Benzinga - by Chris Katje, Benzinga Staff Writer.
A bill to push for TikTok parent company ByteDance to sell the company or face a ban passed the U.S. House of Representatives on Wednesday.
News of the potential sale or U.S. ban could have a huge impact on content creators and could also see rival social media platforms benefit.
What Happened: The House of Representatives voted in favor of a bill that will force TikTok parent to divest its holding in the social media company or face a ban in the U.S.
The bill now faces a vote in the Senate and if passed would head to President Joe Biden to be signed.
The bill would give ByteDance five months to divest the company or face a U.S. ban. The ban could see the app removed from mobile app stores from Apple Inc (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL).
Those who have already downloaded TikTok may still be able to use the app, but wouldn't be able to download updates or keep the app when buying new phones.
While it remains to be seen if the bill passes the Senate, a likely ByteDance appeal could delay the process. Depending on how everything plays out and whether another company buys TikTok, several social media rivals could stand to benefit from a ban or worry of a ban by the more the estimated 150 million U.S. TikTok users.
Companies like Meta Platforms (NASDAQ:META), which owns Instagram and Facebook, Alphabet's YouTube and Snap Inc (NYSE:SNAP) could benefit from the concerns over TikTok.
As reported by Benzinga last year, several members of Congress own stock in the social media companies mentioned above, which could prove to be a conflict of interest as they vote on the potential ban.
Related Link: 10 Best Stock Traders In Congress In 2023 (Spoiler: Nancy Pelosi Has Reentered The Chat)
Why It's Important: According to Quiver Quant, which tracks the trading activity of members of Congress, 16 U.S. representatives currently own Meta Platforms stock.
Of those 16 Congress members, 15 voted in favor of the bill to ban TikTok and one did not vote.
Several members of Congress have sold their positions or portions of their stakes in Meta Platforms in 2024, which comes as a potential ban has been talked about for years.
The recent buying activity tracked by Quiver Quant shows that Senator Markwayne Mullin (R-Okla.) bought $15,000 to $50,000 worth of META shares in January. Representative Jared Moskowitz (D-Fla.) bought $2,000 to $30,000 worth of META shares in December 2023.
Mullin took to Twitter Thursday to share his thoughts on the ban.
"The Chinese Community Party uses TikTok as a propaganda machine to steal user data and undermine America. While this bill is a step in the right direction, more needs to be done to end the #CCP's malign influence on our nation's youth," Mullin tweeted.
It will be interesting to see if any members of Congress have bought Meta shares or another social media company over the last month. Trades have to be disclosed within 45 days of the transaction.
A 2023 poll of Benzinga social media users asked "If TikTok is banned, which platform will you use more?"
The results were:
- Instagram: 38.3%
- Twitter: 26.3%
- Snapchat: 20.6%
- Facebook: 14.8%
While a ban could take months, content creators who have built a following on TikTok might start testing other platforms or focusing more on rival platforms to help offset any potential loss of income from TikTok. Investors will closely monitor user metrics for Meta Platforms, YouTube and Snap in coming quarterly reports.
Read Next: TikTok Ban Could Take Out ‘Billions Of Dollars’ Out Of Creators’ Pockets And Put Over 300K American Jobs ‘At Risk’, Says CEO
Image: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.