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Technology
25 January 2025

TikTok's Temporary Shutdown Sparks Brand Reassessment

The popular app's brush with ban raises legal concerns for advertisers and brands.

TikTok has once again become the talk of the town, but not without drama. The popular video-sharing platform recently faced significant challenges, including a brief shutdown amid legal controversies. On January 19, 2025, TikTok went dark for about 14 hours due to uncertainties stemming from its Chinese ownership and the U.S. government's divest-or-ban law. This law mandates TikTok's parent company, ByteDance, to divest its stake by the deadline or risk being banned entirely.

Prior to this controversial shutdown, TikTok had become increasingly profitable for brands, which saw their potential marketing strategies heavily impacted during the downtime. According to MikMak, which tracks e-commerce marketing, the app's ad traffic plummeted to zero during the outage but rebounded swiftly once operations resumed. On Thursday, traffic from TikTok ads climbed back up to 16% following the brief blackout.

"After the stoppage, at least 70% of the advertisers on our platform resumed ads," said Christina Freel, group director at Wpromote, pointedly highlighting the eagerness with which brands are returning. This was echoed by Rachel Tipograph, CEO of MikMak, who stated, “Several Fortune 1000 brand advertisers across food, beverage, personal care, and beauty have significantly increased their TikTok paid traffic”.

Despite the quick recovery, the uncertainty following the outage raised legitimate concerns among industry leaders. Harriet Riley, social strategy director at Pereira O'Dell, expressed her agency’s cautious approach to managing global brands’ TikTok accounts, asking, “Is a U.S. entity legally permitted to operate a TikTok account for a global brand?” These issues have become all the more pressing as the Biden administration passed on the responsibility of enforcing the law to President Trump, who has since delayed implementation.

"The statements issued today… have failed to provide the necessary clarity and assurance to the service providers…" TikTok representatives lamented. They argued their internal communications had indicated it was safe to operate the platform temporarily, even laying the groundwork to negotiate with regulators for continued service. This precarious position has left many wondering about TikTok's fate.

The practical implications of the shutdown have extended beyond ad spending to affect the entire ecosystem surrounding TikTok. Oracle's collaboration with TikTok to host its U.S. user data adds another layer of uncertainty, as the legal ramifications of retaining user accounts post-ban are still under investigation. Experts warn of potential penalties up to $850 billion for service providers failing to comply with the law. It raises eyebrows at how companies would navigate advertising on a platform perceived as non-compliant.

Meanwhile, TikTok has also reported increased engagement levels and excellent sales through its TikTok Shop immediately after the shutdown ended. Following the blackout, sales on January 19 reached $32 million—surpassing January 18’s revenue, which reached $31 million. Such stats underline the platform’s significant reach and potential profitability, even under tumultuous conditions.

Despite efforts to regain momentum, TikTok's uncertain future is weighing heavily on its use by brands and advertisers. Some companies are apprehensive about associational risks with advertising on TikTok, fearing backlash from consumers who may see the platform as problematic. Greg Song, assistant professor at the University of St. Thomas, noted, “Advertisers running campaigns on TikTok may face indirect liability… brands could face reputational fallout.”

Interestingly, TikTok's recent messaging, which has included thanking Trump for its revival, has sparked intrigue and skepticism among users. Riley summarized this sentiment, stating, "This is alienation for critically minded thinkers,” indicating the unpredictable emotional responses from the platform’s vast audience. Moving forward, advertisers and brands must not only reassess their strategies but also anticipate the effect of these legal constraints on their marketing efforts.

Even though TikTok continues to operate, it remains unavailable for download from the Apple and Google app stores due to legal uncertainties surrounding ByteDance's ownership. Ongoing national security concerns tied to the Chinese company have fueled calls for it to be sold to American interests. The path forward remains unclear as brands and users alike navigate the tempestuous waters of TikTok’s return.

The combination of legal uncertainties, reforming advertising strategies, and mounting reputational risks has pushed brands to rethink their digital presence strategically. Some agencies risk missing opportunities if they rely solely on TikTok, prompting them to diversify their outreach on other platforms.

Looking back, TikTok’s brief but impactful shutdown offers important lessons for brands about digital flexibility. With its vibrant community of creators and users, TikTok has weathered storms before. Now, it faces perhaps its greatest challenge yet: ensuring it can remain influential and operational within the complex web of U.S. legislation.