The Impact of a Potential TikTok Ban on Businesses: Concerns and Contingency Plans

As the government moves forward with legislation that could result in TikTok being banned across the United States, there is growing concern for the impact this could have on businesses. A bill signed into law by President Joe Biden in April mandates that TikTok’s Chinese parent company ByteDance divest its stake in the company within the next year, citing concerns over national security associated with user data. TikTok has rejected these concerns.

With more than 150 million users in the U.S. alone, the app has become a vital platform for business—particularly small and medium-sized enterprises (SMEs)—to reach customers and drive sales. According to TikTok data released in March 2024, more than 7 million small U.S. businesses use the platform. The company reported it drove $14.7 billion in revenue for these businesses in 2023, and contributed $24.2 billion to U.S. gross domestic product (GDP) in the same timeline.

The same report said that 39 percent of SMEs said access to TikTok was critical to their business, while 69 percent said the platform had led to increased sales for them in the last year. TikTok’s importance for business isn’t limited to the U.S., either. Earlier this year, the platform reported a contribution of €4.8 billion ($5.1 billion) to the GDP of several European countries in the last year.

Responding to the potential ban, TikTok said in a video statement on its platform that it has spent “billions of dollars” to secure user data and that it will “keep fighting” for its users’ rights in court. Meanwhile, experts have warned that a ban could have far-reaching consequences for U.S. businesses. Denish Shah, a marketing professor at Georgia State University’s Robinson College of Business, told Newsweek: “TikTok serves as an important channel for acquiring and retaining customers and promoting one’s products and services.”

Paul Tran, co-founder of skin care brand Love & Pebble, expressed his concerns about the potential ban, stating that “A TikTok ban would catastrophically impact our business—90 percent of our sales are through the platform.” Content creators and influencers on the platform are also concerned about the future of their personal brand if a ban comes into force, but experts believe there is hope.

Michael Jaconi, co-founder and CEO of mobile commerce platform Button, believes that if a ban does occur, some creators will see a temporary reduction in income, but it’s unlikely to be a long-term issue. Shah explained that businesses have a chance to pivot to other platforms and manage the migration to alternative short-form video platforms relatively easily.

Despite ideas for how to mitigate the pain of losing the platform that drives most of their sales, Tran emphasized that a TikTok ban would have a negative impact long-term on their company and brand. Businesses are now considering contingency plans, such as launching in other markets where there is no potential ban in place. The future remains uncertain for businesses heavily reliant on TikTok, as they navigate the potential consequences of a ban on their operations.