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Can TikTok’s new CEO solve all its problems?

Short-video platform TikTok announced last week that it had pulled off a major coup by hiring Kevin Mayer, Disney’s head of streaming, as its chief executive.

The ex-Disney executive, who assumes his new post in June, will also serve as the chief operating officer of Beijing-based ByteDance, TikTok’s parent firm. Known as a dealmaking whiz in the US entertainment scene, Mayer could help the app deal with some of the biggest barriers hindering its global expansion.

Industry experts see TikTok’s poaching of Meyer as the next step for a business that has been ramping up its expansion plans and boosting its international presence. While the move will help TikTok establish itself globally, some observers believe that even with Mayer on board, the company will find it challenging to address rising concerns over its Chinese ownership.

Who is Kevin Mayer?

At Disney, Mayer got the nickname “Buzz Lightyear” not only because of his looks, which resemble the Toy Story character, but also because of his confidence and relentlessness.

As the right-hand man of recently retired Disney CEO Bob Iger, Mayer was with the entertainment and media conglomerate for 15 years and was instrumental to its acquisition of Marvel Entertainment, Pixar Animation Studios, Lucasfilm, and 21st Century Fox.

He led the launch of Disney+ streaming service in November 2019 and oversaw Disney’s direct-to-consumer businesses, including Hulu and ESPN+, as well as its international operations.

Photo credit: Alexey Malkin/123RF

Mayer, who was passed over as chief executive of Disney in February, will lead TikTok’s global expansion and report directly to ByteDance founder and CEO Zhang Yiming, the company said in a statement shared with Tech in Asia.

ByteDance declined to comment further on Mayer’s appointment.

At TikTok, Mayer will oversee corporate functions, including corporate development, sales, marketing, public affairs, security, moderation, and legal. He will also lead ByteDance’s music, gaming, and emerging businesses as well as Helo, a social media app popular in India.

Alex Zhu, the current TikTok CEO who co-founded Musical.ly, will transition to vice president of product and strategy at ByteDance.

TikTok’s China operations, which generate most of ByteDance’s revenue, will still be led by the executives in the country, bypassing Mayer, who will be based in Los Angeles and focus on international operations.

ByteDance appointed new leaders for its China operation in March including chief executive Kelly Zhang Nan, responsible for ByteDance’s key products in China including news aggregator Jinri Toutiao, Douyin (the China version of TikTok) and streaming platform Xigua Video. The company also appointed Zhang Lidong as the chairman to oversee China market’s non-product operations such as strategy and monetization.

A natural move

Heightened scrutiny around its Chinese ownership has been a stumbling block for ByteDance. With a market capitalization estimated at around US$100 billion, it’s regarded as the world’s highest-valued startup.

Placing Mayer at the helm of TikTok may come as a surprise to some, but for industry watchers, it was a natural move for ByteDance to make. Who could do a better job at turning TikTok into a global entertainment platform than a seasoned American media executive who spearheaded Disney’s video-streaming initiatives?

Photo credit: Anthony Quintano (CC2.0)

ByteDance has been vocal and aggressive about its global ambitions over the past three years. The startup recently stepped up efforts to step up TikTok’s presence in North America. Last year, the company was reportedly considering setting up a global headquarters for TikTok outside China.

Mayer’s appointment is part of ByteDance’s executive hiring spree in the US and Europe that began last year. Former YouTube executive Vanessa Pappas began running TikTok’s US operations as general manager in February 2019. London-based Ole Obermann, who wasWarner Music Group’s chief digital officer, joined TikTok in October 2019 as vice president and global head of music. In April 2020, the company recruited cybersecurity veteran Roland Cloutier as its chief information security officer.

As its global presence grew last year, TikTok raked in over US$3 billion in profit, with over US$17 billion in revenue, Bloomberg reported. Additionally, the company has about US$6 billion cash on hand.

As most of the world went on lockdown to curb the spread of Covid-19, TikTok became one of the most downloaded apps in the first quarter of 2020. According to mobile analytics firm App Annie, TikTok almost tripled its monthly active users over the past year to more than 390 million outside of China – a rare accomplishment for Chinese software companies. In the first three months of the pandemic, the app gained an additional 13 million monthly active users in the US alone.

As TikTok’s CEO, Mayer could boost ByteDance’s global business – not just for TikTok but also for its nascent gaming business and a slew of other products, such as music-streaming app Resso, according to Shan Jialu, an economist and scholar specializing in Asian and emerging markets at the International Institute for Management Development.

Mayer was head of corporate strategy at Disney, orchestrating important acquisition deals in gaming and various areas. In 2010, Disney snapped up social game developer Playdom, which was one of the hottest startups in Silicon Valley at the time. Disney eventually shuttered Playdomin 2016 and discontinued Marvel Avengers Alliance and its other games.

He also oversaw content created and produced by Disney’s Studio Entertainment, the segment that includes its music arm, among others.

Despite all this potential, TikTok still faces impediments, such as stronger regulatory headwinds and scrutiny in the US over its China ties. Hiring foreign executives could help put some distance between the company and its home country.

