TikTok files emergency motion to stop US ban – but brands & creators are eyeing the door

The news follows a failed appeal by the popular social platform; on Friday, the DC Circuit Court of Appeals ruled to uphold a law requiring the app to sever ties with ByteDance or face a nationwide ban.

The original law – which includes the possibility of a 90-day extension on the divest-or-ban deadline – was signed into effect by President Biden in April. It arrived amid increasing concerns about TikTok’s potential to threaten Americans’ data privacy and national security.

In its appeal, the social media platform argued that the original ruling violates First Amendment rights and imposes an impractical demand: the divestiture of TikTok sans its powerful content recommendation algorithm, which might be required by the Chinese government to approve a transaction. However, in a unanimous decision helmed by Judge Douglas Ginsburg, the appeals court determined that the statute would stand, saying that it represents a legitimate legal protection to safeguard national security.

Now, TikTok’s emergency injunction – a court order that is sometimes granted in cases whose outcomes pose immediate and irreparable harm – could be its final lifeline in the US.

In the new filing, TikTok says that its app is “one of the Nation’s most popular speech platforms” and argues that, despite Judge Ginsburg’s ruling last week, the law constitutes a violation of the First Amendment and threatens irreparable harm to TikTok’s 170m US users and businesses. The filing underscores the economic contributions of the platform’s advertisers and organic marketers, who it claims added more than $24bn to the US GDP in 2023 alone. The filing suggests that a ban would thereby hurt the US economy – and would cause small businesses to lose over $1m in revenue while reducing earnings for creators by $300m in just one month.

The company and its parent organization also said that halting the ban “will give the incoming Administration time to determine its position – which could moot both the impending harms and the need for Supreme Court review.” It said that pushing pause on the decision will “impose no material harm on the government.”

Donald Trump, set to return to the White House in January, has “yo-yoed” on his feelings about TikTok in recent years, says Matt Navarra, a leading social media industry analyst and consultant.

Though the former president previously signaled his support for pursuing a ban on the grounds of national security concerns, he has also courted donors, including Larry Ellison and Jeffrey Yass, who have deep investments in TikTok – which some believe instigated a change of heart. As recently as November, Trump’s team has indicated that the President-elect aims to overturn the divest-or-ban law.

Now, the US Supreme Court may choose to grant or deny TikTok’s injunction. But the US Department of Justice (DOJ) on Monday urged for the dismissal of the request, writing in a letter to the US Court of Appeals for the DC Circuit that TikTok’s foundational arguments have already been “definitively rejected.” DOJ urged the appeals court to swiftly deny TikTok’s request to preserve time for Supreme Court review if necessary.

In the meantime, however, ByteDance and TikTok are no doubt feeling the pressure, especially considering that they’re looking at a less-than-ideal arrangement even if ByteDance successfully secures a buyer. This is because the Chinese government enforces regulations requiring its approval before content recommendation algorithms can be sold. In short, the powerhouse of the TikTok app would likely not be part of the deal.

This possibility in itself could be a damning outcome, according to Jasmine Enberg, vice-president and principal analyst at eMarketer focused on social media. “If TikTok were to sell without its algorithm, TikTok likely wouldn’t be TikTok. Its algorithm is the envy of other social platforms that have tried unsuccessfully to replicate it, and its removal would change how advertisers, creators and users engage on the platform.”

While the legal battle unfolds, speculation grows over potential US buyers. Some big players, including billionaire businessman Frank McCourt and a consortium backed by former Treasury Secretary Steven Mnuchin, have signaled interest.

Meanwhile, the reported 7m+ US businesses using TikTok to conduct business – through organic marketing, paid advertising, e-commerce and more – are surely weighing their options.

“Advertisers who are heavily or solely reliant on TikTok should be diversifying their portfolios and nurturing their audiences on other platforms,” says Enberg.

Today, TikTok rivals Instagram Reels and YouTube Shorts are best positioned to snap up potentially displaced users and brands, Enberg says. It’s a belief shared by industry analyst Matt Navarra. “Instagram Reels, Facebook Reels and YouTube Shorts are going to be the biggest winners in terms of where audiences will go for [TikTok-style] content and where, therefore, advertisers may follow,” he says.

Reels appears to be incentivizing creator migration already, adding new features that make it easier for users to discover content from smaller, up-and-coming creators. Navarra, however, gives YouTube Shorts a slight edge in terms of monetization avenues for creators. Nonetheless, he notes that all of these platforms are fairly comparable from a brand’s perspective – from audience profiles and types of content to their content algorithms and AI-backed advertising tools. As such, he suggests that for organizations looking to redirect their investments, “it shouldn’t be a difficult switch to make.”

TikTok and ByteDance would push back on the argument that other short-form video platforms offer the same advantages. In the emergency injunction filing, the companies cite an Oxford Economics report conducted in partnership with TikTok that found 39% of small and medium companies using the platform for business consider it essential to their survival.

Of course, TikTok itself has the most to lose. The company estimates that a ban would erase 29% of its targeted global advertising revenue for 2025. Even a temporary US ban, it says, could inflict lasting damage, driving advertisers and business partners to competitors and irreparably weakening its market position.

While Navarra believes that “the odds of a ban happening have … shot up,” others are more convicted.

“TikTok’s US ban is now a stark reality,” says Zarina Stanford, CMO at Bazaarvoice, an e-commerce tech company focused on user-generated content.

She sees India’s decision to ban TikTok in 2020 as a blueprint of what we can expect to witness in the US market should a ban take effect. “With TikTok out of the picture, a new landscape of opportunities emerges,” she says. She, too, sees YouTube Shorts and Instagram Reels as the obvious contenders for consumer eyeballs and for brand investment, especially as demand for social commerce grows.

Today, the US market accounts for about half of TikTok’s ad revenues globally, according to eMarketer estimates. What happens in the coming weeks is sure to determine the fate of the business – and may influence the direction of tech regulation in the US and abroad.

TikTok has asked for a decision on its emergency injunction by December 16, underscoring the urgency of its plea.

While the appeals court has yet to rule on the injunction, the DOJ contends that TikTok’s request is burdensome and says “the government is prepared to provide a full response opposing petitioners’ motions” if necessary.