Authors: Arianna McLemore, Helen Reed, and Doyinsola Oladipo
NEW YORK (Reuters) - TikTok is expected to shut down on Sunday, posing the biggest threat to small and medium-sized companies and so-called influencers who rely on the short-video site to make a living, while big brands are expected to move to other sites.
TikTok says its U.S. site generates billions of dollars in revenue for businesses selling candy, beauty products, clothing and other consumer goods. But now, that economy is under threat. On Friday, ahead of this weekend's blackouts, the Supreme Court unanimously upheld a law banning TikTok in the United States on national security grounds.
President-elect Donald Trump said he would make a decision on TikTok but gave no details.
As a marketing tool for businesses, TikTok, owned by ByteDance, generates revenue for itself and many users and merchants through sponsorships and sales fees.
Many TikTok users are hired to serve as brand ambassadors for the company, selling merchandise and forming affiliate partnerships, in which the company pays users commissions when audiences buy items linked to on their social profiles. TikTok also offers compensation to some creators who make videos.
Those who earn money from TikTok also include startups, consumer companies and bloggers who cash in on the platform's massive reach, which reaches as many as 170 million Americans.
For example, small and medium-sized food and beverage companies will gain $4.1 billion in revenue from marketing and advertising on apps in 2023, but will lose the most, according to estimates from economic consulting firm Oxford Economics. This data was obtained on behalf of TikTok.
TikTok CEO Shou Zi Chew said in a video posted to the app on Friday that 7 million U.S. businesses make a living on the platform.
For Mama V's Candy, TikTok Shop, the e-commerce arm of ByteDance's video platform, has changed the company's business trajectory, owner Valerie Verzwyvelt said.
“Since the launch of the TikTok store last year, we have continued to remain viral,” said Verzwyvelt. She said the company, which sells extremely sour candies, made $6 million in 2024 and sold nearly 300,000 copies.
“We’re on our second expansion,” she said, a decision the Pineville, La.-based company made just before the Jan. 19 deadline. "I now have to rebuild my business."
Sven Greany, co-owner of California-based independent beauty brand Simply Mandys, said a TikTok ban would bring his business to a "shuddering halt" after a record-breaking holiday shopping season.
Simply Mandys made more than $20 million in sales on TikTok Shop in 2024 with the help of live streaming, and Greaney said he was never worried about the app's ties to China. He said 95% of the company's total sales come from shoppers on the platform.
However, the company plans to move its marketing to Instagram after TikTok is no longer available.
But TikTok’s privacy policy prohibits sellers from accessing shoppers’ emails, addresses and other information that could help with off-platform marketing. Essentially, if TikTok goes away, Simply Mandys' customers will go away, Greaney said.
Other businesses suspended sales and cut prices to clear inventory in case foot traffic to stores suddenly stopped on Sunday.
But that doesn't stop some influencers from recommending products as they look to cash out before the ban.
One user told her 65,000 followers: "These TikTok stores are doing a massive 'clearance' of their products in anticipation of the ban, so I'm linking up some of my favorite skincare clearance products."
In addition to commissions, TikTok influencers with 10,000 to 100,000 followers may earn $2,000 per brand marketing campaign, according to Lithuanian influencer marketing agency Billo. For some of TikTok's top U.S. creators, all their income will stop while the big companies they work with turn to other platforms, such as YouTube or Meta's Instagram.
Oxford Economics said that by 2023, small and medium-sized business activity on TikTok contributed $24.2 billion, accounting for only a small part of the U.S. gross domestic product (GDP), while supporting 224,000 jobs. Reuters could not independently verify these estimates.
Yuriy Boykiv, CEO of e-commerce consulting firm Front Row, said his clients have made contingency plans to shift marketing spend to other platforms with similar short-form videos, including Instagram and YouTube.
"Every customer has known since April 2024 that TikTok might disappear, so everyone has done some preparation," Boykiff said. Front Row's clients include Procter & Gamble Co.'s hair care brand Ouai and LVMH's Sephora, according to its website.
"We go where our communities are, and that includes TikTok right now. If they move to other platforms in the future, we will be with them," elf Beauty chief marketing officer Kory Marchisotto said in a statement to Reuters.
Mitchell Halliday, the founder and creative director of the British beauty brand Made By Mitchell, launched the TikTok Shop in the United States at the end of August and began selling on the British TikTok Shop in 2022, becoming the first 2019 British beauty brand with sales exceeding US$1 million. One-day sales volume on the platform.
"TikTok is the beauty hub today. It was YouTube, then Instagram, now TikTok," Halliday said.
(Reporting by Ariana McLymore and Doyinsola Oladipo in New York and Helen Reid in London; Editing by Vanessa O'Connell and Anna Driver)