TikTok and the U.S. federal government are facing off over a potential ban of the video app — with implications for ecommerce.

TikTok Shop and the app’s influencers have become key to some online retailers’ business models. Then, in April, president Biden signed a bill that would ban TikTok in a year if Chinese parent company ByteDance doesn’t sell.

On May 7, TikTok filed a suit against the federal government over the potential ban. TikTok’s filing said that a ban would violate the U.S. Constitution.

“For the first time in history, Congress has enacted a law that subjects a single, named speech platform to a permanent, nationwide ban, and bars every American from participating in a unique online community with more than 1 billion people worldwide,” the filing from the U.S. Court of Appeals in the District of Columbia says.

Why is the US planning to ban TikTok?

Concerns about TikTok revolve around the fact that it’s owned by Chinese company ByteDance.

U.S. lawmakers who support the ban expressed concerns that the app could give the Chinese government access to private data, including location information, from TikTok’s 170 million U.S. users.

Other proponents of a ban contend that the recommendation algorithm could be used to spread misinformation or propaganda to U.S. users. 

“Congress is not acting to punish ByteDance, TikTok or any other individual company,” Senate Commerce Committee chairwoman Maria Cantwell said. “Congress is acting to prevent foreign adversaries from conducting espionage, surveillance, maligned operations, harming vulnerable Americans, our servicemen and women, and our U.S. government personnel.”

TikTok is safe for now; the bill gives ByteDance until January 2025 to sell to an approved buyer. However, ByteDance has indicated it will not sell and is now pursuing the lawsuit.

The social media company is represented by Covington and Burling LLP and Mayer Brown LLP in the suit.

TikTok’s role in ecommerce

TikTok now plays a key role in many shopping decisions. The short-form video app’s popularity, especially among young consumers, has driven sales and pushed popular products out of stock. More recently, its ecommerce platform, TikTok Shop, has grown in the U.S.

The app is essentially a shopping guide for consumers who are already primed to spend more than the average person, Ellyn Briggs, brands analyst at Morning Consult, told Digital Commerce 360. It is also a form of brand discovery for Gen Z, she said.

TikTok users are particularly prone to purchasing clothes and beauty products shown on TikTok, Briggs says.

TikTok Shop launched in the U.S. in September 2023 with more than 200,000 sellers and 100,000 creators sharing products through its affiliate program, a spokesperson stated. 

The marketplace is accessible through shoppable videos fed to users through the “for you” page. Creators can tag products in videos and live feeds that viewers can purchase directly within the app. TikTok users can buy products recommended by influencers and creators on the app, who make commissions based on sales they’ve promoted.

TikTok Shop hasn’t publicly released any total sales figures. In November alone, 5 million new customers made purchases through TikTok Shop during the marketplace’s holiday promotions, TikTok said. 

TikTok reportedly had plans to grow its ecommerce reach in the U.S. this year. A Bloomberg report found that TikTok aims to grow U.S. ecommerce sales to $17.5 billion in 2024. 

How ecommerce retailers will handle a TikTok ban

Many retailers that reach customers through TikTok are also active on other social platforms. For example, Newegg Commerce Inc. livestreams on TikTok, Facebook and YouTube.

“Newegg uses multiple popular social platforms to share content and livestream,” a spokesperson said, declining to comment further on how a ban might impact it.

Still, TikTok is a valuable customer acquisition tool.

“TikTok is a great way to get Newegg in front of people who have not shopped from Newegg before,” director of Newegg studios Drew Roder previously said. In 2023, the consumer electronics retailer told Digital Commerce 360 that TikTok streams generate the most engagement, followed by YouTube.

Newegg is No. 68 in the Top 1000. The Top 1000 database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. 

TikTok is just one way to reach ecommerce customers

Children’s apparel retailer PatPat is attempting to build up its presence on other platforms in case TikTok gets banned.

“We value TikTok as a progressive platform for engaging with a dynamic audience and showcasing our creative content,” head of marketing Ranu Coleman said in an email. “Currently our business strategy is diversified across multiple channels — this diversification ensures that while a TikTok ban would be disappointing due to the loss of direct interaction with its community, it would not have a detrimental impact on our financial stability. We have a very flexible and agile business model, so we would shift our focus and resources as needed.”

That diversification comes in through Instagram Reels and YouTube Shorts, which Coleman says offer similar reach and engagement opportunities to TikTok. Short-form video content will remain an important part of marketing for PatPat even in a post-TikTok world, she said. Most of the influencers PatPat works with are also active on these other platforms, which would ease a transition away from TikTok, she added.

Ultimately, she believes, consumers and retailers will adapt if TikTok is banned in the U.S.

“In the discussions surrounding the potential ban of TikTok, one aspect that seems underrepresented is the adaptability and resilience of both users and businesses in the digital world,” she said. “While the focus often falls on the immediate impacts of such a ban, it’s important to acknowledge how quickly users and companies can transition and adapt to new platforms or changes.”

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