- As Kevin Mayer steps into his new role as TikTok CEO his top priority will be a difficult one: he must prove to American lawmakers, regulators and consumers that they can trust the Chinese-owned app with their data.
- If Mayer fails to address these concerns, TikTok's Chinese ownership could be the downfall for the app.
As Kevin Mayer steps into his new role as TikTok CEO, his top priority will be a difficult one: he must prove to American lawmakers, regulators and consumers that they can trust the Chinese-owned app with their data.
TikTok announced Mayer as its new CEO and the new chief operating officer of its Chinese parent-company ByteDance on Monday. He comes to TikTok from Disney, where he was the head of streaming and led the successful rollout of Disney+, the company's competitor to Netflix.
Mayer had long been considered a possible heir to former Disney CEO and current Executive Chairman Bob Iger. But Iger suddenly vacated the CEO role in February and named Bob Chapek, the company's former chairman of Disney parks, as his replacement.
"Getting Mayer, who was thought to be a potential replacement for Iger -- I view it as a home run hire for TikTok," said Daniel Ives, managing director at Wedbush Securities. "But there's challenges front and center."
On TikTok, users can watch and make short-length videos that usually contain clips from popular songs. The app has grown rapidly in popularity, and it was downloaded more than 11 million times in March as the U.S. as Americans began to shelter-in-place, according to Sensor Tower, an app market intelligence firm. That's up nearly double compared to December downloads.
But TikTok is now facing more scrutiny over its Chinese ownership from U.S. regulators and lawmakers than ever before.
In October, Sen. Marco Rubio called on regulators to review ByteDance's $1 billion acquisition of Musical.ly, the predecessor to TikTok. Rubio argued that "Chinese-owned apps are increasingly being used to censor content." In November, Reuters reported that the Committee on Foreign Investment in the United States had opened a national security review into the Musical.ly deal.
"I think Mayer is going to be spending a lot of time in the 202 area code in terms of just getting the beltway more comfortable with the digital platform," Ives said.
Until now, TikTok's Chinese ownership has been a concern, but it has yet to hurt the company's growth. Regardless, the company has been ramping up its lobbying efforts in recent months.
"We're excited to have Kevin joining ByteDance as COO, where his responsibilities will include leading the TikTok business as we continue to build our global community of creators, users, and brands," a spokeswoman for TikTok told CNBC in a statement. "His experience at Disney makes him uniquely qualified to help us drive forward as we work to create new opportunities for our community to connect, while ensuring we're all moving toward the same goal of earning trust with our stakeholders in each of our markets."
If Mayer can proactively show American lawmakers, regulators and consumers that they can trust TikTok, it will allow the company to focus on other matters, such as building new features or growing its advertising business.
"Dealing with those regulatory privacy and security concerns will probably be the biggest things Kevin will have to do initially," said Debra Aho Williamson, principal analyst at eMarketer. "Solving those issues will put TikTok and ByteDance on better footing as they seek to expand in the U.S."
If Mayer fails to address these concerns, TikTok's Chinese ownership could be the app's downfall. The teens who form TikTok's core userbase might not care, but their parents might.
"I have two kids who use TikTok on their phones, but as a parent if I decide that I don't trust this app, we have the power to block use of an app," said Daniel Newman, principal analyst at Futurum Research.
This could also create an opening for an American competitor, like Facebook, to gain users who are wary of TikTok's Chinese ownership.
"It's a risk for TikTok to ignore this as the company reaches the next stages of growth," he added.
Although Mayer's recent focus at Disney was its entrance into the streaming market, he also earned a reputation as a golden dealmaker, playing a key role in the company's acquisitions of Pixar, Marvel, Lucasfilm and 21st Century Fox. Additionally, his division included the ad sales for Disney's media properties. Mayer's experience at Disney and operating in the U.S. will be a boon for TikTok.
"His experience at Disney makes him fit like a glove as CEO here because when it comes to privacy, censorship and international issues like U.S. and China, he's well versed in how to navigate these waters," Ives said.