Small businesses and content creators are bracing for impact if TikTok goes dark this weekend after the Supreme Court on Friday upheld a law banning the app unless it is sold by its China-based parent company.
Jessica Simon, the founder of Mississippi Candle Company, on Friday said she was “grieving” over what she expects to be a steep decline in sales if TikTok is banned from app stores in the U.S. as early as Sunday. She said that between 90% and 98% of her company’s sales come either directly or indirectly from TikTok.
“That much of our business comes from people seeing our products on TikTok and buying it through our TikTok shop, or coming to our website,” Simon told CBS MoneyWatch. “I am still processing the news.”
Simon, who first started making candles on her stovetop, said the TikTok shop she launched in 2023 “changed our lives.”
Despite such concerns, the nation’s highest court declined to block or delay the potential ban if TikTok’s Chinese owner, ByteDance, fails to divest the platform. The Justice Department, which had supported the law, applauded the ruling.
“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. “Authoritarian regimes should not have unfettered access to millions of Americans’ sensitive data.”
Jeffrey Fisher, a lawyer who represented 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.
“The law is scheduled to go into effect literally on the eve of the inauguration of President-elect Trump, who recently asked the Supreme Court for the same relief because he wants to work on this issue directly,” Fisher wrote. “He should be given that chance. Otherwise, the Act would significantly burden the speech rights of over 170 million Americans and would cause substantial and avoidable disruption to the third-party providers that may be subject to severe penalties if they continue to provide TikTok to its millions of users.”
The power of TikTok
With 170 million monthly active users, TikTok is a significant moneymaker for millions of small businesses. For Simon, her company’s reach on the platform generated enough sales to allow her to build a 2,100 square foot warehouse and to hire a team of employees to help make the company’s products. Mississippi Candle surpassed six figures in sales for the first time in November, and again in December, she told CBS MoneyWatch.
“I am heartbroken for my staff,” she said. “I won’t be able to make up for that traffic or sales anywhere else,” she said. Simon’s company has 50,000 followers on TikTok, compared with 7,700 on Facebook and 3,100 on Instagram.
“So we won’t be able to make up that income. We’ll have to completely rebuild our community somewhere else, and it will take a lot longer than it did on TikTok,” Simon added.
Who wins if TikTok exits the U.S.?
Morgan Stanley analysts say that Facebook and Instagram owner Meta stands to benefit from TikTok users migrating to other platforms, writing that the roughly 32 billion hours of annual U.S. consumer time spent on TikTok could soon be up for grabs.
“Meta remains the largest fundamental winner of any TikTok ban given its already leading user base, data set and distribution,” the analysts said in a research note. Alphabet-owned YouTube also could benefit as it also lets users create short-form videos.
Still, experts say that none of those apps come close to TikTok in its ability to generate income for brands, advertisers and creators.
“A ton of people are already flocking to other apps, but there is going to be a ton of damage and loss of revenue,” Edward Klaris, managing partner at Klaris law, told CBS MoneyWatch. “There are going to have to find alternative means of speaking, and this ban reduces their presence on a platform where they are already well-established.”
The parties that stand to lose from TikTok’s U.S. operations shutting down range from independent content creators to businesses and advertisers. In the case of companies, TikTok allows them to establish accounts that reach users organically, as well with paid-ads. And popular influencers can make a lucrative living, with brands paying them to hawk their products.
“Advertisers are engaging in commercial speech to send out messages, influencers are doing commercial speech and businesses are also sharing information. Therefore there is a lot of spend going on,” Klaris explained.
He agreed that a ban could be good news for competitors like RedNote, another Chinese-owned app.
The ramifications of shutting down TikTok in the U.S. would be wide-reaching for diverse users, according to Jessica Rauchberg, assistant professor of communication technologies at Seton Hall University.
“It really concerns me for everyday creators, particularly marginalized ones, who might have a disability and not be able to work in person,” she said. “TikTok is a great space for users to supplement their incomes with content creation, and when you lose that, where do you go? You can’t just rebuild on another platform.”
“It’s a great way to reach customers, because a lot of younger people use it as a search engine and place to find a great local restaurant or craftsperson who is making special items you can’t find at a Target or Walmart,” Rauchberg added. “It’ll hurt consumers, and for small businesses it’s a big tool for outreach. That’s why they are scared.”
