*

Supreme Court upholds TikTok ban on national security

grounds

*

Small businesses and influencers face major revenue loss

*

Some companies have contingency plans to shift to other

platforms including YouTube and Instagram

By Arriana McLymore, Helen Reid and Doyinsola Oladipo

NEW YORK, Jan 17 (Reuters) - TikTok's expected Sunday

shutdown poses the biggest threat to the universe of small- and

medium-sized firms and so-called influencers who depend on the

short-form video site for their livelihood, while big brands are

expected to move to other sites.

TikTok says its U.S. site generates billions for businesses

selling candies, beauty products, clothes and other consumer

goods. But now, that economy is under threat. The Supreme Court

on Friday unanimously upheld the law banning TikTok in the

United States on national security grounds ahead of a blackout

this weekend.

After the ruling President-elect Donald Trump said he

would make a decision on TikTok, without providing details.

As a marketing tool for businesses, Bytedance's TikTok

generates revenue for itself, and for many of its users and

merchants, through sponsorships and by collecting fees on sales.

Many TikTok users are paid to be brand ambassadors for

companies, selling merchandise and affiliate partnerships where

users are paid commissions by companies when audiences purchase

items linked on their social profiles. TikTok also compensates

some creators for making videos.

Those who receive revenue from TikTok also include startups,

consumer companies and bloggers cashing in on the platform's

massive reach of up to 170 million Americans.

For example, small- and medium-sized food and beverage

businesses, which saw revenue increase by $4.1 billion in 2023

from marketing and advertising on the app, stand to lose the

most, according to estimates by economic advisory firm Oxford

Economics. That data was commissioned by TikTok.

TikTok CEO Shou Zi Chew said in a video posted to the

app on Friday that seven million American businesses earn a

living on the platform.

For Mama V's Candy, TikTok Shop, the e-commerce arm of

Bytedance's video platform, changed the trajectory of the

business, said owner Valerie Verzwyvelt.

"We have pretty much stayed viral since the beginning of the

TikTok shop launch last year," said Verzwyvelt. The company,

which sells extremely sour candies, made $6 million in 2024 and

has sold close to 300,000 units on the app, she said.

"We are on our second expansion," she said, a decision

the Pineville, Louisiana-based company made before the reality

of the Jan. 19th deadline set in. "I have to rebuild my business

now."

Sven Greany, co-owner of California-based independent beauty

brand Simply Mandys, said that a TikTok ban would bring his

business to a "screeching halt" after a record holiday shopping

season.

Simply Mandys made more than $20 million in sales in 2024 on

TikTok Shop with the help of livestreaming and Greany said he

never fretted the app's ties to China. Ninety-five percent of

the company's total sales come from shoppers on the platform, he

said.

However, the company has plans to shift its marketing to

Instagram once TikTok is no longer available.

But TikTok's privacy policy blocks sellers from accessing

shopper emails, addresses and other information that could be

useful for marketing outside of the platform. Essentially, if

TikTok disappears, so do Simply Mandys' customers, Greany

said.

Other businesses are holding sales and dropping prices to

clear out inventory in the event that traffic to their shops

comes to an abrupt end on Sunday.

But that's not stopping some influencers from

recommending products as they look to cash out ahead of the ban.

"These TikTok shops are mass 'clearancing' their

products in anticipation of the ban, so I'm linking some

clearance products that I love for skincare," one user told her

65,000 followers.

Beyond commissions, a TikTok influencer with 10,000 to

100,000 followers can potentially earn $2,000 per brand

campaign, according to Lithuania-based influencer marketing

agency Billo. For some of TikTok's top U.S. creators, the

entirety of their income will come to a halt, while the major

companies they've partnered with pivot to other platforms, such

as YouTube or Meta's Instagram.

Oxford Economics said that small- and

medium-business-activity on TikTok contributed $24.2 billion, or

a small sliver of overall U.S. gross domestic product (GDP) in

2023, while supporting 224,000 jobs. Reuters could not

independently verify those estimates.

Yuriy Boykiv, chief executive of e-commerce consultancy

Front Row, said his clients made contingency plans to shift

their marketing spending to other platforms which have similar

short-form videos including Instagram and YouTube.

"Every client has known about this possibility of TikTok

going away since April of 2024, so everybody has done some

preparation," Boykiv said. Front Row's clients include Procter &

Gamble's ( PG ) haircare brand Ouai and LVMH's

Sephora, according to its website.

"We go where our community is and right now that includes

TikTok. If they shift to other platforms in the future, we'll be

right there with them," Kory Marchisotto, chief marketing

officer at e.l.f. Beauty, said in a statement to Reuters.

Mitchell Halliday, the founder and creative director of

British beauty brand Made By Mitchell, which launched on TikTok

Shop U.S. at the end of August, started selling on TikTok Shop

in the UK in 2022 and became the first British beauty brand to

hit $1 million in sales in one day on the platform.

"TikTok is the hub of beauty nowadays. It used to be

YouTube, then it was Instagram, and now it is TikTok," Halliday

said.