TikTok

April 5, 2023. Piper Sandler Spring 2023 survey of Gen Z in U.S shows that TikTok declined as a favorite social media platform. TikTok's market share dropped to 37% from 38% in Fall 2022. It was followed by SNAP whose market share fell to 27% from 30% in Fall 2022. Third was Instagram whose market share grew to 23% from 20% in Fall 2022. The report notes that U.S teens are not much interested Virtual Reality as only 14% of those who own it(29%) use it weekly. Piper Sandler report surveyed 5,690 U.S. Teens.

On March 23, 2023, TikTok CEO Shou Zi Chew was a witnessed in a full committee congress hearing titled, “TikTok: How Congress Can Safeguard American Data Privacy and Protect Children from Online Harms." We noticed that the congress was bi-partisan in grilling the CEO with most questions being suggestions and statements. In fact, in several occassions, Mr. Chew wasn't given time to answer the questions. We believe that the hearing raises the odds of a U.S ban of TikTok given that;

(1)Shou was evasive in most of his answers.

(2)He technically confirmed that Bytedance employees have access to TikTok user data.

(3)The only defense he has is Project Texas, which majority of the congress believe won't solve the app's security issues. Project Texas is TikTok's division created to safeguard American user data. It will be based in U.S and will be overseen by Oracle. It will also use American employees. According to Mr. Chew, Project Texas has spent $1.5 billion since its formation two years ago.

(4)He contradicts himself when he said that CCP has no control over TikTok yet a statement from Spokesperson of China’s Commerce Ministry said otherwise. Also, he acknowledged that TikTok and Bytedance employees share similar stock option plans. He is also answerable to the CEO of Bytedance.

(5)That video showcasing how TikTok promotes suicide was scary and could increase the congress's desire to ban the app.

(6) A divestiture/sale will require continuous monitoring by cfius which will be costly to taxpayers and may not be appealing to shareholders (min 3:49:44-3:54:54).

(7)When Shou is asked whether Bytedance will be willing to divest TikTok, he said that ownership is not the issue here (Min 3:25:45-3:27:08).

March 16, 2023. The Biden administration led by the Committee on Foreign Investment in the U.S (Cfius) is now threatening to ban TikTok unless its owners sale their stakes in the video-sharing app. However, Cfius move against TikTok could face a bumpy road as the company would "argue that any forced sale would amount to a ban, because the Chinese government wouldn’t allow the TikTok algorithm to be sold along with it." Similarly, TikTok can argue that "the move would violate the Berman amendment, as well as the First Amendment."

On March 1 2023, the Deterring America’s Technological Adversaries(DATA) bill that would give Joe Biden the authority to ban TikTok was passed by the U.S. House Foreign Affairs Committee. CNBC notes that "legislation passed the Republican-controlled committee along party lines, with unanimous GOP support and no Democratic votes." Its next steps will be decided by House Republican leadership, which determines which bills get a vote on House Floor. However, despite this legislation, legislators will still have a long way to go before TikTok is ban. However, a US spin off of TikTok remains a possibility and will still benefit the likes of Meta as Needham analyst, Laura Martin notes that TikTok will be a weakened competitor and will experience a period of uncertainty.