The U.S. ban on TikTok, signed into law in March (which isn’t quite a ban) appears to be harming ad spending on the platform. Spending is still growing on the short video platform, but it has slowed considerably.
According to eMarketer, ad spending on TikTok was up 19% in March, before the legislation was signed. Growth was 11% in April and just 6% in May. The article suggests that the specter of a ban is leading some advertisers to divert their ad spend elsewhere.
A Ban by Any Other Name
OK, so why is this not really a TikTok “ban”?
The U.S. wants TikTok’s parent company ByteDance to sell the U.S. division. In particular to an entity not associated with the Chinese Communist Party.
Arguments favoring a ban were largely based on national security concerns. What would stop the CCP from using TikTok to sow dissent or spread disinformation, particularly in a U.S. presidential election year? Or so these arguments went.
U.S. President Joe Biden signed the bill into law in April. While it did require ByteDance to sell off the U.S. operation, the law gives ByteDance almost a year to execute a sale. And Biden can grant a 90-day extension.
We imagine an extension would be forthcoming if a sale were in process but not likely to be completed by the deadline.
Since the ban announcement, TikTok has sued to block the ban on First Amendment grounds. This week, PYMNTS reported that a U.S. House committee has shared information with the Justice Department designed to aid in its defense against TikTok’s legal action.
TikTok has also threatened to shut the platform down rather than sell it off to an entity that passes muster with U.S. regulators.
TikTok has also carried on as a business, including heavily pushing TikTok Shop as a way for small creators to make money.
As the ban was looming, TikTok leaned into its role as an important channel for U.S. small businesses by sponsoring research showing it was having a substantial economic impact. My colleague Mike Boland wrote about this back in April and we discussed it on episode 67 of Localogy’s This Week in Local podcast.
