Amazon Partnering with TikTok Shop

Fady Nakhla 
Staff Writer

 

In an unexpected move by ByteDance (the company that owns Tik Tok) and Amazon, companies announced a partnership to allow Tik Tok users to purchase Amazon goods from the Tik Tok store front by linking their Amazon account through Tik Tok. This motion has come amidst federal turmoil regarding Tik Tok’s place in the American social media market following President Biden’s approval of a “sell or ban” measure in April of 2024 that gave ByteDance nine months to either sell the platform or remove it from the American social media marketplace. Simultaneously, Amazon is facing an Antitrust suit from the FTC in regard to Amazon’s growing monopoly over the e-commerce space.  The Amazon-Tik Tok partnership brings forth questions regarding the future of the two companies. This article aims to explore the following questions: 

•  What will this partnership bring for the two companies and the e-commerce and social media marketplace?

• Is Amazon aiming to purchase Tik Tok from ByteDance? 

• Will this partnership tip the FTC’s radar?  

 

What will this partnership bring for the two companies and their respective marketplaces? 

Tik Tok is the 5th most used social media platform and 2nd fastest growing. It has great impression counts and engagement as well as a wide range of creators. Regardless of the high levels of engagement, Tik Tok has struggled to break into the e-commerce space in the United States. Tik Tok shop, while having great ROI for sellers, has not been as profitable as analysts predicted for ByteDance. However, Tik Tok shop has been able to adhere to a young generation of shoppers that Amazon has struggled to attract. 

On the flipside, Amazon has had the opposite effect. Amazon is the top placeholder in the e-commerce market, owning 37% of the market, significantly ahead of its e-commerce competitors such as Walmart coming in at 2nd place with just 6% of the market share. However, Amazon has struggled to break into the short form video content corridor. Amazon wishes to break into such a market to expand its audience to a younger generation of Amazon buyers. Its shortform video content app—Amazon Inspire—has largely been a disappointment.  

Their partnership aims to combine both companies’ strengths to yield mutual benefits. On one end, Amazon taps into the market of new generation that it has historically failed to yield returns with, on the other Tik Tok gets to deepen its ties within the American marketplace with Amazon—one of the largest American corporations. However, this leads to the question, is Amazon looking to acquire Tik Tok from ByteDance? 

 

Is Amazon likely to purchase Tik Tok? Is a merger even possible? 

Although Amazon and Tik Tok are competitors in many aspects (Amazon Inspire vs. Tik Tok and Tik Tok Shop vs. Amazon), their willingness to partner shows possible open thought to the potential of working in mutual benefit rather than as competitors. With the deadline (for Tik Tok to either be bought or banned) approaching rapidly, it may seem that this partnership is an initial step for Amazon to angle itself to purchase Tik Tok and expand its customer base as well as tap into a market it struggled to break into. However, it is important to realize that Amazon’s integration with Tik Tok isn’t the first we’ve seen of Amazon partnering with social media platforms that Amazon Inspire competes with. Amazon has also partnered with Meta (Instagram and Facebook), Snapchat, and Pinterest in a similar manner allowing its users to link Amazon accounts with the platforms. 

Regardless, it is undeniable that an acquisition of Tik Tok would solve both companies’ issues. Tik Tok would survive the sell or ban measure that it faces, and Amazon would break into a market it has historically struggled to break into and expand its e-commerce audience to a generation it has struggled to appeal to. However, it is important to recognize the regulatory hurdles that such an agreement would have to pass through. Amazon is currently under extreme scrutiny with the FTC regarding a possible violation of the Clayton Act. It is likely that an acquisition of Tik Tok would further violate the Clayton Antitrust laws. Specifically, the section that states, “An illegal merger occurs when two companies join together in a way that may substantially lessen competition or tend to create a monopoly in a relevant market.” The FTC may deny a possible Amazon acquisition of Tik Tok citing this area of the Clayton Act if a case could be made that such an acquisition would reduce competition in the e-commerce and social media marketplace. Considering that the FTC is already investigating Amazon’s monopoly, such an event is not unlikely.  

 

Summary 

As the deadline approaches, the future for Tik Tok seems to be unclear. Direct progress toward an acquisition has not been made, though the company has deepened its connections with Amazon–one of the largest American corporations. While it is unclear whether this partnership will be enough for Tik Tok to overcome the sell or ban measure, it may also be an open-door allowing Amazon to acquire Tik Tok in a strategic move to increase its prospective audience. However, such an advancement would come at great difficulty as both companies are currently under the scrutiny of the federal government. 

 

Contact Fady at fady.nakhla@student.shu.edu