Home Investment Is Amazon eyeing TikTok? Ties between the two companies grow closer

Is Amazon eyeing TikTok? Ties between the two companies grow closer

by forbes

With a January deadline looming for TikTok to be sold to an American company or face a nationwide ban, the Chinese-owned social media giant is quietly strengthening its ties with a company central to Americans’ daily lives and one of its biggest competitors: Amazon. It’s a strategic move that will make it harder to shut down TikTok in the United States, industry experts told Forbes.

Some believe it’s a sign that Amazon could be on the table as a potential buyer. “The future is clear,” said Roee Zelcer, who was until recently TikTok’s head of product and services sales and held the role for more than three years. He left the Chinese social network in April to become the U.S. CEO of Humanz, a global creator marketing platform that connects influencers with brands like Google, L’Oréal and Procter & Gamble.

And even if that acquisition doesn’t happen, Amazon’s cozy relationship and growing reliance on TikTok will likely add to the chorus of voices fighting the ban. “It’s not just small businesses and influencers who are outraged about this ban now — it’s Amazon as well,” Zelcer told Forbes. “It’s a huge investment on TikTok’s part. It’s a very strategic move to deepen their relationship with the U.S. economy.”

TikTok declined to comment. Amazon spokeswoman Maria Boschetti said the company does not comment on mergers and acquisitions or speculation.

Oral arguments begin next week in a legal battle between the U.S. government and TikTok that could lead to the country’s first ban on a foreign-owned social media app.

In April, President Joe Biden signed a law requiring TikTok’s parent company, China-based ByteDance, to sell its most valuable asset to a U.S. company over national security concerns. Otherwise, the company could be shut down as early as next year.

In May, TikTok and ByteDance filed a lawsuit challenging the law, claiming it is unconstitutional and a thinly veiled attempt to simply ban the wildly popular platform. Meanwhile, a group of TikTok creators have also sued the US government. Now, with the app’s future hanging in the balance and four months until its sale, the US Court of Appeals in Washington will hear the parties challenging the Justice Department.

TikTok and Amazon unite
Amid the crossfire, TikTok has been making subtle moves to further establish itself in the country that is threatening to ban it. The platform has been heavily promoting its little-known sister app, CapCut, which continues to grow in the U.S., and has stepped up efforts with TikTok Shop, abandoning plans to expand overseas to focus on growing its presence in the U.S.

Last month, TikTok announced a major partnership with Amazon — allowing people to browse and buy Amazon products directly on its platform, without leaving the app. This means that users who see ads for Amazon items in their “For You” feeds can now link their Amazon accounts to make purchases directly on TikTok; previously, they had to navigate to the retailer to do so. Once the accounts are synced, they remain connected until users actively unlink them. Amazon has also encouraged its own influencers to further amplify Amazon sellers on TikTok.

“Amazon is making it more convenient for customers to shop on social media by expanding shopping to Facebook, Instagram, Pinterest, Snapchat and TikTok,” Amazon’s Boschetti said. “Shopping is available for select products advertised on these popular social networks and sold by Amazon or independent sellers in our store.”

The alliance may seem unusual at first glance, given that the companies are major e-commerce competitors. But there are clear benefits to working together.

“Amazon comes from a history of being a big e-commerce company; how do I integrate with social media? TikTok comes from: I’m dominating on social media, on engagement, and I have all these influencers and creators; how do I get into e-commerce?” said Zelcer, TikTok’s recent chief sales officer. He described the companies as “frenemies” with benefits — friends and rivals, two giants trying to conquer the social commerce turf from different directions.

Amazon’s attempt to integrate shopping and social media was Amazon Inspire, a personalized TikTok-style feed with shoppable photos and videos that launched in late 2022, while TikTok’s response was TikTok Shop, which went live a year later. The former failed to gain much traction—and Amazon Live failed to compete with TikTok Live in social commerce—while the latter was dogged by concerns about the quality of its overly cheap products. They saw each other as an opportunity.

“For TikTok, I’m now accessing all of the e-commerce consumers that Amazon has, so I’m getting all of this credibility and trust and brand that TikTok still has a lot of trouble building… For Amazon, it’s a way to capitalize on the viral trend and the fact that they don’t have a lot of Gen Z consumers on their platform — an audience they would love to reach,” Zelcer said. (It would also give TikTok a significant advantage over its Chinese fast-fashion rivals Shein and Temu, which are exploding in the U.S.)

Advertising revenue
Amazon has become TikTok’s third-largest advertiser in the US, behind only Google and Walmart, according to market intelligence firm Sensor Tower (TikTok advertising accounts for 5% of Amazon’s spending).

Documents obtained by Forbes show that Amazon had more than six advertising accounts on the app as of 2023, including for Amazon Fashion, Amazon Style, Amazon Books, Amazon Health and the Black Business Accelerator. There were also ad accounts for Amazon’s public policy and public relations team, as well as the marketing team focused on the company’s new AI-powered shopping assistant, Rufus, among others. Boschetti, the Amazon spokeswoman, said Amazon advertises on TikTok like any other company or retailer.

The companies’ deepening relationship is managed in part by a team TikTok calls “Team Amazon.” According to TikTok job postings and employee profiles on LinkedIn, the positions are in New York, California and Washington. Many of those employees are within TikTok’s sprawling “Global Agencies and Accounts” group, led by executive Khartoon Weiss and reporting to the company’s president of global business solutions, Blake Chandlee. He oversees the company’s advertising business and reports to CEO Shou Chew.

A large number of TikTok employees building the Amazon tie-up have notably come from Amazon itself, LinkedIn shows. That includes Amazon’s global head of TikTok, the head of product marketing for TikTok Shop and others who previously worked on the US company’s Influencer Program.

The approach seems to be: “If you can’t beat them, join them,” said Julian Reis, CEO of SuperOrdinary, which connects thousands of creators and brands to help them grow on TikTok, Amazon and other social commerce platforms.

He called the TikTok-Amazon integration “a very, very smart move” on both sides. But he said that while the value to TikTok — in terms of the revenue it will generate and the massive amounts of customer data it will possess — cannot be understated, the collaboration could create problems for Amazon down the road.

Can Amazon buy TikTok?
“Where Amazon may lose out, and maybe lose some control now, is that this could become an addiction and a codependency that this is the only way to find new customers,” Reis said. “Why disrupt something that’s working?”

This could also provide a big incentive for Amazon to buy TikTok.

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Should ByteDance agree to spin off TikTok’s U.S. entity, Amazon’s recently announced partnership with the company could be the first step toward a potential acquisition, Zelcer suggested. “If you imagine Amazon acquiring the entire social platform — capturing all of the Gen Z audience and engagement, and integrating their e-commerce, logistics and everything that comes into Amazon through TikTok — and that becoming the social e-commerce platform, that’s huge,” he said.

“And that could be a potential merger between the two. … It’s like making two plus two equal six.”

 

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