March 15, 2024. by Marketnewsdata

The US House of Representatives has greenlit bill known as the “Protecting Americans from Foreign Adversary Controlled Applications Act,” which could spell an end to TikTok’s operations in the country due to apprehensions about data privacy and the role of China. The Act earned vigorous support with 352 favorable votes against 65. President Biden is among the bill’s proponents, which stipulates that ByteDance, TikTok’s Chinese parent company, must offload its interests in the business or face removal from US app marketplaces. The bill’s detractors include TikTok’s sizeable user base of 170 million in the US, alongside civil liberties organizations, who argue that such a ban would encroach on the principles of free speech. The bill is yet to pass the Senate along with the President’s approving signature to become law. Despite denying accusations concerning the sharing of sensitive information with the Chinese authorities, TikTok’s compelling nature has brought about worries regarding the potential adverse effects on young users.

Looking at this from a market perspective could present numerous implications for social media stocks. If TikTok faces a ban, other social media companies could potentially benefit from the void left in the digital landscape. Companies like Facebook, Twitter, Snapchat, and YouTube may see a surge in user numbers and engagement as TikTok’s user base seeks alternative platforms for content creation and consumption.

On the other hand, such a ban can raise alarm bells for American tech companies operating internationally. Countries may follow suit in instituting a similar ban on foreign-owned apps, which could impact the global market shares of US social media companies.

Furthermore, this move also highlights the ever-increasing concern over data privacy. As such, social media companies may face stricter regulations and enhanced scrutiny over their data management practices, possibly leading to higher operation costs and an impact on their earnings.

In summary, this development is a double-edged sword, with potential advantages and challenges for social media stocks. Investors in these stocks should stay tuned to these developments and adjust their strategies accordingly.