Analysts: Meta, Google and Snap would benefit most from TikTok ban

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• Growing political pressure on TikTok over espionage concerns
• Demands for a complete ban in the US are becoming louder
• Meta, Google and Snap stocks could benefit

Since that of EX-President donald trump After the open outbreak of the trade conflict between the USA and China, concerns grew in Washington that Chinese digital companies could pass on personal user data to authorities in China. TikTok in particular has been targeted since 2019. Using the smartphone app, which is particularly popular with teenagers, users can record short videos and share them over the Internet. However, contact and login data, location and shared images and videos are saved.

Concerns were therefore expressed in US politics because the Chinese operator ByteDance was bound by Chinese laws to support the secret services and the app could therefore be used as a gateway for Chinese espionage. This could mean that TikTok and other Chinese-owned platforms could pose a threat to national security, according to concerns in Washington.

TikTok boss meets with rejection in the US Congress

TikTok always rejected these suspicions. Nevertheless, TikTok boss Shou Zi Chew was even quoted before the US Congress at the end of March 2023. During the five-hour hearing, he was met with deep distrust and rejection.

The main topic of the survey was ownership. TikTok asserted that it is not a subsidiary of a Chinese company, since ByteDance is 60 percent owned by western investors and the company’s official headquarters are in the Cayman Islands in the Caribbean. Critics counter that the Chinese founders held 20 percent of the control thanks to higher voting rights and that ByteDance has a large headquarters in Beijing. The US government is therefore demanding that Chinese shareholders pull out, but this is rejected by Beijing.

Due to concerns about data espionage, pressure is growing in the US to ban TikTok and other apps entirely. TikTok has already been banned from US government cell phones. However, it will probably be months before a complete ban – if it comes to that at all – because the hurdles are quite high, since such a law would restrict freedom of expression.

With more than a billion users, TikTok is the only online platform that is also successful in the West that does not come from the USA. In the US alone, there are 150 million users who spend over 2.8 trillion minutes a year on the app, according to an estimate by research and brokerage firm Bernstein. TikTok expects sales of seven to eight billion US dollars in the USA in 2024.

US Internet companies would benefit

Should there actually be a complete US ban on TikTok, three US competitors would be “the big winners”. “Users will go where they are already active,” Bernstein analysts wrote in a note to clients, according to Investing.com. In particular, the Instagram Reels feature, “where users already watch most of the short videos outside of TikTok”, as well as Snapchat Spotlight, “which has the largest demographic overlap with TikTok,” they say, would likely benefit from a ban.

In terms of revenue, Meta, Google and Snap could all be expected to grow, as Bernstein expects ad spend to be redirected “where advertisers feel most comfortable and have the highest ROI [Return on Investment – Kapitalrendite, Anmerkung der Redaktion] “Meta with its “best-in-class ad product” is the most likely winner, but YouTube should also be among the beneficiaries because the platform has “the greatest overlap in the goals of brand campaigns”. A TikTok ban should therefore also be positive affect the stock prices of Meta, Google and Snap, according to analysts.

According to “Money”, Ali Mogharabi sees it very similarly: A legal TikTok ban could prompt content creators to look to other apps such as Instagram (owned by Facebook parent Meta), YouTube (owned by Google parent Alphabet) and Snapchat according to the analyst at financial information and analysis firm Morningstar. More content should then also attract more users, which in turn means more sales, which could ultimately also drive the share price up.

The analysts of the investment company Wedbush Securities also see these three US companies on the winning side: “For Meta and Zuckerberg as well as for Snapchat and Google, today’s hearing was like eating popcorn for a good movie,” quotes “MarketWatch” the Wedbush experts.

Editorial office finanzen.net

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