TIKTOK’S expected Sunday (Jan 19) shutdown poses the biggest threat to the universe of small- and medium-sized firms and so-called influencers who depend on the short-form video site for their livelihood, while big brands are expected to move to other sites.
TikTok says its US site generates billions for businesses selling candies, beauty products, clothes and other consumer goods. But now, that economy is under threat. The Supreme Court on Friday unanimously upheld the law banning TikTok in the United States on national security grounds ahead of a blackout this weekend.
After the ruling President-elect Donald Trump said he would make a decision on TikTok, without providing details.
As a marketing tool for businesses, Bytedance’s TikTok generates revenue for itself, and for many of its users and merchants, through sponsorships and by collecting fees on sales.
Many TikTok users are paid to be brand ambassadors for companies, selling merchandise and affiliate partnerships where users are paid commissions by companies when audiences purchase items linked on their social profiles. TikTok also compensates some creators for making videos.
Those who receive revenue from TikTok also include startups, consumer companies and bloggers cashing in on the platform’s massive reach of up to 170 million Americans.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
For example, small- and medium-sized food and beverage businesses, which saw revenue increase by US$4.1 billion in 2023 from marketing and advertising on the app, stand to lose the most, according to estimates by economic advisory firm Oxford Economics. That data was commissioned by TikTok.
TikTok chief executive Shou Zi Chew said in a video posted to the app on Friday that seven million American businesses earn a living on the platform.
For Mama V’s Candy, TikTok Shop, the e-commerce arm of Bytedance’s video platform, changed the trajectory of the business, said owner Valerie Verzwyvelt.
“We have pretty much stayed viral since the beginning of the TikTok shop launch last year,” said Verzwyvelt. The company, which sells extremely sour candies, made US$6 million in 2024 and has sold close to 300,000 units on the app, she said.
“We are on our second expansion,” she said, a decision the Pineville, Louisiana-based company made before the reality of the Jan 19 deadline set in.
“I have to rebuild my business now.” Sven Greany, co-owner of California-based independent beauty brand Simply Mandys, said that a TikTok ban would bring his business to a “screeching halt” after a record holiday shopping season.
Simply Mandys made more than US$20 million in sales in 2024 on TikTok Shop with the help of livestreaming and Greany said he never fretted the app’s ties to China. Some 95 percent of the company’s total sales come from shoppers on the platform, he said.
However, the company has plans to shift its marketing to Instagram once TikTok is no longer available.
But TikTok’s privacy policy blocks sellers from accessing shopper emails, addresses and other information that could be useful for marketing outside of the platform. Essentially, if TikTok disappears, so do Simply Mandys’ customers, Greany said.
Other businesses are holding sales and dropping prices to clear out inventory in the event that traffic to their shops comes to an abrupt end on Sunday.
But that is not stopping some influencers from recommending products as they look to cash out ahead of the ban.
“These TikTok shops are mass ‘clearancing’ their products in anticipation of the ban, so I’m linking some clearance products that I love for skincare,” one user told her 65,000 followers.
Beyond commissions, a TikTok influencer with 10,000 to 100,000 followers can potentially earn US$2,000 per brand campaign, according to Lithuania-based influencer marketing agency Billo. For some of TikTok’s top US creators, the entirety of their income will come to a halt, while the major companies they have partnered with pivot to other platforms, such as YouTube or Meta’s Instagram.
Oxford Economics said that small- and medium-business-activity on TikTok contributed US$24.2 billion, or a small sliver of overall US gross domestic product (GDP) in 2023, while supporting 224,000 jobs. Reuters could not independently verify those estimates.
Yuriy Boykiv, chief executive of e-commerce consultancy Front Row, said his clients made contingency plans to shift their marketing spending to other platforms which have similar short-form videos including Instagram and YouTube.
“Every client has known about this possibility of TikTok going away since April of 2024, so everybody has done some preparation,” Boykiv said. Front Row’s clients include Procter & Gamble’s haircare brand Ouai and LVMH’s Sephora, according to its website.
“We go where our community is and right now that includes TikTok. If they shift to other platforms in the future, we’ll be right there with them,” Kory Marchisotto, chief marketing officer at e.l.f. Beauty, said in a statement to Reuters.
Mitchell Halliday, the founder and creative director of British beauty brand Made By Mitchell, which launched on TikTok Shop US at the end of August, started selling on TikTok Shop in the UK in 2022 and became the first British beauty brand to hit US$1 million in sales in one day on the platform.
“TikTok is the hub of beauty nowadays. It used to be YouTube, then it was Instagram, and now it is TikTok,” Halliday said. REUTERS
