TikTok Ban Signed Into Law: What It Means For America’s $15 Billion Small Business Economy
TikTok will be banned in the United States on Jan. 19, 2025, after a federal appeals court rejected its bid to overturn the ban that President Biden signed in April. The law states that if TikTok’s parent company, ByteDance, doesn’t divest its ownership to non-Chinese companies, the app will be banned in the U.S.
With the ban date quickly approaching, it has the potential to ripple through the U.S. economy, particularly among the seven million small and medium-sized businesses (SMBs) that use the platform to generate revenue and grow their brands.
Don’t Miss:
Oxford Economics released a report in March 2024 that reveals TikTok’s impacts on U.S. businesses. In 2023, the platform supported $24.2 billion in the U.S. GDP, including $15 billion in revenue generated by small businesses through organic reach and TikTok’s paid advertising. According to the report, TikTok has also facilitated 224,000 American jobs and contributed $5.3 billion in taxes.
In an article from TikTok Newsroom, Blake Chandlee, TikTok’s President of Global Business Solutions, expressed the importance of the platform. “Businesses across America depend on TikTok’s unique ability to help them reach otherwise unreachable customers, generate new revenue streams and drive awareness of their brands, products and services.”
According to Oxford Economics, the food and beverage, health and wellness and business service sectors particularly relied on TikTok, collectively contributing billions to the GDP.
Small business owners in diverse industries express that TikTok has transformed their businesses. Felicia Jackson, owner of CPR Wrap, stated that TikTok has driven over $300,000 in sales in just two days, saving her company. “It’s amazing,” she told TikTok Newsroom. “And best yet, two lives have been saved using our product because they saw it and bought it off TikTok.”
Similarly, Desiree Hill, a mobile mechanic, attributed her rapid business expansion – including leasing a 9,000-square-foot shop and hiring five employees – to her success on TikTok.
The ban poses existential challenges for creators like Shira, a 27-year-old who relies on TikTok partnerships for her livelihood. Shira told BBC that she has spent many years growing and developing a dedicated audience and that TikTok brings in the most money of all the platforms she uses.
“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.”
Kristen Schiele, a clinical marketing professor at USC, told BBC that businesses targeting Gen Z – a demographic particularly active on TikTok – may struggle to reach similar audiences elsewhere. She also noted that international brands may find it more difficult to reach U.S. audiences.
“There’s a lot of cosmetic brands and skin care brands coming from Korea, especially and China,” Schiele said. “That’s a big thing [on TikTok] right now … those different beauty regimens and the great skin care products that they have.”
TikTok CEO Shou Zi Chew has described the ban as a violation of free expression. In an April video, he stated, “This is a ban, a ban on TikTok and a ban on your voice.”
Trending: Inspired by Uber and Airbnb – Deloitte’s fastest-growing software company is transforming 7 billion smartphones into income-generating assets – with $1,000 you can invest at just $0.26/share!
The impact of the TikTok Ban could be catastrophic for millions of users and businesses. According to TikTok Newsroom, small businesses using TikTok as a marketing tool stand to lose over $1 billion in revenue in just one month if the ban goes into effect. In comparison, creators could see nearly $300 million in earnings disappear. These numbers represent the livelihoods and communities TikTok creators have built.
Up Next: Transform your trading with Benzinga Edge’s one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today’s competitive market.
