The U.S. has joined the growing list of countries, including the U.K., France and the Netherlands, to crack down on TikTok data security and look at banning, or at least restricting, the Chinese-owned social media platform over concerns that it shares data with China's Communist Party (TikTok denies it does).
The massively popular video-sharing platform has already been banned, complete with dozens of other Chinese apps, in India. And the White House is reportedly “very in favor” of a bill that would enable the federal commerce department to ban technologies with links to foreign governments—like TikTok.
Although it looks unlikely that TikTok is going to disappear any time soon in the West, for businesses who jumped on the platform as it surged in popularity during the pandemic, a ban could leave them with a gaping hole in their marketing strategy.
With an eye on the more than 1 billion monthly active users on the platform, CEOs and small business owners told Fortune how their reach and revenue would be hit by a TikTok ban.
Meet the businesses using TikTok
“TikTok, along with Snapchat, really is the social platform with the closest pipeline into culture today, including Gen Z and Millennial audiences and broader content trends,” says Melissa Chapman, CEO of the production company Jungle Creations.
Most of the CEOs Fortune spoke to emphasized the platform’s algorithm, which shares new posts with everyone on the platform—unlike Instagram, which shares a user’s post only to their followers.
The power to target a young demographic, reach new users and discover what’s on trend in order to inform strategy is what has gotten businesses hooked to the platform.
“Brands are committing their budgets in significant figures because TikTok has proven time and time again that it can create trends for brands, but crucially it has also shown great success in translating cultural relevance and moments of brand fame through to commerce,” Chapman says. "No other platform does this as successfully.”
For Jamie Love, CEO and founder of the marketing agency Monumental, TikTok offers a way to open his firm to the world.
“TikTok is vital in showing the behind-the-scenes of working at our company,” says Love. His firm has also been using the app to attract talent during the current challenging labor market.
“TikTok is really beneficial in bringing out the company's personality, allowing us to stand out as a potential employer and giving us a unique edge,” he adds.
Meanwhile, small businesses like Solar Buddies have been using the platform to promote their product and generate brand awareness: “Although we are a U.K-based business, 60% of our turnover over the past 12 months has come via U.S. TikTok influencers that have promoted our product on the platform and directed them to purchase via Amazon,” says the sunscreen retailer's co-founder Laura Waters.
Most startups and SMEs can’t compete with the huge following of large brands on Instagram, but on TikTok where lower quality “authentic content” is key, it’s a more level playing field.
“We use the app to showcase our products, share behind-the-scenes content, and connect with our followers,” Waters adds. “Losing this platform would make it challenging to maintain the same level of engagement with our audience.”
How businesses will be impacted by the ban
With over 1 billion users on TikTok, saying that businesses risk losing their audience is stating the obvious.
"A ban on TikTok is going to harm the newer and smaller businesses the most,” warns Josh Lachkovic, founder of the growth agency Amphora.
Startups on a lower budget have gravitated towards the platform because “it's still a platform that has organic reach rather than strictly paid,” he says. “It's a more cost-effective ad platform.”
For his firm, a hypothetical outright ban on TikTok would result in the loss of about a third of his firm’s revenue. "It'll be another blow to entrepreneurs after years of continual blows," he adds.
Many leaders at small firms echoed worry about the lack of alternative platforms to promote their products at a very low cost. Meanwhile, others were frustrated by the possible financial waste from training staff up to use TikTok, buying special equipment, and in some cases, hiring an external video production company to create content for their channel.
“Not only would a TikTok ban be damaging to millions of businesses from a financial perspective, but it would also have a serious impact on our ability to connect with our audience and share important messages that can improve people's lives,” says Jessica Alderson, the CEO and co-founder of the dating app So Syncd, which reaches over a million people a month on TikTok.
Her firm uses the app to help people find love and gain a deeper understanding of their personality type. “Losing access to TikTok would create a major hurdle in achieving this goal, and I know from recent discussions that many other founders feel the same way,” she adds.
Plus, the impact a ban would have on recruitment can't be overlooked.
“The platform has fast become a popular platform for recruitment and job searching,” says Sam Hameed, the co-founder of the recruitment firm, SPG Resourcing. “A ban on TikTok would limit the ability of recruitment businesses to reach potential candidates through the platform, potentially reducing their reach and making it more difficult to find the right candidates for their clients.”
He also cautions that young job seekers who may not have extensive work experience or established professional networks and use the platform as a portfolio would miss out on being able to highlight their creativity and skills to potential employers.
What leaders are doing to prepare for an outright TikTok ban
One CEO predicted the stricter regulation of TikTok and stopped using it altogether last year—despite the growth his business was unlocking through the platform.
“We spent 3 years building up our TikTok following and we hired a new staff member to focus on just video content to help drive our TikTok growth,” says Deepak Tailor, the CEO and founder of Latest Free Stuff.
One of the last videos the freebie and samples website posted on TikTok gained around 125,000 views.
“This drove thousands of new visitors to our site,” Tailor claims. “But we strongly felt like the platform was about to close down after political pressure from the U.S. and other governments.” So he decided to cut his losses and is now focusing on Facebook, YouTube and Twitter.
Avoiding using the app in advance is one way of getting your business ready for a potential ban, but really, most of the CEOs Fortune spoke to are simply diversifying their social media footprint and continuing to use TikTok—for now.
"We always recommend to clients to balance budget across their paid social channels,” says Amphora's Lachkovic.
In the short-term, he thinks businesses would experience some revenue loss if TikTok was banned tomorrow—but that can be minimized by relocating resources into one of the other social media platforms they’ve been investing in: “For the most part, we could reallocate that spend into Meta—but there is always a lag in how fast you can do that."
Other CEOs told Fortune they would explore emerging social media platforms that are gaining popularity, like BeReal, WeAre8, Reddit, Twitch and Snapchat, which is experiencing a resurgence among GenZ.
Ultimately, this isn’t the first time businesses have had to mitigate the loss of a social media platform or revenue stream. Remember Vine, anyone?
“Over time we see the same challenges brought up over and over but dressed up as something different,” says Laura Davidson, co-founder and CEO of the paid media agency Tag Digital.
“TikTok may be banned, cookies will disappear, Chat GPT may replace search, but digital advertising will remain the primary marketing channel, she adds. "So provided we don’t try to fight against waves we can’t control, our business will continue to grow.”
