Drawing from the experiences of other US tech companies, political ad revenue is unlikely to comprise a significant part of TikTok’s revenue. Considering the potential public relations risks and the costs of moderation, issues and political ads revenue should be kept low as a proportion of overall revenue.
That other social media companies similarly strictly regulates political/issues ads creates a potential pitfall: in order to grow revenue, TikTok might tap into pent-up demand to run political ads that are not allowed on other platforms. This would be a serious mistake.
As such, a restrictive approach towards governing political ads—especially relative to other social media networks—that does not emphasize monetization is advised.
Accepting that political ads are a high-risk, low-return source of revenue, it should be managed to ensure coherence with TikTok's product strategy, content moderation policy and localization strategy.
In truth, I do not have a detailed understanding of TikTok's product strategy but I understand the current policy of disallowing political ads is partly because such content not being consistent with TikTok's "focus on creating an entertaining, genuine experience for our community". However, I understand that TikTok generally allows users to create political content—as long as they do not constitute hate speech, misleading information, or support of dangerous individuals and organizations—and political entities are allowed to create TikTok accounts and to spread their content organically. As such, the considerations that apply to what type of political/issues ads to allow would similarly apply to TikTok's moderation of such user-generated content.
The trade-off between product and content moderation is foreseeable. From a product perspective, certain types of political content is likely to increase engagement and TikTok's algorithm might seek to promote such content. But from a content moderation perspective, promoting such content is risky as it might attract accusations of bias.
Actual example: TikTok allegedly suggested adding a #Trump2020 hashtag to help posts go viral. This understandably creates doubts over whether TikTok is truly maintaining political neutrality in the 2020 US presidential elections.
There is a further tension between creating a single "global" TikTok (ex-China) and the inevitably country-specific nature of TikTok's ad and content moderation policies. It is thus necessary to distinguish between elements of TikTok that can be applied in a top-down, one-size-fit-all manner (video editing tools, filters, music) and those that require incorporating country-specific considerations (hashtag prompts, content distribution algorithms etc.).
I do not have a detailed understanding of TikTok's localization strategy or how TikTok is organized internally. But, at a high level, decisions over certain aspects of TikTok's product, content moderation and ad policy must be coordinated and cannot be made without the inputs of those with local expertise of specific countries/territories.
As such, the above has significant organizational implications. Not only must TikTok hire people with the necessary expertise, internal communication channels must be established to ensure sufficient coordination across TikTok's product strategy, ad/content moderation policy and localization strategy.
Furthermore, as monetization is inevitably subordinate to product, it is worth considering how the long-term evolution of TikTok as a product might impact TikTok's political risk. For example, if TikTok follows 抖音/快手 and emphasizes monetization via live-streaming and e-commerce, will this reduce or heighten TikTok's political risk compared to in-feed ads?
Currently, the perception of TikTok as a "Chinese app" is a liability, especially for political ad policy. In the West, there is a popular narrative of illegitimate foreign (Russian) influence that played a role in Trump's election and Brexit. Geopolitically, in the West (and parts of Asia), China is seen through a similar lens as Russia. (Just look at Huawei.)
As such, "Chinese company seeking to influence democratic elections" and "China exporting its censorship system via TikTok" are basically headlines waiting to be written. There are already news articles in this vein:
Already, TikTok's competitors like Facebook are already exploiting this perception, arguing that Chinese companies like ByteDance does not respect values like free speech.