TikTok is facing its greatest catastrophe yet. If it doesn’t divest its app from Chinese leadership brand, ByteDance, the popular social network will be banned on U.S. soil. In December 6, a judging panel supported a new law that could cost TikTok over 170 million users. Despite the looming threat, retailers are still investing in their TikTok Shop campaigns through Amazon advertising software.Let’s find out why.
Why TikTok?
Between 39 and 55% of TikTok Shop users use Temu, Etsy, and Shein, so it’s no surprise that retailers are flocking to the burgeoning e-commerce leader. The Shop tab allows retailers to advertise via the main feed. Many brands are making millions through the e-commerce giant. In 2024, Tik Tok users moved $50 billion in products.
Business as Usual
If TikTok refuses to break its connection with its Chinese leadership, the U.S. will institute a nationwide ban. The A.U.S. federal appeals court’s unprecedented decision is due for an appeal to the Supreme Court, but the future doesn’t look as bright as ByteDance might like. The law is a response to a “broader effort to counter a well-substantiated national security threat posed by the People’s Republic of China.” The Justice Department is concerned that the PRC will use the data it collects from Americans to pose a national security threat. Free speech advocates believe the law blatantly violates the U.S.’ First Amendment Rights.
Why is TikTok Still Drawing a U.S. Audience?
TokTok executives are still gathering new advertisers for the marketplace as enthusiastically as they always have. A spokesman for the company says they’re committed to the livelihoods of their users. Americans invested heavily in Black Friday sales, generating an income of over $100 million. Many businesses earn the majority of their income via TikTok despite the fact that it’s only been operational for a year. The retail marketplace gives brands millions of views on a single video, so it’s no surprise that businesses are still targeting the site via a Channable solution for retailers.
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Social Commerce is the New e-Commerce
Social commerce is revolutionising the retail world, and it’s all revolving around TikTok. Beauty and personal care are currently earning almost a quarter of the networks gross merchandise volume (GMV). The largest advertising segment falls under the women’s fashion and underwear niche, accounting for almost 6% of the TikTok Shop count. Americans own 31, 000 TikTok shops, so if the brand doesn’t bow to US demands, its losses will be significant.
What Happens Next?
While ByteDance and TikTok are likely to appeal the decision, the court might reject the case. The Supreme Court has, of course, consistently supported U.S. free speech rights in the past, so legal experts believe the appeal will be accepted. The next stage of the case will occur during the Trump presidency. Many tech companies speculate that Trump will eschew the new law. That said, the new president has more than one option available to him. He might push for a repeal of the law in Congress or even facilitate a US takeover of the social network. ByteDance insists it won’t sell, so it’s difficult to predict the outcome with any degree of accuracy.
If TikTok decides to sell, it will carry a heavy price of over $100 billion. The platform has an impressive global audience. It will continue to turn a profit regardless of U.S. participation. As e-commerce sellers wait for a conclusion, it’s clear they’re not going to slow down their TikTok ad campaigns.
