The U.S. House of Representatives has passed a bill giving ByteDance, TikTok’s Chinese owner, six months to sell its U.S. assets or be banned in that country. The bill still needs to pass the senate before being signed by President Biden. The Protecting Americans from Foreign Adversary Controlled Applications Act could also apply to apps owned by foreign adversaries such as Iran, Russia, North Korea and China.

Although the Canadian government has banned the installation of TikTok on government devices, it’s unknown what the next step will be if it is banned in the U.S. A spokesperson from Innovation, Science and Economic Development Canada says that the Government of Canada is closely following developments related to the Bill being proposed by US lawmakers. “The Investment Canada Act provides for the review of foreign investments of any size for national security concerns. The Government has not hesitated and will not hesitate to take action on transactions that would be injurious to Canada’s national security. The confidentiality provisions of the Investment Canada Act mean the Government cannot comment on reviews under the Act.”

The popular social media app is widely used by Canadian consumers as well as businesses and would be missed by the industry. Devon MacDonald, president of Cairns Oneil, says, “TikTok is a great property for advertisers with significant investments in media and content being made. While this is a U.S. ban, for Canadian advertisers who are part of a North American structure or follow a U.S. strategy it could trickle down here. It could also cause Canadian leaders to question their strategy and involvement on the platform.”

If advertisers here do exit the platform, MacDonald says it would result in a significant number of plans being rethought and budgets for influencers, content, and media being redistributed. “It would certainly pause their momentum and could really impact the growing TikTok commerce space in particular. This is a big lesson for brands and media planners alike. It’s important for brands to continually monitor platform activity for brand safety and to understand if that is where their content needs to be. Being over-invested in any platform makes changes tough for brands and consumers.”

Caroline Moul, president of PHD says social media is a key part of most marketing strategies today and in the future, and she doesn’t see that changing. “We have weathered boycotts and such in the past with other platforms that have not had long-term impact on the role or the investment for social. TikTok has been growing in importance as its audience has grown and the role of Influencer or creator has played in marketing strategies over recent years. The power that creator content and the influencer can have on brand perception and driving marketing performance is high. Compared to other platforms, organic reach on TikTok is significant, allowing brands to gain traction without relying solely on paid advertising. ”

In Vividata’s recent Digital Consumer Update, based on Fall 2023 data, Facebook is the top social platform for all Canadian adults, followed by Instagram, X/Twitter, and LinkedIn. TikTok is number five with 40% of adults, primarily those under the age of 35.

That mean those at the top have perhaps the most to gain, according to Simon Ross, VP Strategy & Insights at Horizon Media. He says the first thing that comes to his mind with the U.S. ban is that Facebook and Instagram are going to be the big winners if Tik Tok does get banned in Canada. “It’s going to be pretty disastrous if TikTok is to be banned, both for advertisers and for Canadians, since TikTok reaches 53% of the 18-plus Canadian audience, and it’s grown exponentially over the last few years. We all know it’s a great platform for being entertained and a platform where we know Canadians are going to be engaged by brands. People go to TikTok to be entertained, go to Instagram to be inspired and go to Facebook to connect with friends and family. So TikTok has a different role than the other platforms.”

Last June, Horizon Media released a Tipping Point analysis looking at whether Canadians trust TikTok. The research was conducted as a result of reports of misuse of children’s data and ByteDance’s admission that it has spied on reporters. Since it is responsible for client’s media investments, the agency wanted to assess the Canadian viewpoint on TikTok.

The study found that trust in TikTok is limited compared to other social platforms amongst all age groups. Older users perceive the app to be invasive and take more personal data than other social media applications. Residents in Ontario, Quebec, and Alberta have the lowest trust in the platform. The 18 to 34 age group was most uneasy on calling for a complete ban of TikTok. And there was little disagreement on the other end of the spectrum: Canadians 65-plus were most likely to say the app should not be banned.

Kate Dorofeeva, director of Digital Strategy at Involved Media Canada believes that the consequences of banning TikTok in the U.S. would have a ripple effect felt by Canadian advertisers and brands. “First off, Canada relies heavily on the US for its content. If TikTok’s most popular content creators can no longer use the platform, then Canada could see a massive decrease in user generated content. This would in turn impact usage and audience, especially the younger demographic. . . Second, we have all heard of the ‘Tik Tok made me buy’ phenomenon. A ban on TikTok would impact product discoverability in Canada.”

Michael Dobson, global Chief Digital Officer at Involved Media, says influencer activations have seen much higher reach and impression numbers within TikTok vs other platforms so businesses will need to reevaluate their KPIs to reflect this. “Additionally, while between 2018 and 2022, TikTok was the most downloaded app, Instagram was the lead in 2023. Therefore, it’s forecasted that most reallocations will happen to the Instagram platform, heavily driving costs up there. Overall, a ban on TikTok in the US would disrupt the digital advertising landscape, requiring advertisers to adapt their strategies to alternative platforms while navigating regulatory uncertainties and raise further scrutiny to other social media platforms.”