The TikTok ban could have broad economic consequences

Brandon Hurst has built a loyal following on social media and a growing business selling plants on TikTok, where a mysterious algorithm combined with the right content can let users amass thousands of followers.

Hurst sold 20,000 plants in three years while running his business on Instagram. After expanding the business he launched in 2020 into TikTok Shop, an e-commerce platform integrated into the popular social media app, he sold 57,000 plants in 2023.

He now does business entirely through TikTok and relies on its sales as his only source of income. Hurst, 30, declined to say how much he earns.

Hurst also posts content about plant care for 186,000 followers on TikTok. He is one of thousands of content creators who engage audiences through the app and make money from it – by selling products or collaborating with brands.

But Hurst, along with many other creators and influencers, is now wondering whether Washington could jeopardize the progress he's made with his company.

After President Biden signed a bill that would ban the Chinese app in the US unless it is sold to an American company, social media experts said the economic fallout would extend beyond individual creators like Hurst.

TikTok has advantages that set it apart from other platforms like Instagram and Snapchat, Hurst and other creators said.

“What makes TikTok special is its algorithm,” Hurst said, noting that if TikTok's owners sell the app, the algorithm could change.

Like other social networks, TikTok uses a secret algorithm to determine which videos to show to each user, based on what they have previously seen and who they have interacted with. What sets it apart is that the videos are usually short, informal and intended to entertain, and many of them spark conversations between creators.

Many small businesses prefer TikTok for its informality; they do not need a large production budget to showcase their products or services. They just need a good hook to grab viewers, and once they've gone viral a few times and established their niche, TikTok will bring the viewers to them.

A ban on TikTok would have cascading effects – especially in Los Angeles, where so many influencers live and work. For example, the 1600 Vine apartment complex in Hollywood is considered by many to be a headquarters for content creators.

That address isn't the only hub for TikTok stars. Another group lives in a house in Beverly Hills called the Clubhouse. If TikTok is banned in the US, many creators would lose a large portion of their revenue, they said.

But a sale does not solve every problem. Some players are already lining up to buy the app even though it is not yet available for purchase. And creators like the Clubhouse residents, who create content as their full-time job, fear that a new TikTok property could make it harder to attract an audience.

Any ban is expected to be accompanied by legal challenges and delays, and TikTok executives have said there will be no immediate effect on the app.

About 7 million small business owners and 1 million influencers depend on TikTok for their livelihoods, according to Rory Cutaia, owner of a social media livestream shopping platform that partners with TikTok Shop.

Cutaia's Market.Live platform helps small business owners launch on TikTok, where they also often post videos about their products. TikTok Shop receives about 6,000 requests from small businesses every day, Cutaia said.

Banning TikTok would send a ripple effect through the economy as it has become an important platform for emerging companies, he said.

“You're probably talking about billions of dollars that would disappear from the economy,” Cutaia said. “The entire retail world has completely changed. Nowadays you have to distribute your products via social media.”

People calling for a ban on TikTok attend a press conference at the Capitol in Washington, DC on March 23, 2023.

(J. Scott Applewhite / Associated Press)

Adam Sommers, co-owner of Willow Boutique with Chelsea Sommers, said TikTok has leveled the playing field for small businesses. He was one of the first to sell merchandise on TikTok Shop.

“Everyone had the opportunity to become the next giant in their sector,” Sommers said. “Many people have probably grown beyond their wildest dreams.”

Influencers don't need to have a business to make money on TikTok, one creator said. They also don't need to have a huge following to make significant profits, according to Denise Butler, CEO of the company that owns Market.Live.

“TikTok does a very unique job of setting up a content creator to build a community and provide great exposure,” says Payton Reed, a lifestyle blogger based in Memphis, Tennessee, with about 16,000 followers. “When I first started blogging and creating content, I didn't realize it could eventually become a career.”

Reed makes money by sharing links to other products. She was able to help her husband financially through medical school with her income as a content creator, she said.

For small business owners, TikTok Shop makes it “frictionless” to sell and buy products through the app, Butler said. Users can shop while watching a relevant video, interact with others who have purchased the product, and complete the purchase without leaving the app.

While some say TikTok is superior to other platforms because of its e-commerce functionality, not everyone relies solely on the app.

Adam Waheed, a Los Angeles-based sketch comedy content creator, said it's important to have revenue from more than one platform. Last year, he earned approximately $11 million through his social media platforms, including Instagram, YouTube, Snapchat and Facebook.

“We worked so hard to build these platforms,” Waheed said. “I think it will be a much bigger problem for certain creators who rely more on TikTok,” he said of the potential ban.

TikTok users in LA include small business owners, content creators, and regular users who can connect with millions of personalities and products. The app is its own local economy, and a ban would leave a gaping hole, according to its creators.

According to a study of TikTok and Oxford Economics, 890,000 companies and 16 million people actively use TikTok in California. Forty percent of small to medium businesses in the state said TikTok was critical to their business.

TikTok also released national economic data Showcasing the app generated $15 billion in revenue for small businesses.

“More than half of small business owners say TikTok allows them to connect with customers they can't reach anywhere else,” the report said.

Content creators and the companies that work with them aren't the only ones concerned about a possible TikTok ban. Senator Laphonza Butler (D-California) recently wrote a letter to Biden urging him to consider the impact of a ban on workers.

“Approximately 8,000 people work for TikTok in the United States, concentrated in California and New York,” the letter said. “Their jobs and the livelihoods of their families are at stake.”

The senator said a ban would hurt small business owners, contractors and other workers, including janitors and servers who help keep businesses running.

“We need to take time to consider the broader economic implications,” she said in an interview with The Times. “There are thousands of employees that I don't think are being considered.”

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