TikTok Shop, launched in September 2023, was on track to generate over $8 billion in U.S. sales this year, making it the fastest-growing sales channel in the country. But the platform faces a nationwide ban starting January 19, 2025, unless its Chinese parent company, ByteDance, divests its U.S. operations.
This ban will also end TikTok's pioneering role in social commerce, as platforms like YouTube Shorts and Instagram Reels lack integrated shopping features.
Social commerce will "disappear" in the U.S. when the ban takes effect, says Juozas Kaziukėnas, publisher of Marketplace Pulse.
"TikTok ban’s pros and cons aside, its long-lasting impact on e-commerce will be getting people familiar with buying after seeing content on a social network," Kaziukėnas said. "Sure, TikTok forced TikTok Shop into existence at the cost of annoying some users, disrupting its own advertising network, and the financial cost of subsiding sales. ... And it got there without onboarding recognizable brands, mostly relying on Amazon best-sellers and Temu look-alikes."
A democratizing force
TikTok is being banned because of fears that it endangers U.S. national security because of its Chinese owners. But Kaziukėnas argues that TikTok Shop "democratized social commerce" by enabling creators with as few as 1,000 followers to sell products directly through the app. Its algorithm promoted Shop content heavily, and TikTok subsidized sales with discounts and incentives like $50 credits for new users.
Despite criticism from some users about excessive ads, TikTok Shop created a seamless "see it, like it, buy it" experience that resonated with audiences, said Kaziukėnas.
The ban will significantly disrupt e-commerce sellers relying on TikTok Shop's unique ecosystem, which combines social engagement with live shopping. While brands may shift ad budgets to other platforms, the absence of integrated shopping features means the $8 billion marketplace will largely vanish, Kaziukėnas warned.
Why the ban?
The TikTok ban in the United States stems from national security concerns over its Chinese ownership. In April 2024, Congress passed the Protecting Americans From Foreign Adversary Controlled Applications Act, which requires TikTok's parent company, ByteDance, to divest its U.S. operations by January 19, 2025, or face a nationwide ban.
Lawmakers say they fear ByteDance could be compelled to share U.S. user data with the Chinese government under Chinese law, posing risks to privacy and potential manipulation of American users.
TikTok has challenged the law, arguing it infringes on First Amendment rights and unfairly targets the platform. However, in December 2024, a U.S. appeals court upheld the legislation, rejecting TikTok's constitutional claims. The case is now set to be heard by the Supreme Court on January 10, 2025.