Wedbush analysts believe that while Microsoft Corp. (NASDAQ:MSFT) and Oracle Corp. (NYSE:ORCL) could be the "likely buyers" of social media platform TikTok, Meta Platforms Inc.'s (NASDAQ:META) Mark Zuckerberg and Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Sundar Pichai could emerge as the real winners.
What Happened: The TikTok ban bill, which is part of a larger package aimed at providing aid and bolstering national security measures in support of Ukraine, Israel, and Taiwan, has been passed by the U.S. House of Representatives.
The legislation proposes that TikTok, the widely popular video app, must be sold within a year or face a ban from U.S. app stores.
This bill is now racing for a signature in the Senate and, once signed by President Joe Biden, would become law, starting the clock on the TikTok ban or sale.
ByteDance Ltd., the parent company of TikTok, would have up to a year to divest TikTok in a forced sale or face a ban, as per the current legislation.
If ByteDance goes down the forced sale route, it is unlikely that TikTok would be sold with the algorithm, which would significantly change the value of the social media platform.
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While Microsoft and Oracle have expressed interest in the past to acquire TikTok, the real winners would be Zuckerberg and Pichai, according to Wedbush analysts.
"We would expect Meta to be the primary recipient of redistributed TikTok revenue should the company exit the U.S., with Google the likely number two beneficiary."
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In a note seen by Benzinga, Wedbush analysts underscore that 60% of the surveyed TikTok users said they'd use Meta's Facebook or Instagram, while 19% said they'd use YouTube.
"In our view, Meta would be the most likely candidate to benefit from this scenario given the strength of its Reels offering, which reached a $10B run rate in 3Q."
Why It Matters: The proposed legislation for a TikTok ban or forced sale has been a topic of concern for several months.
The bill could significantly impact the future of TikTok in the U.S., as it faces scrutiny in Congress over concerns that ByteDance, its Chinese parent company, could comply with the Chinese government in actions liable to undermine national security.
The bill has already faced rejection from Beijing and is risking adding yet another complication to the already unstable relationship between the world’s two largest economies.
Despite the potential benefits for other social media giants, the bill has raised concerns over the U.S. government’s excessive power over online expression and business operations, as highlighted by Former House Democrat Tulsi Gabbard.
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