Economics of a Potential TikTok Ban
Written by Valeri Guevarra (W’26); Edited by Anna Moehn (W’26)
Yes, it could happen this time. After a failed attempt by Trump in 2020, TikTok could be banned in the U.S after a bipartisan bill passed in the House on March 13th. While many are concerned with the precedent the ban would set and the immediate impact of ‘not being able to scroll on their FYP,’ it’s also important to note the economical impact of a ban of the social media giant.
The House overwhelmingly passed a bill that would force Beijing-based parent company ByteDance to sell its stake in TikTok within 6 months or face a ban in the U.S. The drivers behind this bill are concerns with national security and user data collection by the Chinese government because the app is owned by a Chinese company. The bill initially moved quickly– it was introduced in a House committee in early March and is now moving to the Senate, which is stalling to vote on the bill. Biden claims he will sign the bill into law once it reaches his desk, but TikTok CEO Shou Zi Chew has said he would challenge it immediately—making the removal of the app from our devices unlikely anytime soon.
In response to the passing of the bill, protestors gathered outside the capitol including small-business owners, artists, and content creators.
At its inception, TikTok was known as “the dancing app.” Now, small businesses promote their products, people search for new items or places to visit, and artists showcase their work to the world. Some examples include NYC-based @consumingcouple, music artist merchandise maker @sageandsprout, and painter @halietorris respectively.
The ‘Creator Rewards Program’ allows content creators to be compensated for their videos based on four metrics: originality, play duration, search value, and audience engagement. This program, in addition to private sponsorships/partnerships between a creator and company, allows creators to monetize their content— often identified by the ‘Paid Partnership’ label on the video. Some popular Penn-affiliated TikTokers who take advantage of these opportunities include comedy and skit creators @jamesleonidas2 and @stinkyasher.
As a company, TikTok made $16 billion in revenue with advertising as its primary source last year. This number doesn’t scratch the surface of the true economical impact the app has, excluding the mentioned forms of compensation on the creator side and the exponential growth of the ‘TikTok Shop’ launched toward the end of 2023.
A recent survey of some Wharton students found that the average screen time spent on Tik Tok per week was about 10 hours with a range of 7-14 hours per week. A ban on Tik Tok would clearly be devastating to our generation.
However, the ban of TikTok would also affect the lives of the mentioned creators and millions of others. According to TikTok, more than 7 million American businesses market or sell their products through the platform. In addition, according to Oxford Economics, TikTok drove $14.7 billion in revenue for small-business owners in 2023, contributing $24.2 billion to the U.S. GDP, supporting at least 224,000 American jobs.
While the removal of the social media app from our devices will likely not come soon, the life-changing economical impact of the possible ban is clear and has devastating potential.