Canada has ordered TikTok to shut down its operations in the country. In a statement published on its website on Wednesday, the government said the decision was made in accordance with the Investment Canada Act, which allows the review of foreign investments that may be detrimental to national security. The government began a review in September of a proposal by TikTok to expand the app’s business in the country.
“The government is taking action to address the specific national security risks related to ByteDance Ltd.’s operations in Canada through the establishment of TikTok Technology Canada, Inc. The decision was based on the information and evidence collected over the course of the review and on the advice of Canada’s security and intelligence community and other government partners,” read the statement.
The government, however, added that it was not blocking Canadians’ access to the social network or their ability to create content. “The decision to use a social media application or platform is a personal choice. It is important for Canadians to adopt good cyber security practices and assess the possible risks of using social media platforms and applications, including how their information is likely to be protected, managed, used and shared by foreign actors, as well as to be aware of which country’s laws apply.”
As TikTok has become an important platform for both Canadian creators and advertisers, shutting down its business will surely impact the media industry. Though, at the moment, many in the industry are mostly looking for clarity.
Sonia Carreno, president of Interactive Advertising Bureau of Canada (IAB), says, “IAB Canada is calling on Minister Champagne to provide more information regarding the move to eliminate advertising jobs in Canada. The move calls into question the government’s judgement of where threat truly lies, and we are urgently requesting transparency. Advertisers will now be forced to re-direct their investment through foreign sales channels while hundreds of livelihoods in Canada are negatively impacted. This move sets a dangerous precedent for online advertising platforms in Canada and IAB Canada is deeply concerned about what this means for the stability and future of our sector.”
“TikTok Canada has made a notable impact on our market, contributing to leadership, creating jobs, and offering a platform for Canadian advertisers. While its closure will be felt across the sector, it underscores the importance of remaining committed to building a responsible, brand-safe digital ecosystem,” says Shannon Lewis, president of CMDC. “At the same time, we must ensure that Canadian media investments remain within our economy to support local growth. Shifting those investments, totalling $174M in 2024 to a U.S. based TikTok would be a disservice to our local market.”
Robin LeGassicke, chief transformation officer for Cairns Oneil, shares a similar sentiment and expectation of what’s to come. “TikTok is expected to appeal the decision, so the true outcome is yet to be determined. It would impact hundreds of jobs in Canada and could potentially push Canadian operations to be moved out of the U.S, which could be even more detrimental to any data controls and direct support needed within the Canadian marketplace.”
LeGassicke adds that, when counselling brands about TikTok and other social platforms, the agency encourages them to “evaluate their risk tolerance versus the impact the platform has on marketing performance. If a brand has been on the platform previously and looks to move away, evaluate and add in and test alternate platforms to engage that audience in an authentic way. Organic presence and ad spend do not necessarily need to be tied together.”
The move affects not only advertisers and brands, but also publishers and creators. Tristan Rahman, head of creator partnerships at Rally (Narcity Media Group’s creator marketing division), says that the shutdown disrupts the ecosystem that publishers rely on to capture audiences and maintain their operations, at a time when they are struggling with a lack of advertisers.
Rahman adds, “A domestic presence is essential to foster trust and transparency with TikTok and it’s integrity with Canadian audiences and creators alike. This decision places Canadian content creators at a disadvantage by limiting access to vital resources that would support their ability to thrive and compete. It also eliminates the potential for a creator fund here in Canada, which could have provided much-needed financial support for creators within our borders.”
Mo Dezyanian, president of media agency Empathy, says that for brands that advertise on TikTok, this means less access. “Likely, TikTok’s Canadian business will run out of the U.S, or a larger market. That means Canada will fall behind as ad budgets in our smaller market aren’t comparable with larger markets. This means less access to innovative solutions, maybe even loss of value due to exchange rates. In any case, Canadian businesses will need to pay to create foreign jobs in order to promote themselves to Canadians. Here is the truth, advertising on TikTok will not go away if Canadians are allowed to use it. It might just cost more now.”
For consumers, this means less protection, according to Dezyanian. “This move will allow TikTok to mine Canadian customer data without a local presence to be held accountable to Canadians,” he says.
A spokesperson for TikTok said the company will be challenging the order in court. “Shutting down TikTok’s Canadian offices and destroying hundreds of well-paying local jobs is not in anyone’s best interest, and today’s shutdown order will do just that,” said the spokesperson in a statement.
TikTok has two offices in Canada, one in Toronto and the other in Vancouver. The company’s employee base includes software engineers, ad sales and product managers. TikTok also runs a Creative Lab out of Canada, which is an in-house creative consultancy for agencies and key TikTok accounts.
Last year, Canada banned the TikTok app on government-provided devices, also claiming that it presented a high level of privacy and security risk. The social network also faces a possible ban in the U.S. In May, ByteDance filed a lawsuit in U.S. federal court to block a law signed by Biden that gives TikTok until Jan. 19 of next year to sell or face a ban. The White House has said it wants an end to Chinese ownership on national security grounds.
Canada and the US are not the only countries concerned about the impact of social media platforms, not just when it comes to national security but also the health of its citizens. For example, Australia has plans to ban children under the age of 16 from all social media platforms as a way to protect the mental health of young people. Australian Prime Minister Anthony Albanese said, “Social media is doing harm to our kids, and I’m calling time on it. I want parents to be able to say: ‘Sorry, mate, it’s against the law’.” The Australian government’s plan is to make social media companies responsible for enforcing the ban, and children and their parents would not be penalized if they ignore it.
With files from Patti Summerfield and Kelly Townsend