That’s exactly why some experts are baffled by the decision to parachute Mayer into the COO post at ByteDance.

“The nexus between ByteDance, Douyin and TikTok is too tight,” points out Michael Norris, research and strategy manager at Shanghai-based consultancy firm AgencyChina. As such, widening the gap between the three is vital to allaying “fears that TikTok could be used as a vehicle of foreign influence,” he adds.

Photo credit: Aaron Yoo (CC 2.0)

Mayer’s dual role in TikTok and ByteDance will also make it hard for TikTok to assert that its “management, operations, content, and data are insulated from Chinese government interference,” notes Norris.

For instance, US lawmakers are looking into whether the app exposes the country to security issues. ByteDance is currently under investigation for the acquisition of Musical.ly in 2017. In January, the US Army ordered military personnel to remove TikTok from government-issued devices, warning that the platform “poses a potential national security risk.”

Just recently, TikTok was hit with a massive class action lawsuit in California for allegedly collecting and storing users’ biometric data without their consent.

TikTok has been working hard to address concerns around its Chinese ownership. In March, the company announced plans to set up a content moderation transparency center in its Los Angeles office. ByteDance also stepped up lobbying efforts in Washington late last year.

Shedding its “China image” could become increasingly crucial to TikTok’s chances of success in markets overseas. A company spokesperson recently told The New York Times that TikTok is “not owned by a Beijing-based company” because ByteDance “is incorporated in the Cayman Islands.”

To infinity and beyond

Mayer may help smoothen the path for ByteDance as it ventures into the US and overseas markets, but regulatory hurdles will likely persist.

Hiring Mayer could polish ByteDance’s overseas image, and his experience in the entertainment industry and rich connections in Washington may help TikTok deflect some of the issues related to China.

One of the problems that TikTok faces in the US is complying with the Children’s Online Privacy Protection Act (COPPA). Last February, the company paid nearly US$6 million to settle allegations that it illegally collected personal information from users under 13 years of age.

With his experience at Disney, Mayer understands COPPA and will be an asset to helping TikTok navigate uncharted waters.

However, his appointment may also lead to new but inevitable challenges. After Mayer’s hiring made the news, Sen. Josh Hawley, one of the US senators who introduced a bill to ban federal employees from using TikTok on government-issued phones, posted on Twitter: “TikTok previously told me they couldn’t attend hearings and testify because executives were located in China. But this new executive lives in the US. I look forward to hearing from him. Under oath.”

Treading a thin line

TikTok’s predicament is shared by many Chinese companies that want to go overseas. They need to build their international image while at the same time maintain a cordial relationship with the Chinese government.

ByteDance is no stranger to red tape. Chinese regulators repeatedly threatened to take down one of its most popular products in China, Jinri Toutiao, from app stores due to concerns about how low-brow and salacious content run rampant on its platform.

Last month, Chinese regulators ordered ByteDance to temporarily suspend downloads of its office collaboration app, Lark (or Feishu in Chinese), after discovering that the platform’s newsfeed function allowed users to browse content from blocked sites such as Facebook and Twitter.

Chinese media and content companies are encountering scrutiny in other parts of the world as well. JOYY (formerly known as YY), the company that owns livestreaming app Bigo Live and TikTok rival Likee, came under fire for similar reasons.

“TikTok, like Facebook and YouTube, are at the center of culture and politics in countries around the world,” says Jeffrey Towson, professor of investment at Peking University. “They are required to do censorship and content moderation because users upload the content, and some of it will offend the sensibilities of each country. If users are uploading nudity in Indonesia, TikTok will have to remove it.”

To thrive in the US in the long run, ByteDance’s leader needs to be someone that people know and trust. When issues do occur, Americans will look to the head of ByteDance – that’s Zhang Yiming – just like they look to Facebook’s Mark Zuckerberg, Twitter’s Jack Dorsey, and Apple’s Tim Cook for solutions. “Right now, they don’t know Zhang Yiming at all. Hiring Keven Mayer doesn’t change this,” explains Towson.

TikTok in action / Photo credit: Sweetyhigh

Despite the setbacks ByteDance’s foray abroad has gone well compared to its peers. Its “going global by doing local” strategy seems effective – the locals just know much better than anyone else, Shan observes. Chinese tech companies have added foreigners into top management before. Some examples include Alibaba president Michael Evans, Mobike vice president Chris Martin, Ping An Technology CEO Jessica Tan.

Even though management in Chinese companies have become more diversified in recent years, “foreigners often played a side-role, focusing on specific projects and units outside of the Chinese core business,” noted Schwarzman Scholar Alexander Kremer in his blog. This is largely due to the rising skill levels among the local workforce and Chinese professionals returning from overseas stints.

Mayer may prove to be an exception, given the importance of TikTok to its parent company’s future. ByteDance has made it in the global scene, making it a rarity among China’s software startups. As such, the challenges it needs to tackle are unique or even unprecedented, as some might say.