Access Alert | TikTok ban would create USD 431 billion opportunity for alternative social media platforms

Access Alert | TikTok ban would create USD 431 billion opportunity for alternative social media platforms

America may ban TikTok

Earlier this month, the Montana House of Representatives sent a bill that would ban TikTok to the Republican Governor for signature. The Bill would make it illegal to download TikTok in the state, while non-compliance could result in a fine of USD 10,000 per day for entities like Apple and Google’s app stores, which facilitate the downloading of TikTok. This development follows the Biden Administration’s orders that ByteDance (the owner of TikTok) sell the app or risk a potential nationwide ban.

Policymakers and citizens alike are concerned that Chinese-owned ByteDance (the company that owns TikTok) is sharing data on the increasingly popular app with the Chinese government. The FBI and Justice Department are investigating how ByteDance is using the app to surveil journalists.

In December 2019, the US military banned TikTok from government-issued mobile devices over concerns about the app’s data security and potential ties to the Chinese government. Then, in February 2023, the US government barred TikTok from being downloaded on government devices. TikTok is fighting legislation in Congress that would grant the Biden Administration the authority to outlaw specific foreign-owned technologies. TikTok also pledges to store user data from American users on American servers and maintains that no American data has ever been shared with the Chinese government.

Global concerns around security – bans and restrictions

TikTok has faced scrutiny and been banned or restricted in several countries, including India and Pakistan, which banned the app in 2020, and Bangladesh and Iran, which banned it in 2021 over ‘immoral and indecent’ content.

Several governments have expressed concerns about TikTok, advising their staff not to use the app –  Australia was one of the first countries to warn public officials about the app in 2019. India followed suit in 2020, and in 2021, the UK and Canada implemented similar actions.

USD 431 billion opportunity for American-owned platforms

Analysts estimate that if the US outlaws TikTok, American social media platforms could increase in market value by USD 431 billion. Snap (Snapchat, 50% gain predicted), Meta (Instagram Reels, 30% gain predicted), and Alphabet (Youtube, 20% gain predicted) would be the ‘clear beneficiaries’ of a TikTok ban.[1] Following this action in India, YouTube Shorts and Instagram Reels both experienced a meteoric rise in popularity, while new apps that aimed to imitate TikTok’s format also attracted millions of users. Furthermore, any ban would have a significant impact on the technology sector and raise US-China tension.

How can we help you?

If you would like to know more about the strategic relevance of this development and the work we’re undertaking in this area, please contact [email protected].

[1] Predictions are based on price-to-earnings multiple data for companies who benefitted from similar previous bans in China and India as a guide.

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