NEW YORK, Jan 17 (Reuters) - The impending shutdown of TikTok on Sunday is poised to have a significant impact on small and medium-sized businesses and influencers who rely on the platform for their livelihood. Meanwhile, larger brands are expected to migrate to alternative platforms.
TikTok claims that its U.S. operations contribute significantly to the revenues of businesses selling various consumer goods such as candies, beauty products, and clothing. However, this economic ecosystem is now in jeopardy as the Supreme Court recently upheld a law banning TikTok in the United States on national security grounds, leading to an impending blackout.
Following the court's ruling, President-elect Donald Trump mentioned that a decision regarding TikTok would be made, remaining vague on specifics.
TikTok, owned by Bytedance, serves as a revenue source for both the platform itself and its users and merchants through sponsorships and sales commissions.
Numerous individuals on TikTok, including startups, consumer companies, and bloggers, leverage the platform's extensive reach to engage with an estimated 170 million Americans. These influencers often receive payment from businesses for promoting products and services on their social profiles.
For instance, food and beverage businesses — especially small to medium-sized enterprises — could face significant losses due to the potential ban. Estimates from economic consultancy Oxford Economics, commissioned by TikTok, suggest that these businesses saw a $4.1 billion revenue increase in 2023 through marketing efforts on the app.
Valerie Verzwyvelt, owner of Mama V's Candy, highlighted how TikTok's e-commerce arm transformed her business, generating substantial revenue through the sale of sour candies.
Similarly, Sven Greany, co-owner of Simply Mandys, expressed concern over the potential ban impacting his beauty brand's sales, despite a successful year on TikTok. The company plans to shift marketing efforts to Instagram if TikTok becomes unavailable.
In preparation for a potential shutdown, businesses are offering discounts and promotions to clear inventory, while influencers are promoting products to capitalize on the situation.
Overall, companies are exploring alternative platforms like Instagram and YouTube to redirect their marketing efforts in case TikTok becomes inaccessible.
Mitchell Halliday, founder of Made By Mitchell, emphasized the significance of TikTok as a pivotal platform for the beauty industry, surpassing traditional platforms like YouTube and Instagram in terms of influence.