The Risk of TikTok Ban Soars

Key Takeaways:

• The US House passed a bill last week aimed at banning TikTok should ByteDance neglect to spin it off within five months. Advertising activity on TikTok’s US ad network would likely be eviscerated should it face a US banning. Pathmatics by ST data shows that the top 100 advertisers on TikTok’s US ad network spent more than $2.3bn (combined) on ads in 2023. Additionally, the top 5 categories of advertisers by US ad spend on TikTok in 2023 spent more than $3.7bn on ads

  • Billions of ad dollars would be up for grabs in the event of an outright US TikTok ban. Google and Meta would be poised to seize this advertiser demand for short-form video placements given each has a viable short-form video alternative in Shorts and Reels, respectively. Per ST data, through 2024 YTD, ~35% of ads placed on the YouTube mobile app in the US were on Shorts, while ~28% of ads placed on Instagram in the US were on Reels, indicating a material and present interest in reaching consumers via short-form video advertising

• ~10% of TikTok’s total MAUs came from the US through 2024 YTD. Should the app face an outright ban in the US, those users would likely seek short-form video entertainment elsewhere. Per ST Audience Insights data, TikTok has a heavy degree of overlap with other popular social media platforms in the US, which could prove advantageous for these competitors should TikTok be banned. Across the past 90 days, nearly 94% of US TikTok users opened YouTube, while 80%, 68%, and 55% opened Instagram, Facebook, and Snapchat, respectively

• This wouldn’t be the first time that TikTok was banned as it faced a similar sentence in India in mid-2020. Pre-ban, India was TikTok’s largest market with nearly 19% of total MAUs coming from the country per ST data. Post-ban, Indian smartphone users turned to both localized short-form video alternatives and familiar social media apps. As of Feb’24, localized short-form video alternatives such as Moj and Josh have exhibited explosive user growth with MAUs up more than 100% each compared to Jul’20 (one month post-TikTok ban), with Instagram (+91%), YouTube (+55%), and Facebook (+30%) also exhibiting strong growth through the same period

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