- Bill could see US citizens banned from using Chinese video-sharing app
- Snap stock surges 9% on potential opportunity
- YouTube, Meta Reels, Pinterest and Roblox could all be net winners
Video-sharing phenomenon TikTok could face being banned in the US as tensions between Washington and Beijing heat up. A bill that would empower the US president to ban TikTok from all devices nationwide has advanced beyond committee for discussion by Congress.
Senate Intelligence Committee Chairman Mark Warner is set to unveil a bill on Tuesday (7 Mar) that the Biden administration is poised to support, according to reports from Bloomberg.
TIKTOK PAWN IN US/CHINA POWER STRUGGLE
Concerns have been sparked over possible data sharing with the Chinese government, and last week the White House told federal agencies that they have 30 days to remove TikTok from all federal government-issued devices.
Olivia Dalton, White House principal deputy press secretary, acknowledged worries about the social media app in a press briefing last week. ‘The Biden administration is focused on the challenge of certain countries, including China, seeking to leverage digital technologies and Americans’ data in ways that present unacceptable national security risks,’ Dalton said.
An outright ban might not materialise in the end, but if it does, rival social media video-sharing apps will have the chance to capture TikTok’s estimated 113 million US over-18s, and the sizeable marketing/advertising opportunity.
INVESTORS BET ON SNAP/YOUTUBE
So, which stocks would get the biggest boost from TikTok being put on the US taboo list? Investors are currently betting biggest on Snap (SNAP:NYSE) and YouTube, owned by Alphabet’s (GOOG:NASDAQ) Google.
Shares in Snap jumped more than 9% on 6 March US Senate Intelligence Committee Chairman Warner told Fox News that he plans to introduce a bill this week to ban Chinese technology. While the bill is not expected to name TikTok specifically, it would provide the legal tools needed to stop US citizens using the app.
Snap shares have been battered amid rising competition in short-form video platforms and a gloomy market for digital ad spending. While Wall Street analysts have been speculating that rivals such as YouTube or Meta Platforms’ (META:NASDAQ) Meta Reels could benefit more from a potential TikTok ban, Snap has underperformed peers. Since the end of 2021, Snap is down 75% compared with a drop of 45% for Meta and 34% for Alphabet.
According to Bloomberg Intelligence, if US lawmakers proceed with a TikTok ban, YouTube could gain the most user market share among social media peers due to its content-recommendation algorithm and revenue-sharing model. But Snap would also likely take advantage, as while Snap, Meta Reels, Pinterest (PINS:NASDAQ) and Roblox (RBLX:NYSE) may also experience increased engagement, YouTube may attract more creators.
