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A US TikTok ban — in discussion since 2022 — just got closer to becoming a reality: the House of Representatives passed a bill on Wednesday that means, unless TikTok divests from its Chinese owner Bytedance, the platform could very well be removed from app stores in the US.
The bill won by an overwhelming majority in a rare bipartisan vote, passing on a 352-to-65 vote ratio. Next, it will go to the Senate and if it passes there, President Biden is expected to sign it into law.
It’s a controversial move. The ban’s critics hold that it is a First Amendment violation, and also critique lawmakers for focusing on banning TikTok before dealing with America’s more pressing issues. Other concerns include the impact on small businesses that have come to rely on the app for sales, as well as the seemingly rushed process (it went from committee to vote in four days). Supporters of the ban believe TikTok poses a national security risk and shouldn’t be allowed to operate in the US while owned by a Chinese company.
“For TikTok, shit just got real,” says social media consultant Matt Navarra, who says that the app has been caught off guard by how quickly the bill is moving through Congress. He expects Bytedance to challenge the legality of the bill, and he anticipates that China “will not sit quietly” in response to it.
A TikTok ban would disrupt an emerging ecosystem for creators, small businesses and major brands that have built up followings and strategies based on TikTok’s short-form videos as well as TikTok Shop, the in-app e-commerce platform that rolled out in the US last September. TikTok is the second-top social shopping destination for young consumers (Instagram is first), according to Insider Intelligence. Just over a third (36.1 per cent) of respondents in Insider Intelligence’s research said they had made a purchase on TikTok Shop.
More important than Shop usage, though, is the app’s reach. TikTok contributed $24.2 billion to US GDP last year, according to a report by economics consultancy Oxford Economics. It drove $14.7 billion in small business owners’ revenue, and supported 224,000 jobs. And there are over 170 million active users in the US (as per the report), ready to watch.
“It’s disappointing that this is the one thing our lawmakers can agree on,” says Jade Beguelin, co-founder of skincare brand 4am Skin, which is active on TikTok and TikTok Shop. “It’s disappointing for small businesses.”
“It’s one of, if not the most popular app, with a large number of popular demographics — particularly younger users,” says Navarra. “The level of engagement with their content is hard to replicate the same way on other platforms.” Other platforms (like Instagram and YouTube) offer similar reach, but for hardcore TikTok users, he says, the news will cause anxiety.
Creators still have lots of options, Navarra says, noting the similar formats, editing tools and monetisation options of Instagram Reels and YouTube Shorts. “It should be relatively easy to switch and start posting that TikTok content somewhere else.” But, if a creator’s following is primarily on TikTok, he says, they are left to grow an audience on a new platform.
Permele Doyle, founder of marketing agency Billion Dollar Boy, recalls India’s 2020 TikTok ban: “Creators and brands simply shifted resources to YouTube Shorts, highlighting the sector’s resilience.”
What’s next?
Wisconsin Republican Rep. Mike Gallagher rejects the characterisation of a ban. He told reporters: “It’s not a ban. It puts the choice squarely in the hands of TikTok to sever their relationship with the Chinese Communist Party. As long as Bytedance no longer owns the company, TikTok can continue to survive.”
But is TikTok likely to divest from Bytedance? Unlikely, experts say. “China will have to give its permission to Bytedance to divest its platform from the US — and China will not be happy,” says Navarra. “We will see some reaction to that shortly.”
TikTok has already faced challenges in the US. Last month, Universal Music Group (UMG) pulled its artists’ music from the app due to a lack of licences in place. In a statement, the group shared concerns about fair compensation for artists, the “harmful effects” of AI and users’ “online safety”. To UMG artists, they said: “Every indication is that they simply do not value your music.”
The bill is also not guaranteed to pass the Democrat-controlled Senate. TikTok CEO Shou Zi Chew is reportedly lobbying on behalf of the app in the Senate today. In March, Chew testified before Congress during a hearing about whether to ban the app. Then, he outlined four “promises” TikTok will commit to: teen safety; US data protection; government manipulation avoidance; and granting access to third-party monitors. These, it seems, weren’t enough for US officials.
As for what brands can be doing in the meantime? Essentially, what they should’ve been doing all along, Navarra says: diversifying their platform investments and revenue streams. “You should be spreading your creative efforts across multiple platforms. You have multiple options in Reels and Shorts, so if you haven’t already, I would be starting to think about building audiences and cross-posting there.”
This is the approach Beguelin is taking at 4am Skin. Though she doesn’t anticipate an operational halt in the near term, it would be unwise not to prep, she says. For now, the team is exporting all of its TikTok content and beefing up their non-TikTok strategies.
Advertisers, too, should be thinking about diversification. There’s no need to panic, Doyle says they’ll likely be given some warning if a ban comes to pass, which will enable them to finalise most creator and brand campaign partnerships or even rearrange them.
Watching and waiting
The bill is gaining momentum at an interesting time for luxury brands, which have recently begun to embrace the platform, known for less-polished and more-authentic content. Loewe, most notably, has found success on the app, posting more low-fi, irreverent content to boost brand awareness among younger consumers. Notably, Loewe is already thinking about how to translate this content back over to Instagram. “It’s an exciting challenge to think about how we can take the work we’ve done for TikTok that’s been so successful and apply it to some kind of graphic short-form video on Instagram,” CMO Charlie Smith recently told Vogue Business. It’s an approach other brands could borrow from.
No sudden moves are needed yet, but brands ought to start thinking about how they might reallocate budget if the bill were to pass, and the ban come into effect. “Brands would have to think about how to reach the sorts of audiences they’d been specifically targeting and engaging with on TikTok.” The same goes for advertisers, Doyle says. “[They] should consider reallocating budgets to these alternatives to prepare for a potential ban and gain valuable learnings about performance on other platforms.”
Even if all these steps were to pass, it’s early days, Navarra says. “There’s a long road to go before we get as far as a ban,” he adds, “This is about divestment before a ban.” TikTok has the potential to move to block the ban via legal action. “This is moments old — anything could happen in the days and weeks as the news gets fleshed out and we see the reaction to it by Bytedance, China and the parties opposed to it. It’ll be watchful waiting.”
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