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TikTok, the social media app, may face a ban in the US after its CEO, Shou Zi Chew, testified before a House committee. During the hearing, both Democratic and Republican politicians expressed their concerns regarding China’s influence over TikTok and the communist regime’s ability to track user data via the app. Besides, the politicians also questioned the company’s efforts to curb harmful content, particularly for children who use the app.
While appearing before the House Energy and Commerce Committee, Chew said that TikTok is committed to ensuring user privacy, security, and safety protocols for teenagers. He also mentioned that the company has never furnished any user data to the Chinese Communist Party (CCP), nor has the CCP ever requested such information. Additionally, Chew spoke about TikTok’s “Project Texas,” which is aimed at bringing user data under the aegis of U.S.-based personnel and hosted on Oracle infrastructure by the end of 2023. However, Rep. Dan Crenshaw (R-Texas) pointed out that the CCP has the legal authority to compel ByteDance to turn over TikTok data.
The hearing turned out to be “a disaster moment that will likely catalyze more calls by lawmakers and the White House to look to ban TikTok within the U.S.,” Wedbush analyst Dan Ives wrote in a research note Thursday. If ByteDance does not sell its stake in the app, the future of TikTok “now in the hands of CFIUS with the next poker move.” The Committee on Foreign Investment in the U.S. (CFIUS) is an interagency group that has the authority to block foreign ownership of U.S. entities.
According to Angelo Zino, senior equity analyst CFRA Research, a sale of TikTok or a U.S. ban on the app is looking “increasingly likely in the next 12-18 months” after Chew’s congressional appearance. Emile El Nems, VP, senior credit officer for Moody’s Investors Service, stated that a U.S. ban on TikTok would benefit YouTube, Instagram, and Snap, “likely resulting in a higher revenue share of the total advertising wallet.” Although a ban has bipartisan support, “we still place only about a 35%-40% chance it happens, with ’24 being an election year and politicians needing to tread carefully to ban a platform that is extremely popular with voters (aged 18-45).”
However, a potential U.S. ban on TikTok would be a crushing blow to those who rely on the platform for income, and crucially, social connectivity, as Brooke Erin Duffy, associate professor of communication at Cornell University, said. Meanwhile, Snapchat, YouTube, and Instagram stand to benefit the most from the ban, according to analysts.
In conclusion, TikTok may face a ban in the US as politicians express their concerns regarding China’s influence over TikTok and its ability to track user data. Even though TikTok CEO Shou Zi Chew spoke about the company’s efforts to ensure user privacy, security, and safety protocols, the hearing has catalyzed more calls by lawmakers and the White House to look to ban TikTok within the U.S. A ban on TikTok would benefit YouTube, Instagram, and Snapchat by increasing their revenue share of the total advertising wallet. However, the proposed TikTok ban would be a crushing blow to those workers who rely upon the platform for income and crucially, social connectivity. The ban may happen in the next 12-18 months
By Megan Cole
