Small businesses and content creators are bracing for the impact if TikTok shuts down this weekend after the Supreme Court upheld it on Friday. Law banning the app Unless it is sold by its China-based parent company.
Jessica Simon, founder of Mississippi Candle Company, said on Friday that she is saddened that her sales will drop significantly if TikTok is banned from app stores in the US on Sunday. He said that 90% to 98% of his company's sales come directly or indirectly from TikTok.
“The majority of our business comes from people seeing our products on TikTok and purchasing it through our TikTok shop or visiting our website,” Simon told CBS MoneyWatch. “I'm still processing the news.”
Simon, who first started making candles on her stovetop, said the TikTok shop she launched in 2023 “changed our lives.”
Although concerns over the national security threat posed by TikTok's China-based parent, ByteDance, outweighed the difficulties for account holders like Simon, the country's highest court upheld the potential ban. The Justice Department praised the decision.
“The Court's decision enables the Justice Department to prevent the Chinese government from weaponizing TikTok to undermine America's national security,” Attorney General Merrick Garland said in a statement. statement“Authoritarian regimes should not have unfettered access to the sensitive data of millions of Americans.”
Jeffrey Fisher, the lawyer representing TikTok content creators in the app's case before the Supreme Court, urged President Biden and Attorney General Merrick Garland in a letter on Friday to delay implementation of the law.
“This legislation is scheduled to take effect virtually on the eve of the inauguration of President-elect Trump,” wrote Fischer, who recently asked the Supreme Court for the same relief as he seeks to tackle the issue head-on. “They must be given that chance. Otherwise, this Act would place a heavy burden on the speech rights of more than 170 million Americans and create substantial and avoidable disruption to third-party providers who could be subject to severe penalties if they provide TikTok It has millions of users and continues to do so.”
Sales cross six figures
with 170 million monthly active usersTikTok is a huge money maker for millions of small businesses. For Simon, his company's exposure on the platform generated enough sales that allowed him to build a 2,100-square-foot warehouse and hire a team of employees to help create the company's products. The company crossed the six-figure mark in sales for the first time in November and again in December.
“I'm heartbroken for our staff,” he said. “I wouldn't be able to make up for that traffic or sales anywhere else,” she said. Simon's company has 50,000 followers on TikTok, while it has 7,700 followers on Facebook and 3,100 followers on Instagram.
“So we won't be able to make up that income. We'll have to completely rebuild our community elsewhere and that's going to take a lot more time than TikTok,” he said.
TikTok's loss would be a win for Meta.
Morgan Stanley analysts say Meta will benefit from TikTok users shifting to other platforms, writing that the roughly 32 billion hours of annual U.S. consumer time spent on the platform could soon be achieved.
“Given its already leading user base, data set and distribution, Meta remains the biggest fundamental winner of any TikTok ban,” the analysts said in a research note. YouTube may also benefit, as its YouTube Shorts platform also lets users create short-form videos.
But experts say none of those apps come close to TikTok in its ability to generate income for brands, advertisers and creators.
“A lot of people are already gravitating to other apps, but that's going to cause a lot of losses and lost revenue,” Edward Claris, managing partner of Claris Law, told CBS MoneyWatch. “They have to find alternative means of expressing their views and this ban reduces their presence on a platform where they are already well established,” he said.
Those people include different entities, from independent creators to companies and advertisers, who use the hugely popular social networking platform to monetize their presence. In the case of companies, TikTok allows them to set up accounts that reach users organically, as well as with paid advertisements. Influencers can earn lucrative livelihoods based on the number of followers they have, when brands pay them to sell their products.
“Advertisers are giving commercial speeches to send messages, influencers are giving commercial speeches, and businesses are also sharing information. So there's a lot of spending going on,” Claris said.
He agreed that the ban could be good news for some Competitors like RedNoteAnother Chinese owned app.
According to Jessica Rauschberg, assistant professor of communications technologies at Seton Hall University, the impact of TikTok's shutdown in the US would be widespread across a wide variety of users.
He said, “It really concerns me for everyday creators, especially marginalized creators who may have disabilities and may not be able to work in person.” “TikTok is a great place for users to increase their income with content creation and when you lose it, where do you go? You can't just rebuild on another platform.”
For small businesses that rely heavily on TikTok as an advertising venue, the sudden removal of the platform could be devastating.
“It's a great way to reach customers, because a lot of young people use it as a search engine and place to find a great local restaurant, or craftsman who is making specialty items that are specific to your target.” Or can't get it at Walmart. TikTok is where a lot of people go,” she said. “It's going to hurt consumers and for small businesses, it's a great means of access. So they're scared.”