Key Points
- TikTok could be banned from the United States.
- The company that will benefit from this is Meta Platform Inc. (NASDAQ: META | META Price Prediction) and its Instagram product.
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Meta Platform Inc.’s (NASDAQ: META) Instagram competes with TikTok. More precisely, Instagram’s Threads make for a closer comparison. If any company benefits from a TikTok ban, it is Mark Zuckerberg’s.
In April, Congress voted for a TikTok ban. President Biden signed the law. TikTok’s parent, ByteDance, faced two options. One was to fight the ban in court. The other was to sell the social media service. ByteDance opted for the legal route—the U.S. The Court of Appeals for the District of Columbia Circuit supported the lower court’s decision. The judges wrote, “The First Amendment exists to protect free speech in the United States. Here the Government acted solely to protect that freedom from a foreign adversary nation and to limit that adversary’s ability to gather data on people in the United States,,”
ByteDance might still sell TikTok to a U.S. company, but it seems disinclined to do so.
The magnitude of TikTok’s ongoing threat to Instagram’s revenue is evident from the size of the Chinese-owned service. TikTok has one billion users worldwide and over 150 million in the United States, while Instagram has a U.S. user base of 170 million.
The stock market has already shown the potential benefit of a TikTok ban. After the court’s decision, Meta rose 2.4%. This is based on the assumption that TikTok will be banned from the U.S. market or that a new owner will manage it poorly.
What happens next? Likely, ByteDance will appeal the decision. If ByteDance loses, watch for another runup in Meta’s shares.
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