and security issues, and their access to the US market,” he says. “Current debates on TikTok are also a kind of crazy blend – a blend of genuine privacy and security questions, anti-China sentiment, un-nuanced treatment of digital security risks and wide-ranging views on how the US should approach China’s technological growth broadly.”

Whatever approach the US government takes to regulating TikTok or mitigating the data privacy and security risks it poses “will send a strong signal to the rest of the world about how US policymakers are thinking, and how carefully they are thinking, about these issues,” Sherman says.

A unique tension for marketers

However the US government chooses to crack down on – or ease up on – TikTok will also have inevitable consequences for advertisers. The stakes are growing higher considering that, for the first time in nearly a decade, Google and Meta no longer eat up a majority of digital ad spend, per data from Axios. TikTok’s share, on the other hand, is ballooning – in 2022, it’s estimated that the platform generated nearly $10bn in ad revenues, over 50% more than the year before, according to research from Insider Intelligence.

But amid increased skepticism of the company’s security and data privacy practices, will big spenders be tempted to pull back their advertising investments (as many have on Twitter in light of brand safety concerns under Elon Musk’s leadership)?

Experts aren’t convinced that advertisers will be scared off quite yet. “For now, advertisers likely don’t see a reason to scale down or end their relationships with TikTok, so long as a complete ban is currently unlikely,” says Sherman.

Nonetheless, companies are likely pricking up their ears as the national conversation surrounding data privacy and security grows more heated (with five new state-level privacy laws going into effect in 2023 and the US Federal Trade Commission cracking down on “commercial surveillance and lax data security practices”). “The current policy attention to TikTok… is a wake-up call to companies that policymakers are paying more attention to the national security risks associated with data collection, analysis, targeting and monetization,” Sherman says.

Some experts aren’t convinced of TikTok’s outsized threat. “When I'm talking to business owners and marketers, I often reassure them that it's highly unlikely TikTok poses any graver threat or risk to privacy than any other social network,” says Mike Allton, a social media influencer and head of strategic partnerships at social media management platform Agorapulse. “Every platform has been collecting information on each and every one of us and the greatest danger is not that of governments utilizing the data, but of security breaches that result in data being stolen by private entities. And our government has actually done a great job in this area by imposing harsh penalties for breaches that have encouraged businesses and platforms to invest in security and monitoring.”

Although Allton acknowledges that “there’s room to debate” this perspective, he says what's certain is that influencers, marketers and social media-focused organizations have skin in the game when it comes to TikTok’s success in the US. And the sheer perception “that China has an interest in spying on American people” tends to outweigh the truth of whether or not it’s happening via TikTok, Allton says. As a result, he advises advertisers and influencers to exercise “caution” when considering investing more in TikTok, as “resources are likely better invested in other platforms that aren't under such immediate threat.”

Without meaningful legislation, it’s ‘an endless game of whack-a-mole’

While not all experts are so skeptical about the legitimacy of criticism directed toward TikTok, some share the underlying belief that government preoccupation with a single platform is misguided.

Some, for example, argue that privacy and security concerns are perfectly valid – but would be better served by advancing new national legislation. “We continue to see critics in Washington far more vocal about banning the platform than advancing federal privacy law that would establish foundational privacy and data protection – and much more active in scrutinizing the platform than in advancing efforts to regulate big tech,” says Arielle Garcia, chief privacy officer at ad agency UM Worldwide.

“National security and the rights and liberties of the American public would benefit far more from lawmakers codifying protections that address these valid concerns over privacy, security and algorithmic harms in federal comprehensive privacy legislation.”

And criticism of TikTok and ByteDance, Garcia argues, is “in effect a red herring” considering similar concerns that have been raised for years about foreign-operated tech and media. She points to a handful of surveillance-related national security scandals of recent years, including the November 2022 discovery that Russian tech company Pushwoosh had installed code on thousands of smartphone apps and widely-reported allegations of Russian meddling in the 2016 US presidential election.

Rather than playing whack-a-mole with endless security threats, the US government would do well to pass and enact more comprehensive, federal-level privacy and security protections, Garcia says.

Although US lawmakers came closer than they’d come in decades to pass a comprehensive federal privacy bill last fall in the American Data Privacy and Protection Act, negotiations have come to something of a standstill and many are skeptical that the bill will advance in its current form.

And others agree with Garcia’s hunch that no real progress on data privacy and security legislation will come without drastic measures. “Given what went on just to make Kevin McCarthy speaker of the House, and given what's going on about the debt limit, it's really going to be difficult for these different laws [about data security and privacy] to make it out of committee [in Congress],” says Justin Daniels, a corporate technology and M&A attorney and partner at Baker, Donelson Bearman, Caldwell & Berkowitz. Daniels takes a special interest in data privacy and security and co-authored the Wall Street Journal bestselling book Data Reimagined: Building Trust One Byte at a Time.

In fact, lawmakers may not advance meaningful legislative change around data privacy and security until it’s necessitated by a national disaster, Daniels predicts. “I hate to say this, but for privacy and cybersecurity, which [feeds] into national security, it's almost like you need some type of cyber 9/11 to get people to really understand [and for] our lawmakers to know that this is serious.”

In the meantime, however, Garcia advises that advertisers should maintain a laser focus on driving results for their business and leave the TikTok debate to lawmakers. “It is important for advertisers to understand that there are political interests wrapped up with real concerns over privacy and security, and to look beyond the headlines. Tether investment decisions to tangible standards and observable progress.”

TikTok did not respond to requests for comment.

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