In this illustrated photo taken on November 8, 2019, the TikTok logo is displayed on a smartphone standing above the US flag.
Dado Lubitsch | Reuters
Investor meta, snap U.S. digital media companies such as were looking for signs of recovery after a turbulent 2022. There was some unexpectedly optimistic news this week.
The U.S. House Foreign Relations Committee on Wednesday voted to push forward a bill that would give President Joe Biden the power to ban TikTok, a viral video app owned by China’s ByteDance that is stealing market share from social media stalwarts. bottom.
The meta was up 1% on Wednesday and the snap was unchanged.
Needham analyst Laura Martin said in an interview, “For someone who’s lost market share to TikTok, the impact is great. She’s got Snap, Meta’s Facebook, Google’s YouTube could be a ‘big beneficiary’ if the ban is finally done.
TikTok is experiencing rapid growth in the United States, and the impact was especially noticeable in 2022. The economic turmoil has dragged down the online advertising market.
By 2021, TikTok will have over 1 billion monthly users. August A Pew Research Center study found 67% of US teens use TikTok, and 16% say they use it almost all the time. According to Insider Intelligence, TikTok controls his 2.3% of the global digital advertising market, followed by Google (including YouTube), Facebook (including Instagram), Amazon and Alibaba.
However, TikTok’s parent company is located in China and is privately held, raising concerns about data privacy. Congress banned TikTok from government devices in December as part of a bipartisan spending bill, several governors removed the app from state computer networks (including public universities), and Senator Josh Hawley (R-Mo .) has newly called for a complete nationwide ban. in January.
“The U.S. ban on TikTok prohibits the export of American culture and values to the more than one billion people who use our services around the world,” a TikTok spokesperson said Wednesday. “Despite the considerable negative impact on the free speech rights of millions of Americans who use and love TikTok, we are thrilled to see this hastily enacted bill move forward. is disappointed.”
Even with the bill introduced to the committee this week, lawmakers have a long way to go before an actual ban is implemented. A version would have to pass, and this would be a challenge based on the opposition already expressed by some Democrats. Even if it does pass the Senate, Biden will have to decide whether to veto it or sign it.
TikTok is no stranger to challenges from U.S. authorities, as former President Donald Trump declared his intention to ban the app in a 2020 executive order.
ByteDance has struck a deal with Trump that includes a partnership with TikTok, considering the possibility of spinning off TikTok to keep the app from shutting down. Oracle and walmartboth become TikTok investors.
Those deals didn’t pan out, but Martin said it might get the app this time around. No, but “it’s not going to just disappear and shut down,” Martin said.
JMP analyst Andrew Boone says Meta is likely to benefit most if TikTok is banned in the US. Facebook has been investing in TikTok rival Reels. However, Reels has yet to establish a revenue model as effective as its core news feed.
Meta Platforms Inc. CEO Mark Zuckerberg (left) arrives at federal court in San Jose, California, USA, Tuesday, December 20, 2022.
David Paul Morris | Bloomberg | Bloomberg | Getty Images
Meta said in its fourth-quarter earnings call that Reels expects to be revenue neutral by the end of the year or early 2024.
In an interview, Boone said, “If TikTok were to go away, I think we’d see more consumption of Instagram Reels.” youtube shortcoming out in 2021, “will profit again.”
2022 for all three platforms was rough. Meta stock lost his two-thirds of value as the company experienced its third straight quarter of declining earnings. snap’As growth plummeted to single digits, the company’s stock plummeted 81% and the company chose not to provide forecasts for the second consecutive quarter. YouTube’s ad revenue fell short of analyst expectations in the fourth quarter, down 8% from the same period last year.
The move to copy TikTok has gone awry in many areas.
Adam Mosseri, CEO of Instagram, July shared a video Celebrities such as Kylie Jenner and Kim Kardashian have explained the changes to the social media platform after criticizing the app for “trying to be TikTok.”
A post urging the company to “restore Instagram to Instagram” has received more than 1.6 million likes and nearly 140,000 petition signatures. A month later, Mosseri announced plans to move from San Francisco to London to help Meta lure users away from TikTok.
— CNBC’s Christina Wilkie, Lauren Feiner, and Jonathan Vanian contributed to this report.
clock: TikTok May Be Banned