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Banning TikTok would be an early Christmas gift to Mark Zuckerberg

Grace Kay   

Banning TikTok would be an early Christmas gift to Mark Zuckerberg
  • A TikTok sale or US ban could be a boon for Mark Zuckerberg and Meta.
  • Instagram Reels could see a boost from a shift away from TikTok in the US, experts say.

Mark Zuckerberg and Meta are likely quietly celebrating the news that the US government is once again threatening to ban TikTok.

On Wednesday, the social media company confirmed that the Biden administration had given TikTok's owner ByteDance an ultimatum — sell your shares in the app or face a ban in the US. While a spokesperson for TikTok said divesting the video-sharing app from its Chinese owner would not address national security concerns, the company's leadership is actively discussing the possibility, Bloomberg reported, citing sources familiar with the matter.

It's not the first time US politicians have threatened to ban the app, but the Biden administration's rhetoric around the issue has appeared to "sharpen," Wedbush tech analyst Dan Ives told Insider. Ives said he places the odds of a spinoff or shutdown below 50% because the move could face similar legal issues that the Trump administration encountered in 2020.

Zuckerberg has much to gain from a TikTok ban. It would be like Christmas coming early for Meta, which is looking to boost engagement of its rival service, Instagram Reels. Meta's stock advanced as much as about 3% on Thursday morning.

"Any bad news or added scrutiny for TikTok is a significantly bullish sign for Zuckerberg and Facebook," Ives said. "They're just a natural beneficiary."

Even before US politicians began to publicly threaten a ban on TikTok, Zuckerberg "stoked Washington's fears about TikTok, according to a 2020 report from the Wall Street Journal, telling the White House at a dinner that Chinese companies should be scrutinized more heavily than Facebook. More recently, the Washington Post reported last year that Meta paid a Republican consulting firm to set up an anti-TikTok campaign.

At the time, a Meta spokesperson appeared to defend the effort. "We believe all platforms, including TikTok, should face a level of scrutiny consistent with their growing success," the spokesperson said.

'That time that was spent on TikTok will have to go somewhere'

TikTok has been a thorn in Facebook's side since it became wildly popular. Last year, Zuckerberg reportedly warned staff that the company faces "unprecedented" competition from the video-sharing app.

TikTok quickly became one of the most popular social media platforms in the US, boasting more than 1 billion active monthly users and capturing the attention of younger generations — a demographic Facebook and Instagram have struggled to attract, according to a 2022 study from the Pew Research Center.

In recent years, Zuckerberg has looked to Instagram Reels in an attempt to answer TikTok's popularity, even introducing a controversial redesign that inserted more Reels videos in people's feeds. The billionaire has said that the company plans to continue zeroing in on Reels as a growth driver.

But, Reels doesn't have TikTok's secret sauce, an algorithm designed to keep users hooked. Last year, the Wall Street Journal reported that Instagram users spend 17.6 million hours a day watching Reels, while people spend an astounding 197.8 million hours a day on TikTok.

Social media expert Matt Navarra told Insider Meta's algorithm is still in the early learning phases, but any disruption to TikTok could give the company some time to catch up.

"That time that was spent on TikTok will have to go somewhere," Navarra said. "It's reasonable to expect that these companies that have sort of created clones of the app would absorb at least some of that time."

In the short term, apps like Instagram Reels and YouTube Shorts could also see a boost. Navarra said social media creators are likely to look to further diversify the social media sites they use in the face of a potential ban.

TikTok CEO Shou Zi Chew is scheduled to testify before Congress on March 23 about the company's ties to China, as well as its handling of user data and child safety issues on the app.

Spokespeople for Meta and TikTok did not respond to a request for comment ahead of publication.

Even if TikTok were to spin off from ByteDance or agree to a sale, it could be a win for Zuckerberg. When the company was exploring the prospect of a sale in 2020, ByteDance said the sale would not include TikTok's algorithm, according to a report from the South China Morning Post.



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