Biden Gets Power to Ban TikTok in the US after House Panel Approves Bill

The US House Foreign Affairs Committee voted to give President Joe Biden powers to ban apps like TikTok that are considered a national security threat.

Several US states have already banned TikTok on state devices amid growing scrutiny of the Chinese short video app. Meanwhile, lawmakers voted on partisan lines as Republicans pushed for a ban while Democrats opposed the legalization.

Representative Michael McCaul, the Republican chair of the committee who sponsored the bill, termed TikTok a “national security threat” and stressed that “it is time to act.”

He added, “Anyone with TikTok downloaded on their device has given the CCP (Communist Party of China) a backdoor to all their personal information. It’s a spy balloon into their phone.”

US House approves bill to authorize Biden to ban TikTok

The regulatory scrutiny for TikTok has been rising not only in the US but in many other countries. India banned the app in 2020 after fatal clashes between the two countries at their long and disputed borders.

The EU has also banned TikTok on state devices while leaders in the UK are also facing calls to ban the app over national security concerns.

Many meanwhile oppose the ban and say that it should be the choice of an individual. Michelle Donelan, who heads the UK’s new Department for Science, Innovation, and Technology is among those who are against a blanket ban on TikTok.

Democrats oppose the ban on TikTok

Representative Gregory Meeks, the leading Democrat on the committee is among those against a complete ban on TikTok. Meeks said, “The Republican instinct to ban things it fears, from books to speech, appears uninhibited.”

Meanwhile, he acknowledged concerns related to TikTok. Notably, many have been concerned about data security issues given TikTok’s Chinese ownership. While TikTok has said multiple times that it does not share data of US citizens with China, not many are convinced.

In the past also, TikTok has dismissed fears that it is a threat to US national security. After the vote on banning the app, it said, “A U.S. ban on TikTok is a ban on the export of American culture and values to the billion people who use our service worldwide.”

It added, “We’re disappointed to see this rushed piece of legislation move forward, despite its considerable negative impact on the free speech rights of millions of Americans who use and love TikTok.”

Snap’s revenue growth fell to all-time lows

TikTok is used by over 100 million Americans. The app’s popularity has however come at the cost of US companies like Facebook, Snap, and YouTube.

Snap posted revenues of $1.30 billion in the fourth quarter of 2022, the slowest pace of rise since the company went public in 2017. Snap’s revenue growth had previously stalled to an all-time low of 6% in Q3 2022. In the full year, the company’s revenues increased 12% to $4.6 billion.

To put that in perspective, Snap’s revenues rose 64.2% in 2021. In the preceding three years, the company’s revenues rose by over 40% every year. Competition from TikTok has been a major challenge for US social media companies, especially at a time when digital ad spending has many tepid due to the macroeconomic slowdown.

The company said that its “internal forecasts” suggest a revenue decline between 2-10% in the first quarter. Wall Street analysts were expecting the company’s Q1 2023 to be slightly higher YoY.

Meta Platforms reported first annual fall in revenues

Meta Platforms’ revenues also fell YoY in 2022 for the first time in history. The company’s user growth has also stalled. While Meta has doubled down on Reels to take on TikTok, the monetization is lower than it is on Stories and Feeds.

Last year, Meta Platforms also took a multi-billion dollar hit to its revenues due to the iPhone privacy rules that limit its targeting capabilities. The company is meanwhile investing in the metaverse to drive its long-term growth.

TikTok’s popularity has taken a toll on YouTube also. YouTube’s revenues fell YoY in both the third and fourth quarters of 2022. It has been looking to add more “Shorts” to the platform to take on ByteDance-owned company.

Ban on TikTok could benefit Snap, Meta, and YouTube

Laura Martin, an analyst at Needham believes that a ban on TikTok would be a positive for companies like Facebook, Snap, and TikTok. She added, “Implications are great for anybody that has been losing market share to TikTok.”

Here it is worth noting that China itself has strict laws regarding the data protection of its citizens. It forced DiDi to delist from the US markets a few months after the listing due to concerns over data security.

All said it remains to be seen whether Biden actually goes ahead with the ban despite the bill. However, TikTok adds yet another layer of complexity to the already fragile US-China relations.


Business Asia
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