Will TikTok Divest or Face a US Ban?

The Gist

• Uncertain future. TikTok faces a US ban unless it separates from its Chinese parent company, ByteDance, by January.
• Privacy concerns. US lawmakers fear data access by the Chinese government, raising concerns about data privacy and national security.
• Impact on influencers. A potential ban would significantly affect influencers and brands reliant on TikTok for audience engagement.
• Competitors may gain. Instagram and YouTube stand to benefit the most if TikTok exits the US market.

No business, let alone social media platforms, has a shadow of business death looming over it as large as that for TikTok.

Earlier this year the US Congress approved a bill that effectively forces TikTok to restructure its US operations. By January, TikTok must divest itself from its owner ByteDance because it is based in China. If not, TikTok will be removed from app stores available in the US market, ending its business in the US. 

I covered the story in two posts, the first when the bill against TikTok was being considered and after the TikTok bill was signed into law.

An appeals court in Washington DC is hearing arguments from TikTok to challenge the law. So far experts agree that TikTok is looking at an uphill fight despite the 150 million Americans who use TikTok regularly.   

The Central Debate in TikTok’s Appeal

The law arose from Congressional concerns about data privacy when it comes to the social media giant. Congress passed the law believing that the data of US TikTok users could be accessed by China’s government at will and then exploited through messaging campaigns.

US attorneys claim that the TikTok algorithm is owned ultimately by ByteDance. Attorneys for the US argue that no separation exists, which means the technology, while benign in and of itself, is still subject to response to Chinese government intervention. In short, the Chinese government can ask ByteDance for TikTok data without any Federal intervention, and the Chinese government can access that algorithm to insert propaganda campaigns.

TikTok: We’re Not Sharing With Chinese Government

In contrast, TikTok’s legal defense bolsters claims from the TikTok executives, as well as those of ByteDance, that no links to the Chinese government exist and that invasive data mining or propaganda messaging is unlikely. TikTok US operations usage of the platform is a communication layer that differs from the platform’s algorithm and is independent of ByteDance. That layer defines TikTok operations such as community moderation as separate from the algorithm.

TikTok’s legal defense noted in their opening argument that the engagement in that community layer is subject legally as expressions of free speech and that the law hampers those expressions.

Influencers State Their Case: TikTok’s Their Social Media Revenue Stream

Furthering the argument against the law, TikTok influencers appeared at the hearing with their own legal representation, explaining how the law would severely impact their business. They explained that they and their followers would not be able to easily move to another platform. A ban would force the influencers “out of business” and have consequences for the brands that rely on them.

The case raises the question of what protections speech has when it is associated with an algorithm. A free speech debate may appear to be only an academic topic, but such debates often blur into marketing concerns on managing customer experience online, since so many online expressions about a product, service, or brand involve social media platforms.

Recent news on a separate two-year investigation of TikTok has hampered the platform’s image as well. NPR reported that the investigation discovered internal documents that indicated that execs knew that their algorithm was potentially addicting to teens. Decisions like this give the impression that management of a separate layer of communication is problematic, while the investigation has lead to a state suit against TikTok for allegedly deceiving the public of the addiction risk. Although the safety suit is a separate issue, the claims can give a negative impression of TikTok in its appeal hearing.

Related Article: How TikTok Is Changing the Digital Marketing Game

What Platforms Will Benefit if TikTok Leaves the Market?

The platforms that will benefit the most are any that easily share videos. Two platforms lead that potential benefit: Instagram, which steered its image-sharing platform towards video, and YouTube, considered a video staple among a variety of users, from lone podcasters to entertainment media.

There had been a few lesser-known direct competitors of TikTok, but many have been shuttered since 2020. Byte, created by Vine co-founder Dom Hofmann, was bought by another TikTok competitor Clash. Another one, Dubsmash, was acquired by Reddit in 2020 and then later shut down in 2022.   This, combined with the current competition to attract influencers among the big social media platforms, puts Instagram and YouTube ahead.

Instagram and YouTube Await the News

Instagram would be the best bet where TikTok users would pivot, but not just because of its 2 billion active users. Instagram has bolstered its features to augment the user experience within the feed, so influencers and brands have new ways to deepen engagement. It is also a complement to other platforms. Its user base bolstered the launch of Threads, the microblogging site that has steadily eroded X. Social audio app Clubhouse has also been a feed to Instagram, since their user profiles feature a link to an IG profile. The possibility of Instagram absorbing a significant portion of TikTok’s user base is high.

Meanwhile, Google’s second search engine YouTube has seen new life since it introduced YouTube Shorts, its short-form video platform in 2020. Seen as an answer to the growing popularity of short-form video content, YouTube Shorts has been growing engagement; many creators embraced the Shorts format, using it alongside their regular longer-form content contributed to increased engagement on the platform, especially among younger users. Shorts could see further adoption if TikTok is taken out of the US marketplace.

Social audio apps like Clubhouse and Chattr could also benefit despite offering a different format: live audio instead of video. These smaller platforms have sought massive growth in the same spirit as Instagram and YouTube. So far, they have only seen modest growth in audiences. 

But the users on each are centered on niche interests and have remained committed to prioritize engagement over building reach. Hence, an opportunity to garner influencers who foster connection could still attract TikTok influencers who need a platform alternative to deepen relationships if a TikTok shutdown occurs.

However, these social audio platforms face stiff competition in their own right through LinkedIn Events and X Spaces. Both are live audio hosting alternatives that can attract a larger audience because of the higher user activity on both LinkedIn and X.