Last month, a measure to force the sale of the Chinese-owned app TikTok gained congressional approval and was signed into law by President Biden. If parent company ByteDance does not sell TikTok within the allotted time frame, the app will effectively be banned in the United States.
With over 170 million users in the U.S. alone – and over 7 million businesses on the app – one can’t help but wonder how a potential ban would impact those millions of businesses for whom TikTok has become a powerful backbone in their marketing arsenal.
Time well spent for businesses
TikTok has come a long way since it first launched in 2016. Once known for its users’ viral dances, TikTok’s popularity has spread to businesses across the country. This number has continued to grow since the 2023 introduction of TikTok Shop. With over 60% of users in the 18-34 age range, the platform has provided a unique foothold for companies to target younger consumers directly. Corporations like Dollar General and NYX, among others, have gained new popularity as the platform has allowed them to connect with new consumers and, in some cases, effectively rebrand.
The success of businesses on TikTok spreads further than the wallets of multi-million-dollar corporations. Many small businesses have attributed their growth to the platform, including “Brandon the Plant Guy” who sold 57,000 plants in the last year and has been able to employ eight others directly because of his reach on TikTok.
TikTok claims to drive a large amount of revenue to small business owners and the U.S. economy as a whole, contributing “$14.7 billion in small-business owners’ revenue in 2023 and $24.2 billion to U.S. gross domestic product last year” as found by Oxford Economics in a study funded by and in collaboration with TikTok. In the same report, approximately half of the survey respondents “reported that TikTok was essential in helping them land brand partnerships and develop revenue streams that would have been far more difficult without the app.”
When you factor in the billions of dollars of ad revenue generated, specifically $9.9 billion in 2022, there’s no doubt that there is money to be made on TikTok. So with all the potential gain for business, why does Congress want TikTok banned?
A ticking time bomb?
In an increasingly digital age, fears over a lack of security and privacy aren’t uncommon. Former Investopedia news editor Deborah D’Souza notes the app being Chinese-owned “has raised fears of TikTok being used to collect and manipulate users’ data by the Chinese government or related entities.”
The U.S. isn’t the only one with these concerns, as the app has been banned nationwide in Afghanistan, India and Nepal, and is banned from government workers’ devices in another dozen or so countries around the world, including the U.S.
Some of this scrutiny stems from the app’s mysterious algorithm behind the For You Page, which is used to suggest content to users, and the lack of public information about how content is prioritized, particularly the potential influence of what content is bolstered versus what content may be buried by the algorithm – which has political and social ramifications. Conversely, TikTok has stated, “Our recommendation algorithm doesn’t ‘take sides’ and has rigorous measures in place to prevent manipulation.”
Although there haven’t been any specific instances that reinforce these fears, the unknown of the app’s algorithm workings, collection of user data, and relationship with China create uneasiness for many about how the app’s ubiquity could be exploited.
However, despite the potential national security risks, small businesses are more concerned about the direct impact a ban could have on their day-to-day livelihoods as a direct apples-to-apples alternative to TikTok’s online culture isn’t currently in sight.
