A bill to ban TikTok has been advanced in the U.S. Congress that could affect crypto influencer revenue, as the firm’s parent company ByteDance eats into U.S. firms’ metaverse market share.
A House panel today advanced a new bill that would give the Biden Administration power to ban the short-form video-sharing platform TikTok even as U.S. firm Meta bleeds users of Instagram and Facebook to the platform.
TikTok Could be Used For Chinese Surveillance, Says Former FCC Head
“We’ve already seen thirty state governments, approximately, ban TikTok from state-owned government devices,” Ajit Pai, former U.S. Federal Communications Commission chairman, told CNBC earlier today.
“There’s a growing bipartisan recognition that TikTok is an app that’s ultimately subject to the control of the Chinese government in one form or another.”
Banning TikTok for U.S. users could push them toward products like YouTube “Shorts” and Instagram Reels, operated by U.S. firms.
Pai alleged in 2020 that Chinese telecoms firms Huawei and ZTE had ties with the Chinese Communist Party, warning U.S. carriers against using their equipment.
In a similar vein to the suspicions about TikTok, Pai said that the wireless equipment manufacturers were legally obliged to comply with requests from the Chinese secret police. The FCC banned the sale and import of equipment from Huawei and ZTE in Nov. 2022.
A ban could also come at a convenient time for ByteDance competitor Meta, whose share of the VR headset market at the center of its metaverse ambitions recently ceded ground to Pico, a company owned by ByteDance. In Q3 2022, Pico took 15% of the Meta’s VR Quest headset’s market share. Meta’s metaverse arm, Reality Labs, took a 17% revenue hit in Q4 2022 as European consumers warmed to Pico.
Meta is also battling declining engagement in its Horizon Worlds metaverse, as weekly user retention fell to 11% in Jan. 2023.
Headwinds Intensify for TikTok Influencers After Last Year’s Collapse
Bloomberg opinion columnist Lionel Laurent predicted in June 2022 that social media censorship would follow last year’s market rout. Following the collapse of TerraUSD and Celsius, crypto influencers’ revenue for new signups dropped more than 90%.
A TikTok U.S. ban could see a further decline in influencers’ user revenue, considering that the U.S. has the highest number of TikTok users at 113 million. An Aug. 2022 piece by the World Economic Forum suggested that Gen Z is about five times more likely to solicit financial advice from influencers.
TikTok Users Per Country | Source: Statista
According to the U.K.’s Financial Conduct Authority, these self-directed investors are more likely to invest in cryptocurrencies because of hype on social platforms such as TikTok. Investments are driven by influencers who pump crypto projects to generally young, risk-hungry investors tired of the current financial system.
TikTok crypto influencer Dennis Liu said in 2021 that the platform presented the highest opportunity for user growth. Another crypto influencer CryptoWendyO uses it to promote her “moon bag” strategy. The method pulls money out of a project after profit is earned and moves the funds to another project.
CryptoWendyO said she was convinced to join TikTok because of its ability to disseminate a large volume of information quickly. Well-known influencer BitBoy convinced CryptoWendyO to sample the platform’s potential.