What the TikTok Ban Could Mean for You

Introduction

The decision of whether to ban TikTok or not has been a very divisive issue over the past few years. ByteDance had already run into legal issues in the US through its violation of child privacy laws in 2019 and had been banned from the phones of federal employees in the same year. In 2020, the movement to ban TikTok gained steam with Trump’s pressure to enact a law after he signed an executive order banning American companies from conducting business with TikTok’s parent company. A straight up ban never amounted to anything until recently though. With tensions remaining high between the two global superpowers, many Americans see social media as just another front for waging a proxy war. Others view it as a place to relax, be entertained, gain inspiration, or promote their ideas. 

What is the law?

The law called the “Protecting Americans from Foreign Adversary Controlled Applications Act” “prohibits distributing, maintaining, or providing internet hosting services for a foreign adversary controlled application (e.g., TikTok)”. However, if said adversary were to divest in the application, then the application would be permitted to operate in the United States. Specifically, the divestment must begin within 9 months of signing the act, with another 3 months allowed for the end of the sale. The Act specifically mentions the China-based ByteDance Ltd., TikTok’s parent company, and TikTok itself as the companies it does not want to have any influence in the U.S. markets. This means anyone or any companies listed under ByteDance will not be available in the U.S. 

What are they looking to accomplish with a TikTok Ban?

By proposing this bill, congress is putting national security interests at the forefront, given concerns over TikTok’s huge influence on the American youth. Similar to how Google and Meta have amassed a quite detailed and well-targeted collection of data on its users, ByteDance has access to large amounts of data to fuel its algorithms. The catch is that ByteDance is headquartered in China, and the government has access to their crucial data files that TikTok feeds into its algorithms. The U.S. government’s security interests lie in this data. Given that China has been classified as a “foreign adversary” the United States does not want this data in the hands of a government who can use it against them. 

Who is this Affecting?

In the U.S. there are about 148 million unique monthly users, and the bill would eliminate the app from TikTok’s largest market. The company’s departure would cause many of these people to return to other social media sites to get their wants and needs met. Instagram would likely see a huge surge in engagement and popularity, especially for those using its Reels features. 

According to Oxford Economics, 7 million US companies operate through the app, contributing nearly $24 Billion to the country’s GDP. Losing out on this revenue would likely impact everyone in one way or another, given that the app is almost ubiquitous in modern life. TikTok, along with other social media platforms, has changed the way many corporations conduct business. How companies decide to market their products and reach the younger demographics will also be impacted, given that Gen Z has the largest number of users. Of a surveyed group of companies who advertise on TikTok, 51% have achieved positive ROI, and 45% are breaking even, based on TikTok having such high engagement rates compared to other social media platforms. Small businesses are the ones who consistently utilize and profit off of social media engagement to get their name out there. 

As a result of the massive amount of data at their disposal, TikTok’s ad engine, or “algorithm” is very effective at what it does and gets the ads out to a brand’s target audience. Everything is quite automated on TikTok, which makes it much easier for companies to adjust the parameters and let it run. It is easy to just go on TikTok and look up restaurants or clothes and find a review for it or some other short-form content related to help you make your purchase. Small businesses with low marketing budgets may bear most of the cost when it comes to some of these losses. 

What Should We Expect if ByteDance Cannot Sell TikTok in Time? 

Firstly, ByteDance would certainly protest the decision, and cite a violation of the First Amendment. ByteDance will also likely bring up its positive impact on the economy as a benefit that Americans would lose out on without their app. Young Americans utilize the app as somewhat of a search engine for their favorite items or forms of entertainment. 

Tourism in the US will likely also endure a minor drop-off, as people get many of their travel plans from the platform. According to another survey, 60% of people became interested in a new travel destination after viewing some content. Even further, 35% of people actually decided to visit based on the content they saw on TikTok. Tourist-centric economies in the U.S. would likely have to pivot to Instagram Reels or YouTube Shorts to regain their reach. People who live in these destinations may undergo a minor recession until these locations can recover. 

Tourism would only serve as a minor theater for what would be broadly occurring throughout the country, as the overall economy would likely take a hit from the lost revenue stream. Small businesses wielding the TikTok algorithms would take a second to adjust to life without it, and have to focus on more traditional apps like Snapchat, Instagram, or YouTube. If you are working for a small business, expect to take a minute to readjust to the new competitive landscape

Others argue that gains in productivity would counteract any sort of losses accrued by the banishment of TikTok. Studies indicate that the app has altered teenagers’ attention spans, mental health, and overall brain function. TikTok’s popularity and broad scope have captivated wide audiences of many different niches and it is designed to keep your attention with fresh-new content every minute or so. Some have made the argument that TikTok is overall harmful to the youth, and banning it would likely see only a small rise in productivity, as many would just use Instagram reels, X, or YouTube shorts in its place. 

Ramifications on the Social Media/Big Tech Industry

When looking at foreign-owned companies, especially when they are considered political adversaries, it may be best to remain cautious about their outlook, given that the U.S. may place sanctions on them, inhibiting their ability to participate in free trade with the U.S. New laws on data privacy are set to be discussed and made in the age of weaponizing data and highly efficient algorithms and artificial intelligence. Debates on the uses of your data are likely to become more prevalent as this new law sets a precedent for standards, and how companies can advertise to you may change.

On the other hand, China would likely retaliate through a series of economic sanctions of their own, given their history of banning American websites like Instagram and Google. This law is likely to escalate trade tensions between the countries, and many businesses that have ties to China should begin to plan for this future. The prices of everyday commodities, like the ones that say "Made in China", would likely rise, in order to punish the U.S. for its "unfair" legal practices. 

Conclusion

Given the ban on the app, barring a divestment from TikTok by ByteDance, the question is whether they will be able to avoid this fate through a civil litigation. ByteDance is likely to make the claim that they have unfairly been targeted in this act, and can only hope to convince the courts that they deserve to stay. Otherwise, an American company may acquire the app, even though ByteDance has stated that it has no intention of selling the app or divesting at all. By this time next year, will TikTok be gone from our phones forever? Do you think this will be a good thing in the long run?