There’s no question that investors in the new US TikTok, announced late last week, got a great deal. For creators, brands and users, it’s not as clear cut.
The estimated $14 billion valuation for the TikTok USDS Joint Venture is roughly in line with third-party estimates for what TikTok generated in ad revenue and TikTok Shop commissions in the US last year. But as TikTok is one of the fastest-growing tech companies in the world, it should be valued at a lot more.
The deal could also lead to an initial surge in ad spending as brands who held back due to the uncertainty loosen their purse strings, boosting the app’s value. But how long that lasts remains to be seen.
TikTok US’s three biggest investors are Oracle, which has long handled US user data, private equity firm Silver Lake and UAE-based MGX. A group of other US-based investors bring the app under majority US ownership. Adam Presser, the former head of TikTok operations and trust and safety, is now CEO of the US entity. TikTok CEO Shou Chew will remain in his global position.
Users, creators and brands likely breathed a sigh of relief when TikTok confirmed the US app wouldn’t be cut off from the rest of the world. The company said US users will continue to have a “global experience,” while creators and businesses can continue to operate “on a global scale.” Global audiences and ad strategies would have been difficult to splinter had American users needed to download a new app, for example. That’s not to mention the inevitable drop off in users and engagement that would have come with moving roughly 170 million accounts to a US-only TikTok.
Behind the scenes, TikTok has also been working hard to assure its advertisers that it is business as usual. In a message seen by Scalable, the company told brand partners that they do not need to take any action and that its business products will be unchanged as a result of the sale.
But many questions remain about how much the TikTok experience will change. Under the terms of the deal, the algorithm will be retrained on only US data. This could potentially lessen the reach of foreign creators or non-US content, making the app less diverse and appealing to users. Worse, some users fear that more material changes to content are coming.
For example, some users have voiced concerns in recent days that they were being censored on TikTok after struggling to upload videos that were critical of the Trump administration’s deployment of Immigration and Customs Enforcement agents. Several of TikTok’s new investors, including Oracle, have ties to President Donald Trump, who orchestrated the deal. Others reported seeing generic or repeat videos, rather than the typical personalized stream of content.
For its part, TikTok said the glitches were due to a power outage at a US data center it relies on. As of Tuesday, TikTok said it had made “significant progress” in restoring the app, but some users might still experience technical issues, including when posting new content.
These allegations also come on top of other concerns about TikTok’s new data and privacy policies. The app can now collect precise, rather than approximate, GPS location data on users, prompting some to say they deleted the app over the weekend. While some of those users will likely return and new ones will join, it’s not a great first impression for the new TikTok and the damage to its reputation could hamper its growth in the longer-term.
TikTok has long been the “it” app where trends and culture happen. But as Instagram Reels has widely improved and YouTube has become the place to be for creators and brands, TikTok’s most serious risk is losing relevance.
In other news…
Creators Speak Out on ICE
Creators have long debated how much they should engage in politics for fear of alienating followers, losing reach or risking brand deals. But Saturday’s fatal shooting of Alex Pretti, a 37-year-old intensive care nurse, by ICE in Minnesota has prompted even the most non-political creators to speak out.
Alix Earle and Alex Cooper are among the prominent creators who have posted about Pretti on their social media accounts. Earle reposted a post about Pretti, which said he died “defending a fellow citizen from ICE aggression,” while Cooper was more blunt, writing “Fuck ICE.” Neither typically posts about politics, though Cooper once hosted former vice president Kamala Harris on her podcast.
As The Verge put it, even “the most seemingly apolitical creators have had enough,” including a duck account and one dedicated to gravestones of New England.
Some users on social media have also criticized people who posted about the assassination of right-wing influencer Charlie Kirk, but not about Pretti. Taylor Frankie Paul, a TikTok creator who will star in ABC’s “The Bachelorette” this year, may have seen those posts.
“Feeling heavy from the video I saw today. My heart goes out to Alex Pretti’s family,” she wrote on her Instagram Story. “It’s been weighing on me just like the day I watched Charlie Kirk’s video. Both were devastating to watch. Both are not okay.”
The slew of anti-ICE posts come as many creators are rethinking the role politics and current events play in their work. Since the pandemic, more of them have used their massive followings to promote vaccinations, throw their support behind the Black Lives Matter movement or even back presidential candidates.
Audiences are also increasingly expecting creators to respond to current events and use their platforms for advocacy. Brands have also gotten more comfortable with creators they work with posting about politics, even as many advertisers have moved away from overt political messaging of their own.
