What a TikTok Ban Would Mean for Social Commerce
TikTok enjoyed a meteoric rise during the pandemic and has evolved from a song-and-dance platform to a bona fide digital commerce powerhouse. TikTok is a crucial platform for digital commerce for many businesses due to its unparalleled ability to blend entertainment with commerce seamlessly.
However, the app is once again in the hot seat in the U.S. after the House of Representatives decisively approved a bipartisan bill on March 13 that would ban TikTok from operating in the U.S. unless ByteDance, the social platform's Chinese parent company, divests it within five months.
Even if ByteDance is willing to sell, it won’t be easy. In 2020, the Trump administration attempted to broker a deal through a series of executive actions that would have allowed Oracle and Walmart to buy stakes in TikTok, but the sale never went through. Big tech companies would likely face intense antitrust scrutiny in both the U.S. and China. Microsoft made a failed bid for TikTok in 2020.
Proponents of the bill cite TikTok’s national security risks, while those against it say banning the social app infringes on freedom of speech. The bill now moves to the Senate, where it will face new scrutiny and an unclear timeline for resolution.
TikTok’s Role in Social Commerce
TikTok plays a significant role in social commerce by providing a platform for businesses to engage with shoppers through creative and interactive content. Features like in-feed ads, sponsored hashtag challenges, and influencer partnerships let businesses effectively showcase products and services to a wide audience.
In September, TikTok launched its TikTok Shop e-commerce marketplace and is investing in a robust logistics network to entice both buyers and sellers. According to eMarketer, the share of U.S. users who made a purchase on TikTok in 2023 grew 31 percentage points from 2020.
Potential Effects of the Ban on Businesses and Influencers
Banning TikTok would disrupt existing marketing strategies and force businesses to pivot to other platforms, possibly resulting in a loss of revenue and market share. Even if TikTok isn't banned, the intense debate and negative media coverage could raise further skepticism about the app and negatively impact TikTok’s user base.
These challenges are compounded by geopolitical tensions and regulatory challenges surrounding data privacy, national security, and trade relations in the digital age. As countries navigate these complex dynamics, global social commerce faces uncertainties and disruptions, necessitating collaborative efforts to address regulatory concerns while fostering innovation and inclusivity in the global digital economy.
The debate highlights the importance of brands and influencers having a diverse social media strategy. It also underscores the significance of content ownership and the benefits of distributing content across owned channels.
As the social media landscape evolves, businesses need to adapt their strategies to maintain their online presence and drive sales.
Brands and retailers should develop contingency plans that address potential disruptions if TikTok is banned. They should identify alternative marketing channels, communication strategies, and crisis management protocols to mitigate the impact on brand reputation and revenue.
By taking steps now to diversify their social media presence, build direct relationships with shoppers, and adapt to regulatory changes, brands can navigate the uncertainty surrounding a potential TikTok ban and continue to thrive in the digital landscape.
Anna Brennan is a senior analyst at Kantar, a global data, insights, and consulting company.
