TikTok is planning to lay off a significant portion of its global workforce, specifically targeting its operations and marketing teams, according to multiple reports. This move will impact around 1,000 employees worldwide, with notifications starting late Wednesday night and continuing into Thursday morning.
TikTok layoffs - The immediate result of the U.S. Nationwide ban?
The layoffs mark an unusual cost-cutting measure for TikTok, which is owned by the Chinese company ByteDance. Typically, TikTok has opted for smaller, incremental adjustments rather than large-scale downsizing.
This decision comes less than a month after President Joe Biden signed a law mandating the sale of TikTok to a U.S.-based company to avoid a nationwide ban, a move that ByteDance has chosen to legally contest, which is unsurprising considering approximately 80% of TikTok’s $20 billion 2023 revenue came from the U.S. according to a March 18 report by the Financial Times.
Despite legal and political pressures, sources indicate that the layoffs are not directly related to the ongoing turmoil in the United States. Instead, they are part of a broader reorganization that has been delayed by recent turnover within TikTok’s marketing, trust and safety, and operations departments. "The layoffs are not related to the legal and political turmoil facing the company in the United States that could end in a potential nationwide ban of the TikTok app", a TikTok employee told CNN.
Australia's Stance on TikTok: A Contrast to the U.S. Approach
While the United States has taken a hardline stance on TikTok, mandating a change in ownership or facing a nationwide ban, Australia is charting its own course. The Albanese government has confirmed that there are no plans to ban TikTok from devices used by the Australian public. This decision stands in stark contrast to the U.S. House of Representatives' recent bill.
TikTok Australia welcomed the Prime Minister’s comments, highlighting the platform's importance to over 350,000 businesses and more than 8.5 million Australian users. Minister Bill Shorten acknowledged national security concerns but emphasized the government’s decision against a public ban, stressing the need to balance security with the social and business benefits TikTok provides. Prime Minister Albanese reiterated this cautious approach, stating that while national security is a priority, there is no current advice suggesting the need for a ban.
The Legal Tussle: TikTok and the U.S. Federal Government
On April 24th, President Biden signed a bill mandating that ByteDance sell TikTok to a U.S.-based owner within nine months or face a nationwide ban. ByteDance has the possibility of a three-month extension if satisfactory progress is shown. However, earlier this month, TikTok filed a lawsuit challenging the law, arguing that it violates the First Amendment rights of the company and the free speech rights of 170 million American users.
In their 67-page complaint, TikTok’s attorneys from Mayer Brown and Covington & Burling emphasized the unprecedented nature of the legislation, stating, “Congress has never before enacted a law like this. Congress has never before crafted a two-tiered speech regime with one set of rules for one named platform, and another set of rules for everyone else.”
This legal battle highlights the significant constitutional questions surrounding the proposed ban and ByteDance’s firm stance against divesting from TikTok.
ByteDance has consistently resisted selling TikTok or its core algorithm. However, the company has apparently compromised and is now considering alternative sales that exclude the algorithm.
The Trend and Precedence of Tech Layoffs
In 2023, TikTok had approximately 7,000 employees in the U.S., serving its 150 million users in the country. The Financial Times reported that around 80% of TikTok’s $20 billion revenue that year came from the U.S. market. Despite this substantial revenue, the company is implementing global layoffs to streamline operations and address internal challenges.
This latest round of layoffs follows a widespread trend of job cuts across the tech industry. Data from Layoffs.fyi, a layoff-tracking website, reveals that in the previous year, 1,187 tech companies collectively laid off 262,595 employees. In January alone, 91 tech companies terminated over 24,564 employees. Among these are major companies like Salesforce, Google, eBay, Amazon, Discord, Twitch, Frontdesk, Pixar, Riot Games, and Swiggy that have reduced their workforce. ByteDance itself reduced its workforce in November 2023, particularly within its gaming division, Nuverse.
As TikTok navigates these layoffs and the ongoing legal battle with the U.S. government, the platform's future remains uncertain. The company's strategic adjustments and ability to respond to external pressures will be critical in shaping its trajectory moving forward. The resolution of these challenges will determine how TikTok can maintain its growth and adapt to the rapidly evolving landscape of social media and regulatory scrutiny.
Miyuki
