TikTok may not be banned from the United States yet, but it says the Trump administration's continued threats have already had a devastating impact on the company's ability to land advertisers, hire new talent and hold on to content creators.
In a new court filing, TikTok's interim head, Vanessa Pappas, shared concrete data about the losses TikTok has experienced over the last few months, hoping to persuade the court to issue an injunction against the Commerce Department's forthcoming ban, which is set to take effect on Sept. 27.
According to Pappas, when Secretary of State Mike Pompeo first announced that President Trump was considering banning TikTok in the United States, the app's user base fell by 500,000 daily active users. In the month of August, after President Trump issued his executive order barring transactions with TikTok's parent company, ByteDance, TikTok lost $10 million in revenue, as a dozen brands canceled or delayed their advertising plans. That includes "some of the largest consumer goods companies in the United States," Pappas wrote.
The threats have also interrupted TikTok's hiring spree, according to Pappas. "Since July 1, 2020, 52 candidates have declined offers of employment with ByteDance and TikTok Inc. specifically due to the perceived uncertainty caused by the government's investigation of and threats against TikTok," Pappas wrote, not mentioning that TikTok's former CEO, Kevin Mayer, quit among the chaos and confusion after only a few months on the job.
TikTok has also watched its most popular creators get poached by other platforms. Pappas pointed specifically to TikTok's biggest star, Charli D'Amelio, who recently signed with Triller, a competing app. "Because of the halo effect associated with major personalities on the TikTok app, the departure of even one top creator can lead thousands of members of their fan base to the next platform as well," Pappas wrote.
According to Pappas, until July 1, TikTok was adding around 424,000 new daily U.S. users every day. Even a temporary ban could demolish that growth, according to TikTok's models, which estimate that 40% to 50% of TikTok's daily active users wouldn't return to the app even if the ban lasts only two months. "If the ban is in place for six months, 80 to 90% of daily active users will not return," Pappas wrote. Those estimates are based on what TikTok saw in India when the app was banned for two weeks in 2019.
And because U.S. content creators are so popular in other countries, Pappas argues that "banning TikTok in the United States will result in a massive decrease in content available globally, which will decrease business and impact both our new users and core user base worldwide."
For TikTok, the purpose of releasing these painful stats is to convince the court that it's suffering real harm as a result of the Trump administration's actions. Earlier this week, a district court blocked the Commerce Department's ban of WeChat. Now, TikTok is seeking the same.
Last weekend, the Commerce Department delayed its ban on new TikTok downloads from U.S. app stores, citing "recent positive developments" — namely, the fact that President Trump signaled his approval of a deal that would have given Oracle and Walmart minority stakes in the company and would have given Oracle control of U.S. user data.
But the president and the companies involved have since cast doubt on that deal. On Monday, during an interview with "Fox & Friends," the president claimed that Oracle and Walmart would control the new company, TikTok Global. "And if we find that they don't have total control, then we're not going to approve the deal," he said. Meanwhile, TikTok and Oracle have given their own mixed signals, contradicting each other's statements on the future company's ownership structure.
TikTok has until mid-November to work out the specifics of the deal before the Commerce Department cuts the company off from crucial services like internet hosting in the U.S. But Pappas' court filing makes clear that even if a deal is reached, whoever ends up owning TikTok in the end will be inheriting a once ascendant company that's already lost a lot.
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