The Fall and Rise of TikTok

I’m Alan Chapell. I’ve been working at the intersection of privacy, competition, advertising and music for decades and I’m now writing for The Monopoly Report. If you have a tip to share in confidence, ping me at my last name at Gmail or find me on Twitter or Bluesky.

Our latest Monopoly Report podcast is out with Julia Schullman - General Counsel and CPO at Telly where we talk about Google’s policy shift on device fingerprinting and speculate on the future of privacy in the CTV space.

When voting sometimes doesn’t work as you’d like

Editor’s note: Over the weekend, I posted a LinkedIn poll - asking the digital ads community to vote to select my topic for this week’s column. Big mistake on my part offering TikTok as a possible topic - as I’m not sure I can draw a straight line between the TikTok law and the ads space at this point. Nonetheless, the voters overwhelming demanded that they wanted to know more about the ongoing saga with TikTok and how it’ll impact the ads space. Some may speculate that the voting was unduly influenced by questionable ad buys on X and Facebook.

But as they say, elections have consequences. So here’s the article.

What’s Going on with TikTok?

As you probably know, Congress passed a law on April 24, 2024 requiring that TikTok divest itself by January 19, 2025 or face a ban from the U.S. We covered this story on TMR here and here. There are also some really well written articles on the legal implications of the TikTok ban here, here, here and here. Feel free to read them. I’m not sure those articles are going to be much help though - as lawyers mostly want to talk about… y’know, the law. But if you want to understand what’s really going on with TikTok and/or the digital ads space in the near future, knowing the law is only going take you so far….

Think of it this way. Imagine TikTok as James Bond and the U.S. Congress as Goldfinger. Congress designed what seemed to many as an inescapable legal prison for TikTok - requiring that they divest or go dark. The law had all the escape routes accounted for. Distribution via the mobile app stores. Check. Hosting via Oracle and Akamai. Check. Absolutely nothing could save TikTok.

Except that less than 12 hours after going dark, TikTok is back.

Saved by…. Oracle?

The ingenious part of the law banning TikTok is that it went after the lifeblood of any platform: distribution and hosting. The law imposed huge penalties for non-compliance on the mobile app stores run by Apple and Google as well as the hosting via Oracle and Akamai. Despite the risk of a crippling monetary penalty for non-compliance, and despite the fact that the statute of limitations on the TikTok law is five years (i.e., beyond the current Trump term), Oracle has opted to continue hosting TikTok…. in what on its face appears to be a blatant violation of the law.

Oracle. The same company that once proclaimed that continuing to operate AddThis was too risky. The very same company that ultimately decided that the entire Oracle Marketing Cloud was not worth the regulatory risk. THAT Oracle - decided to host TikTok after the January 19 deadline.

Why?

Was Oracle provided with assurances that the TikTok law would not be enforced and were such assurances provided prior to the inauguration on January 20? Who provided those assurances - and why would that person think such assurances would extend past the current Presidential term?

So many questions.

The Executive Order Protecting Oracle

On January 20, 2025, the White House issued an Executive Order. To mostly paraphrase, the EO says: (1) I am in charge now, (2) the timing of the law banning TikTok makes it impossible for me to fulfill my constitutional duties, (3) “I am instructing the Attorney General not to take any action to enforce the Act for a period of 75 days from today”, (4) I instructed the AG to write a letter to providers like Oracle telling them they are not in violation of the law, (5) I am taking the position that the federal Government (and not State AGs, and certainly not private litigants like Oracle’s shareholders) has exclusive jurisdiction over this national security issue, HOWEVER (via Section 3 of the EO) (6) I reserve the right to still come after Oracle and other providers and (the kicker) (7) “this order shall be implemented consistent with applicable law” which may or may not include the law banning TikTok. (The only thing missing from the EO was: “offer void in the continental U.S….your mileage may vary, and side effects include nausea, heartburn and devaluation of your stock price.”)

The above doesn’t exactly create confidence or legal certainty for Oracle or Akamai. In my view, the only reason you provide service to TikTok under these circumstances is if you think the downside to NOT providing service is even worse.

And I should add - 75 days isn’t much time to find a suitable divestment partner. But that feels like a quibble at this point.

National Security Interests

Perhaps the whole TikTok saga will result in a reconsideration of the role of national security interests more generally. Why?

To recap: The U.S. Congress passed a law designed to protect national security. The Biden Executive Branch agreed, signed the law and told the DOJ to argue in Court that national security was so important that it should override any First Amendment Concerns. And the Court system - led by SCOTUS - agreed. That’s all three branches of Government weighing in on the importance of banning TikTok as national security threat.

Nonetheless, TikTok remains.

If Senators Graham, Cotton and Rickets really believe that TikTok’s continued operations pose a national security threat, then there’s no way they’ll stand for this - they’ll demand answers, and bring Oracle and others in front of a Senate Subcommittee… right?

For the record, I have no idea whether TikTok poses a credible national security threat. The people who U.S. voters selected to make that determination have spoken - clearly and convincingly. And other than the fact that Oracle and Akamai may or may not have violated the TikTok law, nothing has changed this week. Certainly nothing pertaining to national security interests.

Watch carefully as many of those same officials eventually tell us that the national security threat has been averted… but without much detail on the why or the how. This whole experience might remind one of previous claims such as: “these are not the droids you’re looking for”, or more recently, “they have WMD.”

What does this mean for the rest of the ads space?

I’m not here to judge. Rather, I’m here to acknowledge a shift taking place. The rule of law has made a detour. And those who are supposed to be preventing such things are apparently too busy, too afraid, or too conflicted to step in. Maybe it’s only a temporary blip.

So what’s the takeaway for the ads space? Here’s what comes to mind on a brisk January evening - although I’ll concede that a good deal of the below has little to do directly with the TikTok ban.

• Rule of WHAT exactly? - If you’re counting on the rule of law to prevail over hypocrisy or greed, you may be in for a difficult go of things over the next couple of years.

• Trust-busting - I fully expect that the antitrust momentum built over the past few years will continue. I just wouldn’t necessarily count on the momentum extending to any single company in particular. SOMEONE in big tech will end up as odd man out, but predicting exactly who it’ll be at this point is a fools errand. Sorry I can’t help.

• Merger’s galore - I don’t see antitrust scrutiny extending to M&A. We’re going to see consolidation across the digital media landscape.

• Startup Capital - Capital for your startup is almost certainly going to be harder to come by and more expensive pretty soon. Plan accordingly.

• Back to the Wild West? - On most issues, it’ll be laissez faire at the federal agency level. But I think there’s still a fair chance of a (probably meek) federal privacy law in 2025 - particularly as States really begin to go for broke in terms of regulating privacy and AI. Regardless, watch out at the State level - Texas in particular. And sooner or later, we’re going to hear about enforcement from regulators in California and a few other states.

• Cross-Border Data Transfers - Yeah, this isn’t a sexy topic. But if you’re a U.S. company that wants to maintain an ads business in the EU, keep this in mind. The EU imposes rules for those who want to import log files and other personal data from the EU into the U.S. Those rules include a demand of assurances that some foreign Government isn’t snooping on their citizens. Every year the EU covers their eyes, holds their nose and pretends that the U.S. isn’t getting access to their citizens’ data. Sound familiar? A zero tolerance policy on data transfers is likely to be copied.

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