5/20/24
What a TikTok Ban Entails for Small Businesses
Author: David Sun
Editor(s): Kushagra Sadwal
The entertainment software industry is a competitive one, dominated by industry giants. YouTube, founded in 2005, is owned by Google. Facebook and Instagram, founded in 2004 and 2010 respectively, are owned by Meta. Twitch, launched in 2011, is owned by Amazon. Yet amidst this steep competition, TikTok launched internationally in late 2017 and ballooned into the multi-billion dollar industry giant it is today with over a billion monthly users across the world.
However, TikTok has come under scrutiny for its data collection practices and its ties to the Chinese Government, as its parent company, ByteDance, is based in China. As a result, many countries such as Australia, Canada, the United Kingdom, and more have banned TikTok on government devices and countries like India and Nepal have issued bans for all devices. Recently, on April 24, 2024, Biden signed the Protecting Americans from Foreign Adversary Controlled Applications Act, which demands that TikTok be sold from ByteDance or be banned in the United States.
What does this mean for small businesses?
One of the most prominent talking points against a TikTok ban is the potential downsides for creators, especially small businesses. According to TikTok, 7 million small businesses use TikTok to promote their products, generating an additional 15 billion dollars in revenue in 2023. Banning TikTok would extinguish the medium with which these businesses engage with the 150 million monthly users in the United States.
However, the reality is not so clear-cut. Many industry giants, most notably YouTube and Instagram, have launched alternatives to TikTok which have achieved similar success. YouTube Shorts and Instagram Reels each amass roughly 2 billion monthly users, even more than TikTok. Furthermore, many TikTok creators post on each of these platforms while achieving comparable numbers on all platforms. So ultimately, while a TikTok ban might lead to a slight decline in engagement, the actual effects will likely be far less severe than feared.
Sources:
“How many users on TikTok? Statistics & Facts (2024).” SEO.ai, https://seo.ai/blog/how-many-users-on-tiktok. Accessed 19 May 2024.
Kaloi, Stephanie. “A US TikTok ban could take a bite out of small businesses.” BBC, 25 April 2024, https://www.bbc.com/worklife/article/20240425-us-tik-tok-ban-small-business-creator-revenue. Accessed 19 May 2024.
Lutkevich, Ben. “TikTok bans explained: Everything you need to know.” TechTarget, https://www.techtarget.com/whatis/feature/TikTok-bans-explained-Everything-you-need-to-know. Accessed 19 May 2024.