Forced sale of TikTok causes uncertain times for local business

https://www.tiktok.com/@darkslidefilmlab/video/7080591541965802798

Emily Swift started Darkslide Photo Lab out of her Bridgeport photo studio in 2021 as part of her “pandemic pivot.” The career as a professional portrait and fashion photographer she had spent years building had stopped suddenly when Covid lockdowns swept the nation.

“Nobody really needed portraits during lockdown, so that led me to start considering what else I could do for money so that I didn’t have to sacrifice my studio during that sort of uncertainty,” Swift recalled.

“Film photography is specifically what got me into being a photographer in the first place, so I started to kind of revisit my roots and realized I could open a mail-in film lab.”

The lack of face-to-face interaction made it a safe business from a pandemic safety standpoint. But at first it wasn’t clear that there was sufficient demand for a new company serving the niche of people who were still using film cameras in 2021.

After all, in an era when people can shoot a video on their phone and share it around the world in seconds, who wants to wait for film to travel by mail and then be processed in a chemical bath for an hour?

Swift discovered there was a surprising amount of overlap. Just shy of fulfilling 500 orders in early 2022, a customer asked for a peek behind the scenes. She used TikTok to produce a short video that displayed the chemical baths, the drying process, and scanning that went into revealing the images, including a roll of film undeveloped since the 1980s. At the end she reveals the processed images both to the customer and the world before sending the originals home.

The video was a hit, racking up over 4.7 million views, and more than 458,000 likes on TikTok. Swift credits the viral video with allowing her to grow her Bridgeport-based business to employ not only herself but an assistant.

Swift even makes some money off of the accumulated views, but for her the real value is bringing in new orders from a deeply passionate but widely dispersed customer base.

“I did an audit on my last 250 orders and 160 of them came to us because of TikTok,” Swift said. “We average about 80 percent of our leads coming from TikTok.

The platform’s unique mix of automated content moderation and an algorithm which seems particularly good at putting her videos in front of receptive audiences have made it a cornerstone of her business, but it seems possible another pivot might be made necessary by government action.

The federal government has passed legislation which would force ByteDance, the Chinese company which owns TikTok, to sell the app to an American business or essentially ban it from US devices. The move has bipartisan support and backing from Joe Biden’s white house but is already facing legal challenges. ByteDance and a group of TikTok influencers are both filing suits in the US Court of Appeals for the District of Columbia. Oral arguments are set to begin in September.

Swift is worried about the outcome.

“A lot of our growth plans that we had out for 2024 have been made on the assumption that we have the reach that we currently have,” Swift explained. “It’s going to throw a wrench in our lead generation, all our plans. It’s going to make it very difficult to continue to run how we currently run.”

Swift noted that she spoke with US Representative for Connecticut District 4 Jim Himes, who seemed supportive. Himes ultimately voted against the bill in Congress, although he said the decision was motivated primarily by First Amendment concerns rather than business impacts.

Himes joined 50 Democrats and 15 Republicans in voting against the bill, which ultimately passed 352 to 65 on March 13.

“The idea that the federal government would decide that it knows better what media the American citizenry should have access to feels to me like what Iran and China and Venezuela do, not what the United States does,” Himes said. “But I’m aware of the fact it is a massive platform for political speech, and small businesses.”

Himes said that there were legitimate security concerns that the platform could someday be used to harvest user data or spread propaganda, but that those concerns “don’t override the first amendment.”

He also indicated that the bill’s bipartisan support seemed motivated by ByteDance’s position as a Chinese company. “If you want anything to pass in Congress today if you paint it as being ‘tough on China’ it starts with the benefit of the doubt.”

“I think the whole concept is flawed constitutionally but this never would have worked if it were a Swedish company.”

Professor Steven Michels, who is a professor of Political Science at Sacred Heart University described the move by the government as highly unusual, particularly in a highly partisan environment.

“It’s just very strange, I’ve been using it as a case study in my classes,” Michels said. “We’ve talked a lot about gridlock in government, partisanship, and then lo and behold you have something that both parties in Congress have been able to rally around despite it seemingly being pretty unpopular.”

Michels said that it seemed possible that the courts would prevent the forced sale, while there was a strong chance that practical concerns would preclude TikTok’s sale to a US entity.

“There is not a long list of companies that could afford it,” Michels said. Meta and Alphabet, the social media giants that own Instagram and Youtube respectively already have competing products. Additionally, Michels said, there could well be antitrust issues with either company adding TikTok to their portfolios.

“Microsoft and Apple probably don’t want it. Maybe Amazon because TikTok has been pivoting to commercial sales, but we’re looking at some early estimates that put TikTok’s value at 60 billion, 80 billion, it could be a hundred billion dollars, which is not chump change,” Michels said, adding that ByteDance has already indicated that it was uninterested in selling the algorithm that Swift credited with helping her business succeed.

“That determines what videos you watch which is really sort of the secret sauce and why the app has become so popular: because it’s really good at figuring out what you want.”

According to Michels, without the algorithm it is unlikely that major US companies will be interested in acquiring the branding and userbase alone.

The potential for a fractured user base has already cost Swift money, regardless of the ultimate outcome.

“It took us three full business days to download all of our videos that we have posted and back them up,” Swift said. “We did that so that if anything happened to the platform, we at least still had our content and can repost it elsewhere. We’re a small business. I have one employee and one intern. Between the three of us we’re turning a lot of rolls silver every month so to spend three full days on just back up our three years of content was just ridiculous.”