U.S. may soon ban TikTok: could Snap be the primary beneficiary?
Snap Inc (NYSE: SNAP) is in the green today on reports that TikTok – the world-renowned short video app may face a ban in the United States to resolve concerns of national security.
Here is Washington’s take on TikTok
Biden Administration has asked ByteDance, the parent company of TikTok based out of China, to relinquish its stake in the short-form video hosting service or else the popular app will be banned in the U.S., as per the Wall Street Journal.
Remember that TikTok has reiterated several times that it doesn’t store U.S. users’ data in China. Its spokesperson is also not convinced that a ban would resolve the said concerns.
If protecting national security is the objective, divestment doesn’t solve the problem: a change in ownership would not impose any new restrictions on data flows or access.
Also on Thursday, the United Kingdom followed in Washington’s footsteps and banned TikTok on government devices.
Snap Inc may not benefit the most
Rumours of such a ban started surfacing again earlier this month helping Snap stock that’s up about 10% for the month at writing.
Still, Evercore ISI’s head of internet research Mark Mahaney doesn’t expect it to be the most notable beneficiary if TikTok is indeed banned in the United States. On CNBC’s “Squawk Box”, he said:
There’s a huge amount of demographic overlap between Snap and TikTok but the use cases are different. Snap is primarily a communications tool whereas TikTok is much more of an entertainment tool.
YouTube Shorts and Instagram, Mahaney added, are much more likely to directly benefit if TikTok goes out of the equation. Both Google and Meta Platforms stocks are also trading meaningfully up on Thursday.
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