Stocks of Snap soars as TikTok ban efforts are renewed in the US

Snap and Meta's shares jumped in after-hours trading on Wednesday after reports that the Biden administration is considering banning TikTok in the U.S. unless Chinese tech giant ByteDance divests its stake.

‍

There were gains of nearly 7% on Snap shares and more than 2% on Meta shares after Trade Algo reported that TikTok is facing a possible ban in the U.S. if ByteDance fails to comply with the Biden Administration's proposal.

‍

Meta and Snap compete fiercely with TikTok to attract users, and both have launched short-form video products. There is a forecast that adults in the U.S. will spend an average of 55.8 minutes per day on TikTok in 2023, versus 30.8 minutes on Snapchat, 30.6 minutes on the Meta-owned Instagram, and 30.2 minutes on the Meta-owned Facebook, according to research by Trade Algo.

‍

Earlier this week, the White House expressed its support for a Senate bill that would allow the Biden Administration to ban TikTok within the United States of America if the legislation is passed.

‍

The Chinese ownership of TikTok has raised concerns among U.S. lawmakers, who have expressed concern that it poses a potential threat to national security. In a recent statement by Senator Mark Warner of Virginia, he stated that "this competition between China and the United States over who dominates technology domains, I would say that this is where the nexus of national security lies going forward."

‍

Defending its claims, ByteDance said in a statement on Wednesday that divestment does not solve the problem since a change in ownership would not alter data flows or access restrictions.

‍

As argued in the statement, “Despite the concerns about national security, we believe that the best way to address them is through the transparent and U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, all of which we are already implementing.”