The news: TikTok has coasted along relatively unscathed as the ad spend slowdown has continued into 2023. The popularity of the short-form video app helped its ad revenues grow 139.9% in the US last year, per our latest forecast.
But despite that success, regulatory pressure has forced TikTok to restructure its US business and could pave the way for US oversight of its recommendation algorithm in a move that could reshape social media’s relationship with the government.
The video boom: To say TikTok was immune to 2022’s spending slowdown wouldn’t be entirely true—that 139.9% growth is still a reduction of $933.6 million from our March forecast. But the app’s powerful recommendations algorithm has helped it avoid the AppTrackingTransparency and spending pains that have afflicted competitors like Instagram.
Regulator challenges: TikTok’s advertising success isn’t happening in a vacuum. Regulators have hammered the app over the last year, raising concerns about its ties to China, use of personal data, and impact on teenagers. After several bills seeking to ban the app (and already having been banned on some college campuses), TikTok may soon lift back the veil to appease regulators.
Our take: If TikTok allows regulators to have recommendations oversight, it could lead them to demand the same from platforms like Google, Facebook, and more.
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