TikTok creators fear for their livelihood after Biden signs law

Ophelia Nicholls, known as “shoelover99” on TikTok, is among a host of online creators and influencers whose lifestyles have suddenly been thrown into potential chaos.

Nichols, who lives in Alabama, has more than 12.5 million followers on TikTok, an app she uses to create lifestyle content and deliver speeches in her deep Southern accent. Her posts can attract millions of views, and she makes most of her money through promotional partnerships with brands like Home Chef.

But after legislative action this week in Washington, D.C., Nichols doesn’t know what will happen next.

On Wednesday, President Joe Biden signed a bill requiring TikTok to be divested from Chinese parent company ByteDance. If ByteDance doesn’t sell TikTok, the app could face a US ban. The legislation passed the Senate on Tuesday, along with a package to provide billions of dollars in aid to Israel, Ukraine and Taiwan.

“TikTok allows small businesses and creators to find their people in their community,” Nichols told CNBC before the bill was signed. “It’s made it possible for everyone to be able to provide for their family in a way that they’ve probably never provided for their family before. It’s changed people’s lives.”

Prohibition it can take years, as TikTok vowed to challenge it in court. But in the meantime, there is a lot of uncertainty.

SMEs that used TikTok supported 224,000 jobs in 2023, according to Oxford Economic Survey paid by TikTok. These businesses generated nearly $15 billion in revenue and contributed $24.2 billion to U.S. gross domestic product in 2023, the study said.

Nichols joined several other TikTok creators in traveling to the Capitol to oppose a potential ban. She wanted to speak out against it and explain to lawmakers how she runs her business using the app. Nichols said TikTok did not ask her to join the protest.

“You’re taking away our First Amendment rights,” Nichols said. “People don’t understand. It’s a community. It’s a family. Whatever you like or whatever makes you smile, you’ll find someone else on the app who likes it too.”

According to the March CNBC All-America Economic Survey, nearly half, or 47 percent, of respondents supported a ban or sale, while just over 30 percent opposed the ban.

On TikTok itself, there are over 585,000 posts against the ban, mostly consisting of videos under the hashtags #KeepTikTok and #SaveTikTok. Many reviews highlight TikTok’s significant role in providing online entertainment, while others call for the current platform to be preserved, arguing that it is crucial to their livelihoods.

The effort stems from ByteDance’s $7 million marketing strategy to mobilize American opposition to the ban. The tactics ranged from heartfelt testimonial videos featuring TikTok CEO Shou Zi Chew to in-app banners recommending users call their senator.

After Biden signed the bill into law on Wednesday, TikTok called the measure unconstitutional and said it would challenge the law in court.

“We believe the facts and the law are clearly on our side and we will ultimately prevail,” the company said in post to X. “This ban will destroy seven million businesses and put 170 million Americans out of business.

Lawmakers have long argued that TikTok is a threat to US national security, saying the Chinese government could use the app’s data to spy on American users and spread disinformation and conspiracy theories.

Sen. Markwayne Mullin, R-Okla., told CNBC’s “Last Call” on Tuesday that the legislation is not a ban, but simply a requirement that TikTok separate from ByteDance.

“You can still keep the platform, you can still move forward,” Mullin said. “But the Chinese Communist Party is using the algorithm they developed for ByteDance, for TikTok, and the servers they use so they can push their propaganda.”

TikTok creators and influencers living far from the realm of politics have other concerns.

Many users of the app have struggled to get a similar audience on other platforms. Creators say each platform is different, with its own audience and interests, and TikTok’s algorithm makes it easier for their videos to be discovered by a larger audience.

“People are saying, ‘If we shut down TikTok, they’ll follow you on Meta,’ which is not true,” said V Spehar, host of Under the Desk News, a short news show with over 3 million followers on TikTok, in an interview with CNBC. “And that’s not true for so many people. Otherwise, we would.”

TikTok offers a variety of ways to monetize, including its creative program designed to reward popular videos that are longer than a minute. In addition, creators can generate revenue through brand partnerships and affiliate sales through the TikTok Shop, as well as receive virtual “gifts” from followers during live streams.

Competing platforms have tried to encourage users to post their short videos on their platforms. Last year, YouTube Shorts changed its monetization program, offering users 45% of ad revenue across multiple posts. However, users said payouts are not as high as long videos.

Elsewhere, too, it has become more difficult. Last year, Meta shut down its program to pay creators of short videos on Instagram and Facebook. The creators complained that they were doing nothing while getting hundreds of thousands of views on the app. However, Instagram head Adam Mosseri hinted that the program may return in 2024.

Tony Yoon, a plastic surgeon with 8.4 million followers on TikTok, said finding a large audience is difficult. His videos on everything from weight loss and plastic surgery to funny clips about sitting in traffic often get hundreds of thousands of views.

“I diversified on purpose, just because it’s something, as a business person, I know you have to do,” Yoon said. “But not everyone did that.”

Yoon added that part of his anger against the TikTok bill has to do with the fact that there are “people who have much smaller voices than me who will really be hurt by this if it happens.”