January 19, 2025, will be a pivotal moment for TikTok – the world’s leading short-video platform.  

The controversy started in April 2024 when President Joe Biden signed a bipartisan bill mandating that ByteDance, TikTok’s parent company, must divest its control over the app or face a complete ban across the U.S.  

Since then, a fierce legal battle has ensued. With U.S.-China trade relations deteriorating, the TikTok ban appears inevitable. But what led to this crisis? How will it impact markets, and who will emerge as the ultimate winner? Let’s explore this issue in detail.  

Why is TikTok Facing a Ban in the U.S.? 

The primary reason behind the ban is national security. U.S. officials argue that TikTok, under ByteDance’s control, poses a security risk as it could be used for data collection and manipulation by the Chinese government. Here’s a timeline of key legal events:  

• April 2024: President Joe Biden signed into law a bill requiring ByteDance to divest its U.S. TikTok operations before January 19, 2025, or face a complete nationwide ban.  

• September 2024: The U.S. Federal Appeals Court held hearings to address the legal challenges raised against the bill.  

• December 2024: The U.S. Federal Appeals Court upheld the ruling, rejecting TikTok’s claim that the law violates First Amendment rights. The court demanded that ByteDance either divest its U.S. TikTok operations or face a ban. 

The U.S. government asserts that TikTok is being weaponized by China as a tool for data collection, behavioral control, and propaganda. Such activities, according to U.S. officials, directly threaten national defense and public safety.  

TikTok’s Response: ByteDance argues that the ban would cause “irreparable harm” to more than 170 million American users and content creators on its platform. TikTok insists that the proposed measures violate free speech rights.  

While national security is the official reason, it’s clear that the bigger picture is linked to the ongoing U.S.-China trade war. This context sheds more light on the broader implications of the ban.  

How Big is the Impact of the TikTok Ban? 

The reality is that the impact is far more significant than anticipated. But what’s more intriguing is identifying the “winners” and “losers” in this battle.  

Impact on the Social Media Market 

If TikTok is banned in the U.S., platforms like Instagram Reels and YouTube Shorts are poised to become the biggest beneficiaries. Here’s a comparison of key metrics across the top short-video platforms:  

(Source: Allied Market Research, CleverAds, Statista)  

According to Allied Market Research, the global short-video platform market was valued at $1.6 billion in 2023 and is projected to reach $3.3 billion by 2032, with a CAGR of 8.1% from 2024 to 2032.  

This market is an opportunity-rich “blue ocean” with just a few key players. Losing TikTok’s large user base creates a massive market opportunity for rivals like Reels and Shorts to grab market share. Backed by strong parent platforms (Meta for Reels and YouTube for Shorts), both players are well-positioned to scale their dominance in this space.  

Impact on the Creator Economy 

North America currently holds 40% of the global creator economy.  

• By 2025, the North American creator economy will be valued at $32.28 billion, twice that of Europe.  

• By 2030, the value will exceed $142.91 billion, more than the combined value of Asia, Europe, and South America. 

If TikTok is banned, over 170 million American users – many of them creators – will be directly affected. This will disrupt ad revenue streams and force creators to shift to other platforms. Brands that rely on TikTok for influencer marketing will face strategic challenges in finding new platforms, new collaborators, and new engagement strategies.  

Impact on the Digital Advertising Market 

The ban on TikTok is a windfall for other tech giants like Meta (Facebook, Instagram) and Google (YouTube). These companies will see a significant increase in advertising revenue as advertisers are left with fewer choices for ad placements.  

Consider these numbers:  

• Ad spending on short-video platforms exceeded $99.43 billion in 2023.  

• The average advertising spends per user reached $17.46 USD. 

These figures highlight the revenue potential of short-video platforms. With TikTok out of the picture, platforms like Reels and Shorts will grab more ad dollars.  

Bigger Picture: U.S.-China Tech War 

This is not the first battle in the U.S.-China tech war. Previous targets included:  

• Huawei (5G technology ban)  

• ZTE (access to U.S. tech restricted)  

• WeChat (faced temporary bans) 

The TikTok ban is the latest in a series of efforts by the U.S. to limit China’s influence in tech, data, and communications.  

China could retaliate by targeting U.S. giants like Apple, Tesla, and Qualcomm. For instance, China could impose tighter controls on the export of rare earth materials crucial for chip manufacturing.  

Here’s a snapshot of major companies affected by the U.S.-China tech war:  

Can TikTok Survive Without the U.S. Market? 

The short answer: Yes, but at a cost.  

With over 1.5 billion users globally, TikTok’s 170M U.S. users account for a relatively small percentage. But the U.S. is a highly profitable market due to its advertising revenue potential.  

Losing the U.S. market would also jeopardize TikTok’s ambition to expand TikTok Shop – its fastest-growing revenue stream.  

Conclusion 

The potential TikTok ban will have far-reaching consequences across markets. Winners include Meta, YouTube, and digital advertisers. Losers include TikTok creators, small businesses, and firms dependent on TikTok for marketing.  

This is also a political and economic statement in the ongoing U.S.-China tech war. ByteDance now faces the tough decision to either divest its U.S. TikTok operations or exit the market entirely.  

Will TikTok be banned? Will ByteDance sell TikTok? 

Only time will tell. Stay tuned with Doo Prime for more updates. 

---

Risk Disclosure:    

Securities, Futures, CFDs and other financial products involve high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding your initial investment could incur within a short period of time.    

Please make sure you fully understand the risks of trading with the respective financial instrument before engaging in any transactions with us. You should seek independent professional advice if you do not understand the risks explained herein.   

Disclaimer:    

This information contained in this blog is for general reference only and is not intended as investment advice, a recommendation, an offer, or an invitation to buy or sell any financial instruments. It does not consider any specific recipient’s investment objectives or financial situation. Past performance references are not reliable indicators of future performance. Doo Prime and its affiliates make no representations or warranties about the accuracy or completeness of this information and accept no liability for any losses or damages resulting from its use or from any investments made based on it.