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Banning TikTok Would Hurt Small Businesses. Here's What Congress Should Do Instead There are ways to mitigate the potential threats of TikTok without a complete ban.

By Taylor Barkley

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Alex Wong | Getty Images

Calls to ban TikTok have reached a fever pitch, with talks of banning it outright in the U.S. — a move that would affect all 150 million American users, including millions of small businesses. TikTok CEO Shou Chew's congressional testimony in late March was mostly an opportunity for members of Congress to air their concerns, unassuaged by Mr. Chew's answers.

Policymakers should carefully weigh the costs and benefits a ban might have, especially for small businesses that rely on it as their primary marketing platform. Based on the evidence we have, TikTok's relationship to China is a potential threat with theoretical consequences, but for small businesses, a ban on TikTok is a very real threat with real consequences.

The decision of what to do about TikTok does not have to be an either-or decision — either we do nothing, or we ban it. Congress has other options, all of which come with their own costs and benefits. For small businesses, a complete ban would be potentially devastating. Congress should proceed with caution and consider other options for mitigating the TikTok risk while still allowing small businesses to flourish.

Why is the U.S. government considering a ban on TikTok?

In a sentence, it is the fear that the Chinese Communist Party (CCP) could use the data collected by the app to spy on users in the United States. Although TikTok is based in the U.S., ByteDance, the parent company of TikTok, is based in Shanghai. Given the porous relationship between any company within Chinese borders and the CCP, as well as prior malicious cybersecurity behaviors from the CCP, scrutiny from the U.S. government is warranted. TikTok is currently banned from U.S. government-owned devices and the Department of Justice is prudently investigating ByteDance employees for snooping on journalists via TikTok. This episode in particular has done real damage to the credibility of both ByteDance and TikTok. Even though there is no concrete evidence to date that the CCP has accessed Americans' data on TikTok, this story has boosted concerns that the firewall between TikTok data and the CCP might not be so robust.

Now the question is whether the risks of TikTok warrant a stronger ban that would include banning the app from private devices and access in the United States. The scrutiny, concerns, and practicality of a ban for TikTok on government devices is clear cut and justified. But banning the platform for the whole of U.S. citizenry is a much trickier issue and may or may not be justified. If it is justified, Congress should clearly state its case.

On the other hand, it is clear that small businesses use TikTok to engage with customers and market their products. According to TikTok's studies, 5 million businesses use TikTok's platform and many of those are small businesses. Independent figures are difficult to find.

TikTok's algorithmically directed feeds match interested users with the content they most want to see, and appears to be a boon for small businesses and creators. Instead of buying ads, they merely need to create engaging content — all for free. As Congress considers a TikTok ban, what should policymakers keep in mind so that small businesses are not negatively impacted?

First, an outright ban would be harmful to tens of millions of private users and tens of thousands of small businesses, not to mention the U.S. economy. Policymakers need to consider that this would be a major cost of banning TikTok. According to a 2019 report from the Small Business Association, 44 percent of the U.S. economy is generated by small businesses, including 1.5 million jobs. Policymakers should provide concrete evidence to U.S. citizens that the costs are worth the benefits should a ban be the ultimate method of dealing with TikTok's risks.

Second, policymakers should be mindful of the collateral effects of any bill banning TikTok. Currently there are six bills in Congress that are either narrowly focused on TikTok or could include other international businesses. Broader bills like the RESTRICT Act could unintentionally catch many international small and medium sized businesses in their purview.

Analysts have pointed to many flaws in this legislation, including the opaque and largely unaccountable authority the bill would provide to the Secretary of Commerce. The bill includes so many "internet communications technologies" that mundane and helpful services like VPNs or payment systems could be caught up in a ban were the Secretary of Commerce to move in that direction.

Third, there are other ways of mitigating the potential threats of TikTok other than a complete ban. The U.S. government could force ByteDance to sell TikTok to a U.S.-based company. The Committee on Foreign Investment in the United States (CFIUS) has been negotiating terms with TikTok for two years. It was recently reported that CFIUS will recommend a sale.

Congress could require that apps like TikTok with ties to the CCP or other foreign adversaries be clearly labeled, as proposed in the Internet Application I.D. Act, so consumers could decide for themselves.

Congress could also pass a privacy bill that mitigates the data collection concerns of TikTok and creates a uniform rule for small businesses to follow. This would further benefit small businesses by limiting the number of privacy laws they have to comply with. As a recent report from the startup advocacy organization Engine outlined, the growing patchwork of state privacy laws are harming startups, with each new state law costing some an estimated $60,000 in compliance costs.

Finally, small businesses and policymakers should keep in mind the ever shifting ecosystem of social media platforms. The dominant platform of today is likely not the dominant platform of the near future. For example, policy concerns about Meta's dominance were rendered moot by the market — mostly through the growth of TikTok. Businesses should not exclusively rely on a particular platform because algorithms change and companies can go out of business. And policymakers should trust market competition. American companies are taking notice of TikTok's success and are launching competing products, like Meta's Instagram Reels.

Regardless of what ultimately happens, small businesses should make their voices heard in policy discussions that could impact their livelihood. Members of Congress pay special attention to those within their states or districts who might be affected by a legislative change. That information and perspective can only help policymakers make a better decision on this thorny topic. What is clear is that small businesses will be impacted by a complete ban, so all policy options should be exhausted before that step is taken. Such compromise leaves everyone better off.

Taylor Barkley

Technology and Innovation Director at the Center for Growth and Opportunity

Taylor Barkley is the Technology and Innovation Director at the Center for Growth and Opportunity, where he manages the research agenda, strategy, and represents the technology and innovation portfolio. His primary research and expertise are at the intersection of culture, technology, and innovation. He has extensive experience working with state-based technology policy projects and partners and most major federal technology policy topics.

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