Social media platform TikTok posted self-funded research that claims small businesses generated $14.7 billion in combined revenue through its platform in 2023. The report arrived on the same day a bill that would require the company to enter a buyout with an American firm passed through the U.S. House with overwhelming bipartisan support.
The study was conducted in mid-2023 before the release of the platform’s e-commerce system, TikTok Shop, which officially launched last September. Oxford Economics, the consultancy firm behind the report, based its findings on a survey of 7,500 TikTok users in the U.S., 1,050 small business owners with TikTok accounts, and internal data provided by the company.
The research concluded that the company contributed $24.2 billion to U.S. gross domestic product last year and helped small business owners generate $14.7 billion in revenue. Through sales increases attributable to their use of TikTok, small companies paid an extra $5.3 billion in taxes, while the platform’s U.S. operations provided an additional $2 billion. Among the small business owners contacted by Oxford Economics, 39% said the platform was critical to their operations, and 69% attributed increased sales to TikTok.
On Wednesday, coinciding with the report’s publishing, the U.S. House overwhelmingly voted in favor of a bill that could outlaw TikTok were it to pass in the Senate. While lawmakers largely based their decisions on security concerns associated with the company’s relationship with China, the law is not an outright ban as it would give the platform the option of staying in the U.S. if it sells itself to an American company. It is not clear whether the bill will receive the same bipartisan support in the Senate.
Small business owners have utilized TikTok both as a means to engage with consumers and as a way to market their brands. While its impact on the economy was not analyzed due to the timing of the study, TikTok Shop has also offered companies a way to sell their products directly through the app. The claim that the platform has helped some entrepreneurs achieve success is hardly in dispute.
That being said, the transparency of corporate-paid research is rarely without fault. An analysis published by the Yale School of Medicine found that industry-sponsored studies were 3.6 times more likely to produce results beneficial to the client than independent research. “Industry sponsorship has the potential to distort the scientific process in a very disturbing way,” remarked Cary P. Gross, M.D., who headed the 2003 study. “I am in no way against industry sponsorship. But our results show that we need very close oversight.”
While the fact that TikTok has contributed a handsome amount to the U.S. economy and small business sector is undeniable, the financial impact this study attributes to the platform is worthy of re-examination.
For example, according to Oxford Economics, there are seven million businesses that use the company’s platform. No clarification is provided on the size of these businesses; however, figures from the U.S. Chamber of Commerce indicate that there are between 32 and 34 million companies in the U.S., the vast majority of which (99.9%) qualify as small businesses. We can thus safely assume that most of the seven million accounts cited by Oxford Economics are not operated by mid or large-size firms. That means that the 1,000 small business users upon whom the study based its $14.7 billion revenue estimate accounted for (approximately) one-hundredth of a percent of the total number of small business users.
That conclusion is, admittedly, a guess. Statisticians have certainly obtained accurate results from even smaller sample groups, and no amount of analysis could prove that Oxford Economics failed to uphold standards of academic integrity in its study. At the same time, there is no guilt in questioning the validity of TikTok’s self-funded research, regardless of whether one agrees with the House vote or not.
