The TikTok ban took another step toward becoming a reality on Tuesday as the Senate pushed a foreign aid package forward. The package includes a stipulation that could ban TikTok if ByteDance, its Chinese owner, doesn’t divest it in a year. The House has already passed the bill, and President Biden signed it on Wednesday.
TikTok has been a lightning rod for controversy among legislators amid a tech cold war with China that has led the U.S. to block exports of advanced semiconductors and semiconductor equipment to China.
Some lawmakers believe that TikTok is sharing user data with Beijing and that it can be used as a vehicle for Chinese propaganda, though ByteDance has denied those allegations.
The implications of a TikTok ban or divestiture are vast, as the social media app has more than a billion users around the world and thousands of American businesses and influencers rely on TikTok to generate income. The regulatory pushback also has implications in the stock market as rival social media stocks have bounced in response to the likelihood of a ban passing Congress.
From DailyBubble’s perspective, two Magnificent Seven stocks that look poised to benefit from a TikTok ban are Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).
Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, stands to benefit greatly from a TikTok ban. TikTok’s rise has posed a significant challenge to Meta, diverting users and affecting advertising growth. Despite launching a competing product, Reels, Meta could see significant gains if TikTok is banned or limited.
Alphabet, primarily known for search advertising, also has a stake in the competition with TikTok through YouTube. While YouTube’s growth has not been as visibly impacted as Meta’s, it could still benefit from a TikTok ban as ad spending on TikTok becomes available for other platforms.
In DailyBubble’s opinion, investors should consider the potential impact of a TikTok ban on social media companies like Meta and Alphabet. While the legislation may take time to have a meaningful impact, the long-term implications could be significant. Investors should monitor the situation closely and be prepared for potential changes in the social media landscape.