he likelihood of a US TikTok ban is higher than ever.
Last Thursday, the House of Representatives fast-tracked a bipartisan effort that could lead to Gen Z’s favorite app being banned in the US, and over the weekend, the House approved the bill.
The revised legislation ties TikTok’s fate to a foreign-aid package for Ukraine and Israel. The Senate passed its biggest procedural hurdle Tuesday afternoon in an 80-19 vote. The bill will get a final vote shortly, likely sending it to President Biden’s desk, where Biden said he’d sign it.
If it goes through, it would force TikTok’s Chinese parent, ByteDance, to separate from the app within a year or be banned in the States. This doesn’t necessarily mean a ban is imminent, but it means that the president will have a great deal of leverage to make the sale happen in the foreseeable future.
Supporters say the bill’s necessary to protect American data from the Chinese government. TikTok and other critics argue it would curb free-expression rights for 170M American TikTok users.
The Tik-ban saga’s long: US leaders have been trying to ban the addictive app since 2020. But now things are moving fast. Here are some companies that could be affected by a TikTok ban, based on how they mention the app in earnings transcripts and filings as either friend or foe.
META
$439.18
-11.01%
Today
SNAP
$10.94
-1.25%
Today
GOOG
$155.7
-3.35%
Today
Social media: Meta, Snap, and others
If the TikTok economy collapses, it’ll be a major win for rivals Meta, Google, and Snap, who each have TikTok copycats ready to step in (Reels, YouTube Shorts, and Spotlight). TikTok’s popularity among Americans has grown faster than any other social platform, and if it vanishes, its 170M US users would likely move to its rivals. TikTok’s often cited as a risk factor in social giants’ earnings:
Meta: “User growth and engagement are also impacted by a number of other factors, including competitive products and services, such as TikTok, that have reduced some users' engagement with our products and services.”
Snap: “We compete with other companies in every aspect of our business, particularly with companies that focus on mobile engagement and advertising. Many of these companies, such as Alphabet (including Google and YouTube), Apple, ByteDance (including TikTok), Meta (including Facebook, Instagram, Threads, and WhatsApp), Pinterest, and X (formerly Twitter), may have greater financial and human resources and, in some cases, larger user bases.”
ULTA
$407.6
-0.72%
Today
ELF
$174.3
-1.51%
Today
EL
$144.16
-2.17%
Today
COTY
$11.48
-1.89%
Today
Beauty: Elf, L’Oréal, Coty, Ulta, Clinique, and others
These days, beauty companies are heavily reliant on social media (especially TikTok) to gain viral traction for their products — from Clinique’s Black Honey Lipstick and Elf’s liquid filter foundation to Coty’s Kylie Cosmetics. If a ban happens, it could dent beauty marketing:
Elf: “We're one of the first beauty brands on TikTok, where we — our first hashtag challenge, I think had something like 3 billion views well before most people knew what TikTok was… So, our ability to go deep in a particular platform, be native in terms of how people are using it, is one of our key strengths.”
L’Oréal’s March report: “L’Oréal is no. 1 in influencer market share (+5.5 points compared to 2022 to the end of November 2023), boosted by strong leadership and increased TikTok.”
L’Oréal’s February earnings call: “There's like an appetite for beauty. And on TikTok is by far the number one category. And I think the number of video views have doubled in 2023. So, there is this appetite.”
Ulta: “In December, we surpassed 1 million followers on TikTok reinforcing our position as a social brand leader in beauty.”
Fuente de nota e imagen: https://sherwood.news/markets/tiktok-ban-affect-companies/