A US TikTok ban could take a bite out of small businesses

Without the popular social media platform, some creators and small enterprises across the globe could see their revenue plummet.

On 24 April, the US Senate passed legislation to ban TikTok, the popular social media app. Hours later, President Biden signed the bill into law. It requires TikTok's parent company ByteDance to sell the app to non-Chinese owners or face a blanket ban in the US. The decision now faces a complicated and uphill legal battle.   

Many devoted fans of the social media platform in the US – more than 150 million users – may see their favourite leisure activity disappear. Yet some of the people who stand to feel most impacted are the creators and small businesses on TikTok that make money through the platform, whether on the side or full-time. 

According to March 2024 data from TikTok, more than seven million small US businesses use TikTok, and the company reported it drove $15bn (£12.04bn) in revenue for these enterprises in 2023.

The platform is also a major global economic force: in January, TikTok reported small- and medium-sized enterprises on the platform contributed €4.8bn ($5.14bn; £4.12bn) to the GDP of Germany, France, Italy, Netherlands and Belgium in 2023 alone. 

Now, facing a TikTok ban, American entrepreneurs are worried about their revenue streams. So too are global businesses that rely on US audiences to buy their products and engage with their content. There may be alternatives, but finding a suitable substitute could be an uphill battle.

Shira, 27, who has more than 500,000 followers on the platform at @shirashiraonthewall, is a full-time content creator. She launched her account on TikTok in 2021 after she moved to the US from Australia. Initially, she shared reaction videos to other people's content as well as her experiences living in the US. Within nine months, her following had ballooned.

To generate income, Shira relies on partnerships on TikTok. While she also has accounts on Snapchat and YouTube, she says TikTok has consistently brought in the most money. She's put in a lot of work, she tells the BBC. "I have spent many years growing and developing a really dedicated audience. Doing many live streams, posting and editing for years. It's been a difficult journey to make any money from it, so I'm really grateful I took the leap and got lucky."

Shira describes the ban as "devastating". Beyond her own business, she says she's also concerned about potentially hundreds of thousands of jobs that will be lost – in March, TikTok reported the app provides at least 224,000 jobs in the US. "I'm not sure what all these people are going to do if the ban goes through," says Shira. "There is no unemployment for creators or fallbacks."

Ileana Justine, 30, a creator with a following of nearly 200,000 on TikTok at @ileanajustine, expresses similar concerns. Her account took off in 2021 after she began posting about the fact that she and her groom were requiring guests to wear masks at their upcoming wedding to help limit the spread of Covid-19. She was soon launched into the realm occupied by "controversial" content creators, and since then she's "primarily focused on the intersection of lifestyle and political content", discussing topics such as paid family leave, abortion and gun control.

Unlike Shira, Ileana isn't a full-time content creator, but her work on the platform still takes time. Beyond her own economics, she's also concerned for people whose income is entirely based on TikTok success. "The platform allows for amplification of their products and stores, which can completely transform their businesses – I have lots of friends who have been able to turn their businesses from side hustles into full-time jobs because of TikTok."

The ban may not spell doom for businesses – but experts say it will force them to adapt, much of which will be figuring out how to shift their operations to other online platforms. 

"We're living in a digital economy … and we're basically relying on technology for all kinds of communication and information," says Mohammad Rahman, a professor of management at the Purdue University Daniels School of Business, US. The idea of going back to how business was done before social media likely won't work, primarily because "consumers [around the world] have changed in terms of how we collect information, how we decide on what to buy".

If TikTok is banned in the US, there are existing alternatives such as Meta, and experts predict others could pop up in the future. There's also time for businesses to figure out their next moves; ByteDance will have at least 270 days to sell TikTok from the point of President Biden's approval, a period that may extend further due to by court battles between the ByteDance and the US government.

Yet which platform they might migrate to in the wake of a ban is anyone's guess, says Kristen Schiele, an associate professor of clinical marketing at the University of Southern California's Marshall Business School, especially since many are laser focused on reaching Gen Z, who drive a large portion of spending on TikTok. "It's hard to reach them on any other platform," she says.

American TikTok users don't just power domestic businesess – they have a global impact. Entrepreneurs in other countries stand to potentially lose the US audiences they depend on for views that ultimately convert to sales, too. Some have already expressed concerns, including within the UK and Canada. In March, a TikTok Canada spokesperson told the Global News via email that "banning TikTok in the US would be devastating to Canadian TikTok creators and small businesses, many of whom rely on being able to reach Americans as a large part of their audience". 

Additionally, says Schiele, "There's a lot of cosmetic brands and skin care brands coming from Korea, especially, and China. That's a big thing [on TikTok] right now … those different beauty regimens and the great skin care products that they have."

They, too, will have to figure out a pivot to continue to reach US customers without TikTok. And it may be more difficult for international brands to do so. Schiele is optimistic many can, but worries that the blow to up-and-coming companies and international brands could be too much for some, especially smaller enterprises.

Matt McGuckin is widely known as Dappz Sports on TikTok and started his sports trading card company out of his bedroom in 2019. The 35-year-old steadily built his online presence in the following years, but when Covid-19 shut down most of the world – including sports – thousands of people began flocking @dappzsports to talk about trading cards. 

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The account now has one million followers, thanks in part to two teens who insisted McGuckin – who had been fighting with other creators for eyeballs on Instagram – build out his TikTok following. McGuckin began live streaming on the platform each night. After one evening in which he sold $70,000 (£56,195) in cards while streaming alongside his sister in his bedroom, he realised he was onto something big.

He's concerned about the revenue hit Dappz Sports will take if a TikTok ban goes into effect, but he adds the platform is about much more than his personal income. As Dappz Sports expanded, McGuckin was able to create 90 jobs for people working in Los Angeles, including to actors and writers who were out of work throughout the Sag-Aftra and WGA strikes in 2023.

He's also created a virtual gathering space for a cross-generational audience across dozens of countries, many of whom have visited Dappz Sports on TikTok for years. "We have people who join our stream and they don't spend any money," he explains. "They just come in every night and we're talking about sports and we're talking about our favourite games or we're talking about our favourite moments."

He will entertain alternative platforms, especially if they're necessary for the business to survive. Yet, says McGuckin, "this is where we put our most energy into and where we built our community, and it would just be a shame [to lose it] even if we succeed on other platforms".                                                                                                                

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