For TikTok, losing India market tough but US holds the key

Although TikTok has lost its biggest market in terms of users in India after the ban, the damage is not as hard as it would be to lose the US market, according to market research firm Forrester.

According to Xiaofeng Wang, Senior Analyst, the US is TikTok's second-largest market after India in terms of downloads. While TikTok has nearly 120 million users in India, it has about 100 million in the US.

"But in terms of monetisation, the US market is significantly more important than India," she said in a statement.

According to Forrester analytics, the social media advertising spending in 2020 will reach $37.374 billion in the US and only $1.673 billion in India.

TikTok business sales talk in the US has once again hit the roadblock after China's update of the technology export rules. The update covers Artificial Intelligence (AI) technologies used by ByteDance, the Chinese firm that owns TikTok.

People often compare the US government's handling of TikTok with the Facebook and Google situation in China. But these are two very different situations.

"Facebook and Google made their own decisions not to comply with the Chinese government's data censorship regulation that is the prerequisite to operating in China.

"While TikTok is willing to and has so far complied with relevant regulations in the US, the US government still doesn't allow it to operate in the country unless it changes hands from being a Chinese company," Wang said in a Forrester report.

However, the US move will discourage Chinese and possibly other foreign companies to invest in that country because it has lost its charm as a fair business environment.

"On the other hand, countries like Singapore have been enforcing a neutral position as an independent market that provides a fair business and investment environment, which could make it more attractive to Chinese and other foreign companies and investors," she emphasized.

TikTok is currently under pressure from the Donald Trump administration to sell its US operations quickly or face an effective ban.

While Walmart entered into the fray in partnership with Microsoft, Oracle is another top contender for the deal.

"From a pure business perspective, its parent company ByteDance doesn't have any reason to sell it. It would make more sense to aim for an IPO. However, geopolitics has created this rare opportunity for Microsoft, Twitter, Oracle, or any other company that wants to acquire TikTok," she elaborated.

It would help them expand their user base from working professionals to young consumers (especially teenagers) or from B2B businesses to general consumers focused on pop culture and entertainment.

TikTok is already a strong competitor to Facebook today.

"If the new parent company could successfully carry on TikTok's momentum in attracting young consumers and content creators/influencers, it's possible that this would make it a third important digital ecosystem to brands beyond Facebook and Google and would definitely take a share of marketers' advertising dollars from the two platforms," Wang said.