TikTok’s future uncertain as U.S. considers ban, forced sale

In a significant development that could reshape the social media landscape, the U.S. Congress has introduced the Protecting Americans from Foreign Adversary Controlled Applications Act, targeting TikTok, the wildly popular video-sharing app owned by Chinese company ByteDance. The bipartisan legislation, backed by President Joe Biden, aims to address national security concerns by forcing ByteDance to sell TikTok or face a nationwide ban.

The bill, co-sponsored by Representatives Mike Gallagher (R-WI) and Raja Krishnamoorthi (D-IL), has garnered support from both sides of the aisle, reflecting growing apprehension about TikTok’s data collection practices and potential ties to the Chinese government. If passed, the legislation would require ByteDance to divest its ownership of TikTok, failing which the app would be prohibited from U.S. app stores and web hosting services.

The economic implications of a TikTok ban could be far-reaching, affecting brands, businesses, and influencers who have come to rely on the platform for marketing and revenue. TikTok has become a central hub for influencer marketing, with the industry reaching $16.4 billion in 2022. A ban could disrupt marketing strategies and force businesses to reevaluate their approach to reaching younger audiences.

For small businesses, TikTok has proven to be a valuable tool, with over 50% reporting substantial improvements in marketing performance and 78% seeing a positive return on investment from TikTok ads. Losing access to this effective marketing channel could lead to decreased sales and engagement.

Influencers, who have built massive followings on TikTok and rely on sponsored content for income, could face significant financial losses if the platform is banned. The creator economy, worth $104.2 billion at the end of 2022, could also be affected, potentially disrupting the projected growth to half a trillion dollars by 2027.

As the possibility of a ban looms, potential buyers are starting to emerge. Bobby Kotick, former CEO of Activision Blizzard, reportedly approached OpenAI CEO Sam Altman about forming a consortium to acquire TikTok. However, the situation remains fluid, with former President Donald Trump, who initially pushed for a TikTok ban or sale, now expressing opposition to the idea, citing concerns about benefiting rival platforms like Facebook.

TikTok’s music licensing model has also come under scrutiny, with the Association of Independent Music Publishers (AIMP) calling for a change in how revenue is earned by songs on the platform. AIMP argues that songwriters and publishers deserve to be paid based on the value they bring to TikTok, advocating for a per-stream rate rather than the current model based solely on video creations.

As the debate over TikTok’s future in the U.S. intensifies, content creators and businesses would be wise to diversify their presence across multiple platforms to mitigate the risk of a potential ban. Repurposing content for platforms like Instagram Reels and YouTube Shorts, as well as focusing on owned media channels, could help safeguard against the economic impact of losing access to TikTok.

The coming weeks will be crucial in determining the fate of TikTok in the United States. As Congress deliberates on the proposed legislation and potential buyers circle, the app’s 150 million monthly active users in the U.S. await the outcome, which could have profound consequences for the influencer marketing industry, the creator economy, and the broader social media landscape.