It's official – On April 24th, Biden signed a law that would ban Chinese-owned TikTok unless it is sold. That means that unless someone buys the platform, marketers, creators, and brands will have to jump ship within a year. Easier said than done, right?
Whether you support the ban or not, those who will be most affected will be small business owners. TikTok has been a powerful tool in growing awareness for small brands. For example, TikTok drove $15 billion in revenue for US small businesses last year.
The impact of this ban extends beyond simply removing an app that features short-form videos. It has the potential to influence customer behavior, alter search patterns, hinder the growth of social commerce, and much more.
In this article, we will explore the reason for the TikTok ban bill, its implications on e-commerce brands, and what it means for the broader e-commerce landscape.
Breaking it all down
As a platform with a massive user base and addictive short-form videos, TikTok has become a powerful tool for e-commerce brands to reach a wide audience and drive sales. To fully understand the impact of the ban, it’s essential to understand the significant role TikTok has played in the e-commerce industry.
Small business owners (SMBs) have credited TikTok with significantly boosting their sales and opening doors to potential buyers. According to TikTok's Economic Impact Report, over half of SMBs acknowledge that the platform enables them to engage with customers they wouldn't have otherwise been able to reach.
However, TikTok’s explosive growth has been accompanied by an equally strong uptick in scrutiny, especially from Western governments like the United States. As proof of this scrutiny, the bill that banned TikTok was passed by a 79-18 vote on Tuesday, April 23rd, as part of a long-awaited foreign aid package for Ukraine, Israel and Taiwan. The bill stipulates that TikTok's Chinese owner, ByteDance, has one year to sell the platform to a buyer approved by US officials.
The day after the US Senate vote, Biden signed the TikTok crackdown into law.
Previous steps taken against TikTok
At the end of 2022, the United States Congress banned using the app on any federally issued device or network. Not long after, several other countries (Britain, Australia, Canada, the executive Arm of the European Union, France, New Zealand) followed suit and imposed similar bans on the use of TikTok in government offices.
The US was not the first country to ban the platform, however. In 2020, India banned the use of the app not only in government offices, but also nationwide, costing ByteDance one of its biggest markets.
Why ban TikTok now?
Originally a karaoke app called Musical.ly, TikTok has come a long way after ByteDance bought the popular app and relaunched it as TikTok in 2017. With 150 million monthly subscribers, TikTok is one of the fastest-growing apps in the US.
The growing influence has drawn the attention of spy agencies and US lawmakers. Both have expressed fear that TikTok might share users’ data with the Chinese Communist Party (CCP), mainly because of Chinese laws that allow the Chinese government to secretly demand data from Chinese companies and citizens for intelligence-gathering. Legislators and regulators also fear that China could use TikTok’s content recommendations to spread misinformation – both claims ByteDance has denied.
The impact of TikTok on e-commerce
TikTok has become a valuable resource for e-commerce brands looking to reach a wider audience. Here is a look at how TikTok has impacted the e-commerce industry and what might happen if a ban is implemented.
Social commerce and livestream shopping
TikTok has been at the forefront of social commerce and livestream shopping trends (and is the reason why YouTube added their own shopping features recently). Its platform has enabled brands to connect with consumers in real time, showing products and driving sales. However, the removal of TikTok could slow down the momentum of these emerging trends.
Livestream shopping, in particular, has gained traction thanks to TikTok’s investment in the concept. TikTok has been using its relationships with creators to promote livestream shopping and encourage its adoption in Western markets. If TikTok is banned, there is a possibility that these innovative ideas might struggle to gain a foothold in the US market.
Impact on customer behavior and search patterns
For Gen Z consumers, social media platforms like TikTok play a significant role in brand discovery and product research. In fact, over half (51%) of Gen Z consumers worldwide use social media to look up a brand versus 45% who turn to search engines. TikTok has become a go-to platform for product discovery and inspiration – and it is also the reason Gen Z broke the marketing funnel.
However, if TikTok went away for good, it would likely impact consumer search behavior, especially for Gen Z consumers. While TikTok is the top platform cited for shopping and product discovery, Instagram is not far behind. This suggests that consumers – and brands – have alternative platforms to turn to for product promotion and research.
The impact on the e-commerce landscape
While a TikTok ban may significantly impact individual brands, it’s important to consider the impact on the broader e-commerce landscape. TikTok’s rise has paved the way for social commerce and livestream shopping, introducing innovative concepts that could reshape how brands interact with consumers. If TikTok were to be banned, it could slow down the adoption of these trends. Or, other platforms will rise to take the crown. YouTube’s new shopping features: "Shopping Collections" and "Affiliate Hub," also foster the creator-brand connection and can help with brand discovery. In addition, Instagram has also embraced these emerging trends, providing brands with comparable opportunities to connect with consumers in a similar fashion.
The e-commerce landscape is dynamic and constantly evolving, and brands should be prepared to adapt to changes and explore new platforms and strategies to stay ahead of the curve.
What happens now?
TikTok is still available in the US – for now. This measure is also likely to face legal challenges both from ByteDance and on First Amendment grounds. In truth, only time will tell what will happen next.In the meantime, keep doing what you are doing and explore the vast array of alternative platforms available. You never know what the key to unlocking your audience and rocketing your sales will be. Diversification of platforms is key. And remember, you got this!
