TikTok made their businesses popular and lucrative, and now they fear a ban: 'I'll be screwed' – CNBC

Emily Swift has a lot riding on TikTok’s ability to stay accessible and legal in the U.S.

Swift, who spent her pre-Covid years as a Connecticut-based photographer, now runs a business called Darkslide Film Lab that scans and develops film by hand in a traditional black-and-white darkroom.

She also posts TikTok videos about the process. When one goes viral, client orders for Swift and her one part-time employee come pouring in — leading to upwards of $6,000 in extra revenue per month, according to documents reviewed by CNBC Make It.

Nearly five million businesses have TikTok accounts, according to the social media platform. Many are Covid-era side hustles that became full-time gigs after viral videos led to real-world popularity.

Some of those entrepreneurs are worried about losing it all.

TikTok is under fire from U.S. legislators who allege it poses a significant national security concern. The app, owned by Beijing-based tech giant ByteDance, stands accused of potentially funneling American consumer data to the Chinese government.

The company denies the allegation, and TikTok CEO Shou Zi Chew was grilled by American lawmakers over the issue in March. The acrimony could potentially lead to a nationwide prohibition of TikTok, following a Montana statewide ban signed into law last month.

Swift and some of her small-business compatriots say they feel caught in the crossfire. “I really hope that doesn’t happen, because I’ll be screwed,” Swift says.

Swift’s business is more than a woman and a phone camera: She and her one part-time employee process 30 to 60 rolls of camera film per day, sent in by customers, which requires practiced hands. That usually takes about six hours, leaving the remainder of the day for Swift to make videos.

Unable to book photography clients in March 2021, Swift used an unemployment check to launch Darkslide. She reached her first month of profitability much more quickly than she expected after her first viral video, a behind-the-scenes look at developing film from a vintage camera owned by a customer’s grandfather.

“I’ll never forget thinking, ‘Oh my god, all we had to do all this [whole] time was just film what we do every day,'” Swift says.

Swift says she’s sticking with the platform for the long haul — and she’s unsure where to turn if it gets banned.

“I can show up as myself, anytime, anywhere, any day [on TikTok] and my followers are going to accept that,” she says. “If I tried to do the same on Instagram, it’ll look almost a bit unprofessional to show up there like that, because what people are expecting is your best.”

For the most part, U.S. lawmakers’ concerns center around a Chinese intelligence law, which states that if the government requests data from “any organization or citizen” in the country on the basis of national security, the organization or citizen must provide it.

In the case of TikTok, that might include your email address, phone number, search and browsing history, phone contacts and photos, or videos you’ve uploaded on the app.

There’s no publicly known evidence of the Chinese government requesting data from TikTok, or TikTok providing it. It’s unclear whether TikTok would even be required to hand over data on U.S. consumers, which the company says it stores on U.S. servers.

The lack of clarity is exactly what American lawmakers say they find troubling.

Security concerns are an industry-wide problem, Chew argued in his congressional testimony. “The potential security, privacy, content manipulation concerns raised about TikTok are really not unique to us,” he said. “The same issues apply to other companies.”

To an extent, that’s true, says Aram Sinnreich, a professor and chair of American University’s Communication Studies division: Tech companies like Amazon, Alphabet and Meta do collect similar types of data, and use it to sell targeted advertising to their clients.

None of them, however, are nearly as likely to be forced to hand their data over to a foreign government, some American legislators say.

The likeliest outcome of Congress’ deliberations is either a nationwide ban — which would be met with First Amendment challenges and “years of litigation” — or some type of heavy regulation, Sinnreich says.

No regulatory proposals have gained significant momentum in Congress as yet.

To see what a TikTok ban or regulation would mean for small-business owners, look to Montana.

The state’s governor, Greg Gianforte, signed a bill last month that will prohibit Google and Apple’s app stores from offering the TikTok app, starting in January 2024.

TikTok responded with a federal lawsuit against Montana, for infringing on its First Amendment rights to freedom of speech. The app disputed Montana’s claim that TikTok is used for surveillance, saying the state has “nothing to support these allegations.”

Some small-business owners in Montana say the unfolding drama is a cautionary tale for their peers across the rest of the country.

“My first reaction was: This is silly, it’s never going happen. And then [Gianforte] signed [the bill],” says Taylor Reed, owner of Kalispell, Montana-based Reed Painting.

Reed launched his house painting business in April 2021, after the Covid pandemic slowed his subcontracting work. A year later, his company notched its first viral TikTok video, a before-and-after shot of a home makeover.

Online popularity helped Reed ink brand deals with companies like Sherwin Williams and Benjamin Moore, helping his business bring in roughly $17,000 from its TikTok presence last year, he says. That doesn’t include revenue from clients who learned about the startup through social media, he adds.

Reed says he’s betting on TikTok remaining available in Montana, referencing experts who’ve testified that Google and Apple can’t filter apps on a state-by-state basis.

But the situation is a reminder that small-business owners shouldn’t pigeonhole themselves into a single app, he says — even though TIkTok makes it relatively easy to reach customers organically.

“It’s a good wake-up call for me and other businesses to diversify, hop on other platforms and get better at marketing,” Reed says. “Moving forward from a business standpoint, it’s hard. You just have to adapt to it.”

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