Battle for TikTok: Implications for content creators and businesses

Chinese-owned ByteDance faces a stark choice: divest TikTok from its parent company or risk a US ban. With 150 million US users, TikTok’s future hangs in the balance, impacting the digital content and advertising landscape. CEO Shou Zi Chew has challenged the legislation, calling it a de facto ban due to the tight deadline for divestment within the stipulated timeframe. 

Critics have raised concerns that TikTok, the popular social media platform, is influenced by China’s government. They allege that Beijing leverages the app to gather user data and disseminate propaganda. However, both the country and the company vehemently deny these accusations. 

Implications for users and content creators

Once a ban kicks into effect, TikTok will vanish from the Apple and Google app stores in the United States. However, until the nine-month deadline, the platform will remain active. The US president can also grant an extension of the deadline for 90 more days if the company is seen as progressing on the terms set in the law. So, existing users will still be able to access it on their phones, but they’ll be left without crucial updates and bug fixes. For content creators and advertisers, this snag will mean disruption. 

And the ripples for users will extend far beyond mere leisure. For the ardent followers of the social media platform, it’s not merely the prospect of losing their beloved pastime; it’s the creators and small enterprises that rely on TikTok for income, a side hustle or a full-time endeavour that will bear the brunt. 

TikTok’s impact is staggering: nearly seven million small US businesses use the platform, generating a whopping $15 billion in revenue during 2023. And the phenomenon transcends borders. In January, TikTok’s global economic clout was evident as European SMEs contributed €4.8 (US$5.15) billion to the GDP of Germany, France, Italy, Netherlands, and Belgium. 

Jobs, potentially hundreds of thousands, will be lost. In March, TikTok reported the app provides at least 224,000 jobs in the US. Businesses will need to pivot, recalibrate and explore seismic shift, too. Alternative online platforms such as Meta and other contenders will be ready to capture the market void.

Implications for ByteDance

North America comprises 15% of TikTok's total user base. The monetary brunt for ByteDance will be deep. Analysts speculate that losing TikTok could substantially impact ByteDance’s global valuation and operational dynamics. Infact, analysts speculate that losing TikTok could substantially impact ByteDance’s global valuation and operational dynamics.  

In 2023, ByteDance's revenues surged to nearly $120 billion, up from $80 billion in 2022, according to Reuters.

TikTok and other ByteDance-owned apps, such as the short video platform Douyin, share fundamental algorithms. Separating TikTok from its algorithms would be impractical, as the intellectual property rights are held by ByteDance in China, making them challenging to separate from the parent company. 

In addition, ByteDance is not inclined to sell one of its most critical assets, which is the proprietary TikTok algorithm to competitors. Beyond algorithms, TikTok's primary assets are understood to include user data, along with product operations and management. 

Instead, ByteDance might prefer shutting down its operations in the US over a forced sale, primarily to protect its proprietary algorithms, which are central to its business model across various applications.

In a statement published on Toutiao, a media platform under its ownership, ByteDance categorically denied plans to sell TikTok. This was in response to a report by The Information, which claimed that ByteDance was considering options to divest TikTok's US operations without including the video recommendation algorithm. 

This legislative move significantly impacts US-China relations as the US government's insistence on divesting TikTok from ByteDance is seen as part of a broader strategy to mitigate potential risks associated with foreign control over American data and digital infrastructure.  

The precedent might set in a domino effect with other countries, particularly those allied with the US, possibly considering a similar ban.

The implications of a forced sale or shutdown extend beyond ByteDance to affect a vast network of content creators and digital marketers who rely on TikTok for revenue and audience engagement.  

Changes in ownership or operational policy could alter the platform’s content dynamics and advertising models, potentially disrupting the broader digital content ecosystem. This is particularly concerning for creative communities in China, where ByteDance’s platforms serve as significant outlets for cultural expression and commercial endeavours.