TikTok ban: YouTube, Snap to benefit most from young user influx
The US House of Representatives passed a bill that could potentially ban TikTok operations in the US if the social media app's parent company ByteDance does not divest from it. House membership voted 352 to 65 for this legislation in a bipartisan push. The Senate has yet to vote, but many leading voices have communicated a mixed consensus on an outright TikTok ban.
Yahoo Finance Senior Columnist Rick Newman weighs in on the House vote and former President Trump's new sentiments surrounding a TikTok ban.
Jefferies Senior Analyst Brent Thill also joins the Live show to discuss market share opportunities for platforms like YouTube — which is owned by Alphabet (GOOG, GOOGL) — and Snap Inc. (SNAP) if TikTok is forced pull away from US consumers.
"Certainly, Snap could see this as well if you look at most of the younger audience, obviously... they go back and forth between Snap on the map and then some of the videos on TikTok. So, those are all... potential beneficiaries," Thill says.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
- There has been some analyst calls out recently over the last couple of days saying Alphabet along with Meta remains one of the key beneficiaries to that. So let's talk about this breaking news that we are getting, that US House voting 352 to 65 to pass that bill that could lead to an all out ban on TikTok. Rick Newman back on set with us. Rick, we started the day with you. And here we are ending the show with you. So now the big question is, what this is going-- how it's all going to play out in the Senate.
RICK NEWMAN: It's going to be much harder to pass the Senate than it is the House. And I think part of the reason that it got through the House is this just came from nowhere. I mean, what we know, we're learning now, is that there has been an effort underway by some people who really think this is an important national security situation in conjunction with the Obama-- excuse me, the Biden administration and the Justice Department kind of behind the scenes to sort of mount this sneak attack to get this bill passed in the House.
So TikTok and its army of influencers are now aware that there's a problem and there's a real likelihood that this could go somewhere. So I think we're going to see more opposition mounting now that this will hit the Senate. And you know, the outlook for this actually passing the Senate is 50/50 at best. And I think the longer this goes on, the lower those odds will become. I mean, let's keep, just to put this in perspective, there is a set of tax provisions that passed the House, I think, two months ago at the beginning of 2024. And that was unusual, because it was bipartisan. There was something Republicans wanted and something Democrats wanted. That went to the Senate. And it's just stuck there right now.
So this could-- the same thing could happen here. And it probably also is a factor, what Donald Trump actually does, because until just a few days ago, he was in favor of this bill to ban or either force the sale of TikTok. And now he has flipped within the last few days after some-- this guy who owns part-- this billionaire who owns part of TikTok whispered in his ear that this was a bad idea. So is Trump actually going to mount his own campaign against Republicans in the Senate? And if he does, is that going to be influential? My guess is, I don't know if he will. But I think if Trump decides he wants to go to the mat on this, that could be another factor that slows this down in the Senate.
- And you have to wonder the appetite to speed it up, since we are in an election year, whether or not that's a factor here. We have another guest here with us to discuss this developing news here. We've got [? Jeffrey ?] senior analyst Brent Thill with us. And Brent, thank you so much for coming on. I'm curious about the potential impact here to some of the other big tech names, particularly Alphabet, which we're seeing push into the green after this news. Do you think that because of Google's massive streaming platform and YouTube, is that a potential beneficiary to any potential TikTok ban?
BRENT THILL: Yeah I mean, if you look at my own kids, they're split between TikTok and YouTube. So certainly, if it was shut down, the place you're going to go is probably on YouTube. And the advertisers would flip over so Google could be a beneficiary. Obviously, Meta and Pinterest also could see more time spent on the platform if that happened. So yeah, certainly, there's going to be beneficiaries under the scenario that it does get banned, from that side. I mean, certainly Snap could see this as well. If you look at most of the younger audiences, obviously on-- they go back and forth between Snap on the map and then some of the videos on TikTok. So those are all potential beneficiaries. Again, at the low end, it's probably more of a Snap. And at the higher end, it'd probably be more of a Google beneficiary.
- From an analyst perspective, when you take a look at the vote that was today, yes, we have to wait to see how this all plays out in the Senate. But how material of an impact is this going to have on a name like Snap? Obviously, you're saying it's probably best-positioned here. But in terms of the bottom line, what does that more specifically look like?
BRENT THILL: Yeah. I mean, it's hard to say right now, because we don't know exactly what's going to happen. But if you think about what's happened right now, most advertiser budgets have shifted to Meta. So Meta has gained 30%, 40%, 50% of the incremental budgets. And it's because the quality of the product, and they lap the iOS privacy change you've seen. In all of our advertising work, the ROI on Meta is off the charts. So if you just look kind of in isolation of what's happening away from this, Meta has been a huge, the biggest share gainer, and is one of the fastest growers. And as they've said, they have 3 billion people on the planet. They have multiple ways to engage with their platform across the different products.
So we continue to believe that Meta has the best fundamental position in social. Snap, on the other hand, has really done a terrible job. I mean, again, when you talk to the younger audience that is on this platform, they use it for the map to see where their friends are. And they use it for a messaging system, because they don't want their parents to see what they're sending. But they're not influenced by the advertisements. They're not influenced by the shows. They're not influenced by anything else on the platform. And so that's why you're continuing to see, they've got users, but they don't have the advertiser activity--
- Right.
BRENT THILL: --that Meta has. And so they've got to fix that. Now, if TikTok got banned, could theoretically, this really help Snap. And could this be a windfall, you know, for them to-- but again, I think they have to fix their own house--
- Sure.
BRENT THILL: --on some of the issues before that really improves.
- Right. And Brent, we have to mention, of course, that this still does have to go to Senate, where it is likely to stall, given the wide variety of factors that we've talked about here. Particularly, one of them being this election year, so a lot of policy on the table there. Brent Thill, thank you so much for joining us to break down that breaking news. And our thanks to Rick Newman, who had to go cover this developing news. So he had to leave the studio here for us. But we appreciate him as always.
