Could TikTok really be banned in the US? Whether it’s likely or not, analysts at Wedbush are bracing for it.
The Biden administration demanded Wednesday that Chinese-owned TikTok be sold or spun off from its parent company ByteDance or face a US ban, according to reports.
The hugely popular short-form video-sharing app has long been the subject of security concerns going back to the Trump administration, with US consumer data potentially at risk.
“This is a very complex situation as ByteDance's ownership of TikTok and the golden jewel algorithm at the center of this security debate is a hot-button issue that would not necessarily be solved just by a spin-off or sale of the assets,” analysts wrote. “... We see a spin-off as very unlikely with a sale very complex with many restrictions likely on the docket.”
TikTok CEO Shou Zi Chew is expected to testify before Congress next week.
If a US company were to acquire TikTok, it would need approval from Chinese officials, according to reports.
Alternatively, if TikTok were banned in the US, the big winners would be Snapchat and Meta, which owns Instagram, the analysts said.
That’s setting aside the geopolitical fallout, though.
“This move would also significantly increase US/China tensions with the brewing Cold Tech War playing out across the software and chip ecosystem with investors watching with a close eye,” analysts said. “This is all a game of high stakes poker and clearly the Beltway is putting more pressure on ByteDance to strategically sell this key asset in a major move that could have significant ripple impacts.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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