How TikTok ban in US will affect businesses, influencers and the economy – Firstpost

The US Senate on Tuesday approved a bill requiring TikTok’s Chinese parent company ByteDance to sell the popular social media platform or risk a ban. This decision, a source of contention among US lawmakers, is likely to encounter legal obstacles and cause upheaval for content creators who depend on the app for their livelihoods.

The TikTok measure was incorporated into
a comprehensive $95 billion package
earmarked for foreign aid to Ukraine and Israel, garnering a 79-18 vote in favour. The bill now awaits US President Joe Biden’s signature, with him stating his intention to sign it on Wednesday immediately following its passage.

“The USA Congress is planning a total ban of TikTok. Speak up now — before the government strips 170 million Americans of their constitutional rights to free expression. This will damage millions of businesses, destroy the livelihoods of countless creators across the country, and deny artists and audiences. Let’s let Congress know what TikTok means to you and tell them you vote NO!” TikTok urged its users in a statement.

How will this ban affect influencers and businesses?

TikTok boasts an extensive array of influencers in the US, making it the preferred platform for users seeking entertaining and engaging content. Renowned for its impressive filters and features, the app is user-friendly and possesses distinct characteristics.

In practical terms, two key entities will bear the brunt: influencers and brands (businesses).

A significant cohort of influencers relies on TikTok to endorse products, engage with their followers, and expand their audience. Many even exclusively utilise the platform, despite TikTok not actively pursuing exclusive contracts. Among its top earners are figures like Khaby Lame and Adam Salisbury, rumoured to earn almost a million dollars per post through various sponsorship deals.

Their fame owes not only to their talent but also to TikTok, which has facilitated their access to new audiences. However, with a potential TikTok ban, influencers may experience a notable drop in their engagement rates, as a substantial portion of their followers lose access to their content. Consequently, they could lose brand partnerships and witness a decline in their follower count.

A multi-billion dollar contribution to US GDP?

In early April this year, TikTok unveiled an economic impact report as part of its latest public relations campaign aimed at defending itself app against efforts to ban it in the US. Authored by Oxford Economics, the study asserts that TikTok generated $14.7 billion in revenue across twelve critical sectors of the US economy and contributed $24.2 billion to the overall US GDP in 2023.

“TikTok provides an opportunity for [small and medium-size businesses] to grow by allowing them to market themselves both organically and/or through investing in paid advertising and creator marketing,” the study said.

Initially reported by the Washington Post, the data dissects the influence of the app’s extensive user base, which has expanded to encompass 170 million active users and over 7 million businesses. The study was carried out by surveying 1,050 of these businesses and 7,500 TikTok users.

According to the report, the most substantial impact has been observed in the food and beverages sector, where TikTok purportedly contributed $6.4 billion in revenue and generated 73,000 jobs in 2023.

Also Read:
Is TikTok parent company ByteDance a Chinese agent?

Overall, the report contends that the company played a role in creating 224,000 jobs across the featured sectors.

What would be the financial impact of the ban?

Businesses face potential financial setbacks from a variety of factors such as economic downturns, market instabilities, operational inefficiencies, or unforeseen circumstances like natural disasters or global pandemics. These hurdles can disrupt business operations, diminish revenue streams, and affect profitability. However, little attention is given to the repercussions of a nationwide app ban or outage.

Last week, when Facebook and Instagram encountered a glitch, chaos ensued. Some regions reported being unable to access Facebook or Instagram for durations ranging from 30 minutes to 2 hours, impacting billions of users. Some users suspected hacking, password forgetfulness, or impending crises.

Yet, the true alarm wasn’t among the users. The real panic gripped Facebook’s operators. In that brief timeframe, Facebook’s operations and influencers suffered incalculable financial losses. Thus, the question arises: what would the financial toll of a TikTok ban be? Is TikTok concerned about business owners and creators, or merely its own interests?

Facebook provided insight into their potential losses during the outage: “Last year’s ad revenue (for Facebook’s sites) was $84.2bn. So, for every minute it’s down, we’re losing around $160,000. Or, $2,670 per second.”

Despite the significant losses incurred by Facebook during the outage, they are positioned to swiftly recover if TikTok is banned. Forecasts indicate they could capture a substantial portion of TikTok’s business, potentially tripling their revenues in the process.

What alternate platforms can creators use?

Transitioning to new platforms isn’t that easy. TikTok, with its unique algorithm, streamlined the process of reaching a broader audience. However, in the event of its shutdown, influencers may need to devise alternative strategies to expand their reach. This entails increased pressure and creativity, which may not always yield favorable outcomes.

Also Read:
Which countries have already blocked TikTok?

That said, this situation presents an opportunity for platforms like Instagram Reels, YouTube Shorts, and others that focus on vertical video content — including X, previously known as Twitter — to attract more creators and brands to invest their time and resources with them.

Instagram Reels is a short-form video feature introduced by Instagram, owned by Facebook. It enables users to create and share TikTok-style videos directly within the Instagram platform.

YouTube Shorts, a creation of YouTube, a platform owned by Google, offers users the ability to produce and view short videos on mobile devices, akin to TikTok’s format.

Triller, another social media platform, emphasises short-form video content and integrates music, providing functionalities similar to TikTok.

Snapchat’s Spotlight feature enables users to create and distribute short videos to a broader audience, competing with TikTok’s viral video format.

Spinnr, a video-sharing application, introduces the concept of “squads” based on hobbies and interests, fostering genuine connections. It also facilitates direct communication between businesses and customers, emphasising a video-first approach to friendship and community building.

What should brands to in the event of a complete ban?

In the event of a complete TikTok ban, brands and organisations should embrace the potential changes to their business and develop contingency plans. It’s crucial for brands to actively communicate with creators and influencers they collaborate with on the platform, reassuring them of support.

These individuals have cultivated their brand presence on TikTok and are likely to have questions, concerns, and fears about the uncertainty ahead.

Diversifying an organisation’s content and marketing mix across various channels is of paramount importance. This strategy should include owned channels such as newsletters and websites.

By building a robust digital presence beyond social media, businesses can ensure continuity even in the face of platform disruptions. This approach underscores the notion that businesses thrive not only on the platforms they utilise but also on their ability to adapt and maintain relevance across diverse channels.

TikTok has
hinted that it may pursue legal action
if a TikTok ban is enacted into law.