The
ban of TikTok in the United States is set to create a glaring hole in social media. For ByteDance, TikTok’s parent company in China, it also could create a glaring hole in its business.
The ban, which was
signed into federal law last year and
upheld by the Supreme Court on Friday, is a major blow to ByteDance, the world’s second-most valuable private technology company, worth $300 billion. At least a chunk of the company’s value is tied to its success in the United States, where TikTok has 170 million monthly users, according to analyst estimates.
TikTok has a larger audience outside the United States — it has 1.2 billion to 1.8 billion monthly users around the world, with its largest markets including
Indonesia and Brazil — but the app’s American users are the most valuable, analysts said. TikTok makes money through ads, as well as by selling goods through its TikTok Shop, which pays influencers a commission to hawk beauty products, gadgets, clothes and other items. Social networks typically get their highest “revenue per user” in the United States.
“The U.S. market is the most profitable market of any market by a long shot,” said Mark Zgutowicz, an analyst at Benchmark Company. TikTok took in an estimated $10 billion in revenue in the United States last year, he said, out of a total global revenue estimated at $20 billion to $26 billion.
That is the fallout that ByteDance must grapple with now. The scale of its looming business conundrum is vast. While Facebook, Twitter and other social media were blocked in China around 15 years ago, that was before many of those apps had accumulated a large number of users there. Perhaps the closest equivalent is what
TikTok experienced in India in 2020, when the Indian government banned the app. TikTok lost an audience of 200 million users there, but has since gained users elsewhere.
Whether TikTok may still escape a U.S. ban is unclear. President-elect Donald J. Trump is
considering an executive order to allow TikTok to keep operating until new owners are found. He could also direct the Justice Department not to enforce the law, or delay enforcement for a set period.
TikTok did not respond to a request for comment. In court papers, it has said if it is banned, its U.S. business will be hurt. “Many current and would-be users and creators — both domestically and abroad — will migrate to competing platforms, and many will never return even if the ban is later lifted,” the company wrote.
ByteDance, which operates a family of apps in China and internationally, remains a business juggernaut even if TikTok’s ban in the United States goes ahead on Sunday, when the law takes effect. The company makes the biggest share of its revenue from another product, Douyin, a Chinese social media app. Including TikTok, ByteDance brought in roughly $73 billion in the first half of 2024, according to a person with knowledge of the company.
The Informationearlier reported ByteDance’s revenue.
ByteDance, founded in 2012 by the entrepreneur Zhang Yiming and others, is backed by U.S. investors including Susquehanna Capital, which
owns around 15 percent of the company. General Atlantic, Coatue Management, BlackRock and HongShan, the firm formerly known as Sequoia Capital China, have also invested in ByteDance.
TikTok’s ban in the United States will probably help its American competitors. As much as 85 percent of TikTok’s U.S. revenue is expected to quickly move to Instagram, which is owned by Meta, and YouTube, which is owned by Google, analysts and advertisers said. Both offer video services and programs to share commission on e-commerce sales or ads with their popular creators. When India cut off TikTok in 2020,
Instagram and YouTube quickly filled the void.
“It’s very easy to take what you’re spending on TikTok and just shift it over to Meta and Google,” Mr. Zgutowicz said. The rest could be split up between smaller platforms like Snap and Pinterest, he added.
TikTok’s users and influencers may make a similar shift, even though other platforms do not offer the same algorithmic personalization that made TikTok so popular. Instagram’s Reels tends to reward creators with large followings, whereas TikTok’s algorithm lets relatively unknown creators find an audience. YouTube’s Shorts also focuses more on established creators.
“There are other platforms where we haven’t necessarily been focused, where we’re probably going to double down,” said Kristin Patrick, the chief marketing officer of the fashion company Marc Jacobs. She pointed to Instagram Reels, YouTube Shorts and, to a lesser extent, Pinterest. She added that the brand was “preparing for the worst” with TikTok.
A survey of TikTok users conducted late last year by the investment bank TD Cowen showed that, in the event of a ban, more than half of users said they would reallocate the time they spent on TikTok to YouTube or Instagram.
People who were spending hours a day on TikTok are “not just going to go away and replace that time with reading a book or something,” said John Blackledge, an analyst at TD Cowen. “They’re going to go to a platform. They’re going to find content.”
TikTok employees and executives have left the company ahead of the ban. TikTok had an estimated 17,000 people working in the United States as of late 2024, according to Live Data Technologies, which tracks employment and job changes. But as the ban loomed, turnover at the company jumped 38 percent in the second half of the year compared with 2023.
Some top TikTok executives, including its head of North American ad sales and the general manager of its U.S. agency business,
recently left the company. Sandie Hawkins, TikTok’s head of ecommerce in the United States, exited in late 2023 to take a break from the company’s fast pace, she said. During the three and a half years she spent at the company, there was a recurring threat of TikTok being banned, she recalled.
“Anytime there was a news cycle, we would tell the team to focus on what was in your control,” Ms. Hawkins said.
In recent days, speculation has swirled that investors may step in with a last-ditch effort to buy TikTok and save it from a ban. The company has denied reports of deal discussions and said the Chinese government would forbid a sale.
The rumors and confusion echo 2020, when the first Trump administration issued
an executive order to ban the app and then tried orchestrating a sale of the company to U.S. businesses. A cloud computing and e-commerce deal struck between TikTok, Walmart and Oracle and promoted by Mr. Trump ultimately
failed to separate TikTok from its parent company.
www.youtube.com
Hmm I wonder why that is…