Plus, when creators stay silent or neutral, especially in a moment that has lit up the country, it can be interpreted by audiences as tone deaf—or as a political stance.
By the Numbers
YouTube accounted for 16% of citations in AI responses over the past six months, beating out Reddit as the top social source for AI search results, according to data from AI marketing platform Bluefish published by Adweek.
While that’s good news for the value of creator content as AI search rises, it can also damage creators’ reach and revenue. As we wrote in last week’s newsletter, AI chatbots rarely cite individual creators and often bury their links, hurting creators’ visibility and potentially making people less likely to tune into their original content.
We dove deeper into this topic in last week’s podcast, embedded below. You can also tune in on Spotify or wherever else you get your podcasts.
Soundbite: Sundance Edition
The impact of AI on the film industry was on display at the Sundance Film Festival, which kicked off last week in Park City, Utah and was attended by top creators including “Chicken Shop Date” host Amelia Dimoldenberg and TikToker Louis Levanti. The festival included the premiere of an AI-generated short film “Dear Upstairs Neighbor” from Google, which recently invested $2 million in the Sundance Institute to fund a new AI educational program for artists and filmmakers.
Despite the advancements, there are still major pain points when it comes to AI for creators and filmmakers.
“Character consistency I think is really, really early,” Mike Polner, vice president of product marketing and general manager of creators at Adobe, told us in an interview at Sundance.
“For example, when you generate a character or an image of something, making sure that it is visually the same character carried throughout” the film or content.
Eighty-five percent of filmmakers who submitted entries to this year’s festival used Adobe Creative Cloud products, including AI-generation tools and Photoshop, in their work this year, according to the Sundance Institute. Adobe has emerged as a key company in the creator economy as creators of all types use its tools in their work.
The Round Up
Synthesia, a UK-based AI avatar and voiceover startup for businesses, raised $200 million in Series E funding at a $4 billion valuation from investors including Nvidia’s VC arm NVentures, Accel and Kleiner Perkins. Last year, the company announced it would start giving stock options to actors whose avatars have appeared in marketing campaigns or have been popular with its customers.
Dick’s Sporting Goods is expanding its creator program to include more influencers. Dick’s told Digiday that the in-house program gives it more control over its relationship with influencers. Other major retailers, like Lowe’s, Walmart and Home Depot have also launched their own influencer programs, while other brands have been cutting down on the number of agencies they work with on campaigns.
Pinterest said it would lay off up to 15% of its employees, or about 700 jobs, as part of a restructuring as it moves resources to AI. Last week, Pinterest announced a new CMO and its first chief business officer. Bill Watkins, the company’s chief revenue officer, also stepped down.
Creator Moves
Dhar Mann Studios, the digital studio founded by creator Dhar Mann, signed a deal with Fox Entertainment for original, scripted shows shot vertically. As part of the deal, Dhar Mann Studios will create and produce an initial slate of 40 shows for microdrama company Holywater. (Fox Entertainment took an equity stake in Holywater, which owns streaming app My Drama, last year.) Read more about why creators could be a game changer for microdramas here.
Khaby Lame, the most followed creator on TikTok, sold his company Step Distinctive Limited to Rich Sparkle Holdings, a Hong Kong-based financial printing and corporate services company. Rich Sparkle will have the exclusive rights to Lame’s global commercial activities for 36 months, including e-commerce ventures. The deal is worth $900 million, according to Business Insider Africa.
Assistants vs. Agents, the Instagram account that pokes fun at the struggles of assistants in Hollywood, hosted its first awards show in Los Angeles, where it naturally gave out awards to assistants.
Regulatory Woes
The European Union announced an investigation into Elon Musk’s Grok chatbot on X over its ability to create manipulated sexually explicit images, including of children.
Meta, TikTok and YouTube are heading to trial on Tuesday in a tech addiction lawsuit. Snapchat owner Snap agreed to settle last week. It’s the first lawsuit of several similar cases expected to go to trial this year centering on social media addiction and youth.
Talent Tracker
Deena Woloshin was promoted to TikTok’s head of civic integrity for the Americas. Before that, she was the civic integrity manager for the US and Canada.
Justin Johnson joined blockchain infrastructure company Paxos to lead partner marketing. Previously, he led creator and marketing partnerships at investing app Acorns, crypto firm MoonPay and Meta.
Lucy Quick announced she left creator membership site Passes where she was head of marketing, creator and agency success. Quick, who previously worked at TikTok Shop, hasn’t yet shared what’s next.
