Bill that could potentially ban TikTok in US passed: Will Meta be the ultimate winner?

The US House of Representatives overwhelmingly passed a bill on 13 March that would give TikTok's Chinese owner ByteDance about six months to divest the US assets of the app, or a face a ban.  The Bill was passed 352-65, with bipartisan support, according to Reuters. However, it faces a more uncertain path in the Senate, where some favour a different approach to regulating foreign-owned apps posting security concerns. 

Don't miss: TikTok facing potential ban in new bipartisan bill 

In response to the bill, TikTok urged its user in the US to call on Congress to stop a shutdown of the app. TikTok also called the bill a ban of the app. 

"This bill is an outright ban of TikTok, no matter how much the authors try to disguise it. This legislation will trample the First Amendment rights of 170 million Americans and deprive five million small businesses of a platform they rely on to grow and create jobs," said a TikTok spokesperson when MARKETING-INTERACTIVE reached out earlier last week. 

Currently, TikTok has over 170 million users on the app. If enacted, the app will no longer be available in app stores or accessible on US-based web hosting services. 

What does this mean for marketers?

Should the measure be passed and become law, marketers will likely have to resort to other short-form video apps. Some alternatives include Facebook and Instagram reels. 

According to recent Forrester data, 68% of US online Gen Z youths (ages 12–17) use it weekly — that’s more than any other social media platform surveyed (including YouTube, at 66%).

Mike Proulx, VP, research director at Forrester said that a ban on TikTok will hand an effective monopoly to Meta’s Reels — the company’s short-form video product. Forrester’s Youth Survey, 2023, saw an 11-point year-over-year increase in Instagram Reels usage: Nearly a third (30%) of US teens now use Reels at least weekly.

“Absent of TikTok, users will flock to Reels, period — leaving just YouTube Shorts as its sole competitor. That means Meta is the likely beneficiary of TikTok’s ad revenue in a TikTok-less world, as well,” he said.

Moreover, Forrester’s Marketing Survey 2024, showed that 67% of US B2C marketing decision-makers said their organisations were planing to increase investment in TikTok this year. “With little to no other options to reach Gen Z via short-form video, ad dollars will divert to Meta,” he added.

This rhetoric on TikTok ban in USA has been going on for some time now, added Nimesh Desai, CEO of VML Singapore. Whether politically or security driven, the implication is on the end users.  Desai added that advertisers aside, TikTok’s ban would have a deep impact on many within the creator community who use it for a livelihood.

“Meta is likely to pounce on the opportunity to push reels and we are likely to see the status quo being disrupted,” he said. Nonetheless, the silver lining, said Desai is that with any disruption the net outcome tends to be better as structures put in place tend to get re-evaluated. This could then mean better ROI for advertising dollars, better experiences and possibly this time better controls that will address security and harmful effects.

Disappearance is unlikely

Siddharth Surana, chief operating officer, Media360 Communications added that expectedly, some ad dollars will shift towards Meta, Snapchat, and YouTube Shorts for now, and creators will naturally diversify too.  “But the market might be overreacting – TikTok has a unique hold on users that's hard to replicate anywhere else,” he said.

Surana added that the House bill creates short-term uncertainty, especially for brands who rely heavily on TikTok, but given the size of the US market he reckons there will be a change of ownership, rather than a disappearance of the app.

Agreeing with him is Ranganathan Somanathan, co-founder of RSquared Global Ventures, who said that it's likely one of the tech giants might acquire and help it to decouple from China. “As long as the platform is operational in some form, it will remain a strong contender to get consumer attention and therefore ad dollars,” he added.

The measure is the latest in a series of moves in Washington to respond to U.S. National security concerns about China.

“Any technology—apps, software, language models—owned by foreign adversaries are unequivocal threats to our national security. We have every right to protect Americans’ constitutional rights, data privacy, and national security, and it’s only become clear over the last several years how dangerous these foreign-owned tech platforms truly are,” added Rep. Kt Cammack this week. 

Join us this coming 24 - 25 April for #Content360, a two-day extravaganza centered around four core thematic pillars: Explore with AI; Insight-powered strategies; Content as an experience; and embrace the future. Immerse yourself in learning to curate content with creativity, critical thinking, and confidence with us at Content360!

Related articles:
What are Singaporeans making of the questioning of TikTok CEO? 
TikTok reportedly still violating ID govt law despite GoTo partnership
TikTok Shop MY to increases commission fees for sellers