TikTok faces a ban crisis, where will sellers go?

TikTok is once again facing the crisis of being banned in the United States.

On March 5 local time, 19 members of the U.S. House of Representatives submitted a new bill requiring ByteDance to divest control of TikTok within 165 days; two days later, the U.S. House Energy and Commerce Committee passed a bill to divest TikTok, owned by ByteDance, with a 50:0 vote.

The result of this bill may be that TikTok will be removed from US app stores and other business collaborations will be banned.

Faced with this challenge, TikTok made a strong instinctive self-rescue. On March 7, TikTok tried to use public pressure to change the direction of the new bill and achieve "extreme self-rescue" by displaying a pop-up window "Prevent TikTok from being shut down" to 170 million users.

Where does this "divestiture" crisis come from, and how is it different from previous hearings and ban crises? Can TikTok achieve a desperate counterattack through the opposition of local users?

Strip or ban, the ultimate choice

This week, China's overseas app TikTok once again reached a crisis point in the United States.

On March 5th local time, the U.S. House of Representatives Special Committee on China issued a bill titled "Protecting Americans From Foreign Adversary Controlled Applications Act."

The bill states that "the President should be able to take corresponding actions such as bans or restrictions on social media applications controlled by companies headquartered or registered in certain countries." "Foreign competing entity companies may not own more than 20% of the shares of the application company." "If such applications want to avoid being banned, they need to sever their ties with the entity company by selling shares, etc."

The company most affected by the bill is TikTok, a short video social media platform from China.

According to the bill, the Chinese company ByteDance needs to divest its control over its short video app TikTok within 165 days (approximately less than six months) in order to prevent TikTok from being banned in the United States.

Otherwise, after the bill comes into effect, TikTok's web hosting services in app stores such as Apple and Google will face forced suspension, and its business dealings with other US companies will also be banned.

This may eventually force ByteDance to sell TikTok or bring TikTok's overseas expansion into the US market to an end.

A TikTok spokesperson also responded to the bill: "No matter how you try to cover it up, this bill is a complete ban on TikTok."

This bill is a bipartisan bill jointly proposed by more than 20 U.S. bipartisan congressmen, including Republican Congressman Mike Gallagher of Wisconsin and Democratic Congressman Raja Krishnamoorthi of Illinois.

Raja Krishnamoorthi also said in the statement, "This bill will ensure that the president has the tools he needs to suppress dangerous applications to defend the security and privacy of Americans and protect the United States from adversaries." According to foreign media Politico, the bill has the support of the White House.

But at the same time, it should be noted that

First, the proposal on March 5 is still under review and has not yet come into effect and become law signed by the US President.

Second, the 165-day deadline starts from when the bill actually comes into effect, which has not yet begun.

In other words, ByteDance's TikTok currently has at least half a year of "self-rescue buffer period" in the US market.

Fight back = save yourself

In the past three years, TikTok has faced the fatal crisis of being "banned" in the United States more than once.

This time, it can be said that TikTok’s counterattack was the fastest, most direct, and most resolute:

On March 7, local time, the TikTok app immediately sent a pop-up message to their American users. Clicking on it was a short and direct full-screen announcement:

“Stop a TikTok shutdown”

"Let Congress know what TikTok means to you and tell them to vote No!"

It is reported that 170 million users across the United States received this "complaint letter" from TikTok.

Many people did press the red "Call Now" button below. According to foreign media UnHerd, the House of Representatives office received a large number of calls from TikTok users. Mike Gallagher, the bill's sponsor, also said in an interview that "the congressmen's phones kept ringing last night."

This counterattack did have a certain effect in influencing public opinion, and TikTok also disclosed to the foreign media Politico that they only launched this pop-up message to users aged 18 and above.

Influencing the final policy implementation through the local public opinion environment overseas has become an effective experience summed up by TikTok in its many overseas counterattacks.

During the US House of Representatives hearing on TikTok in March last year, its CEO Zhou Shouzi also posted a video on the platform on his personal account, encouraging and mobilizing American users to speak out. This time, TikTok's response of directly popping up a window to encourage users to call the House of Representatives directly is obviously tougher and more direct.

But from the current situation, the boycott of American public opinion has not affected the progress of the bill.

On March 7, local time, the U.S. House of Representatives Energy and Commerce Committee voted 50-0 to pass the bill requiring ByteDance to divest TikTok. Next, the U.S. House of Representatives and Senate will review and vote on the bill.

It can be said that the ban risk mentioned in TikTok’s current announcement involves two major losses for the American people: on the one hand, the people’s right to "freedom of speech", and on the other hand, the economic interests of TikTok creators will be affected. Neither has really become a panacea for self-rescue to escape the disaster.

Pull = Turn

The United States has the largest number of TikTok users in the world.

According to the latest data disclosed by Zhou Shouzi when he testified in the U.S. Congress on January 31, more than 170 million Americans use TikTok every month. In other words, about half of Americans are TikTok users.

According to demandsage data, the number was 160 million last year, which shows how fast TikTok's user base is growing in the United States. Data shows that TikTok's user growth rate in the United States has reached 105% in the past two years.

In addition, TikTok Shop's business in the United States has expanded rapidly since the second half of last year, with GMV reaching $34 million on Black Friday alone . According to FastMoss's forecast, TikTok's daily GMV in the United States will exceed $100 million by the end of 2024. Many cross-border e-commerce sellers are interested in entering the North American TikTok e-commerce market, and both the official and sellers have invested a lot in it.

In fact, in the past three years, from executive orders to increasingly rigorous hearings, TikTok's compliance journey in the United States has gone through many twists and turns.

As early as 2020, Trump issued an executive order requiring ByteDance to force the sale of TikTok, but it ended in failure.

On March 23 last year, the U.S. House of Representatives held a hearing on TikTok that lasted more than five hours. Although it caused an uproar around the world, it did not really stop the development of TikTok in the United States.

On May 17 last year, the U.S. state of Montana enacted a new bill, stating that it would ban all app stores in the state from offering TikTok starting January 1, 2024. However, it has been blocked by a federal judge and the ban has been suspended.

Considering that TikTok has avoided risks and survived in the cracks many times before, many people also believe that TikTok can still "turn danger into safety" this time.

In addition, this year is the year of the US presidential election. In February of this year, Biden’s campaign team even announced that it had officially joined TikTok . The frequency of short video updates and the number of views are extremely high, which has also become one of the factors affecting the ultimate fate of TikTok.

In addition, for users and businesses in the United States, the ban on TikTok means that a large number of local celebrities, anchors, supply chains, and other upstream and downstream interests will be damaged. In the future, many American creators and commercial monetization that rely on TikTok will be tied to the survival of TikTok in the United States.

A TikTok spokesperson also responded to the bill: "This legislation will trample on the First Amendment rights of 170 million Americans and deprive 5 million small businesses of the platform they rely on to grow and create jobs."

The current "divestiture storm" and the possible "ban crisis" in the future are extremely fatal risks and challenges for local American users, celebrities, and a large number of cross-border e-commerce sellers who are ready to roll up their sleeves and make a big move.

"TikTok is still very influential in the United States. If the timeline can be extended, especially with the impact of this year's US election, maybe it can get away with it this time." A North American TikTok seller expressed his views to us.

He believes that North America is still the largest target market for cross-border e-commerce. Whether it is TikTok e-commerce, Amazon, or the other three of the "Four Little Dragons Going Global", Chinese cross-border e-commerce sellers will not easily give up this market.

Do you think TikTok can still "turn the corner" this time? Feel free to share your thoughts.