Montana to become the first U.S. state to ban TikTok
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The next big tech battle is in the making after Montana Gov. Greg Gianforte signed a bill that would ban TikTok, the popular short video app used by 150M Americans. It's the country's first bill that outright bans TikTok for private citizens, and is set to go into effect in January 2024 - barring an injunction or defeat in the legal system. Proponents of the measure claim it will protect users against "Chinese Communist Party surveillance" and from pro-Beijing misinformation reaching the public, with TikTok being owned by China-based ByteDance (BDNCE).
How it'll work: The law will prohibit downloads of TikTok in the state by fining any "entity" - namely the app stores of Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL), or TikTok itself. $10,000 would be leveled per day for each time someone "is offered the ability" to access or download the app, though individual TikTok users would not be punished. It's unclear what would happen to Montanans who downloaded the app before the start of the statewide ban, or how authorities would outlaw usage through virtual private networks.
"Gianforte signed a bill that infringes on the First Amendment rights of the people of Montana by unlawfully banning TikTok," a TikTok spokeswoman said in a statement. "The bill's constitutionality will be decided by the courts."
Former President Donald Trump already sought to ban TikTok and force a sale of its U.S. business to an American company, and while a transaction with Oracle (ORCL) almost went through in 2020, the lawsuits piled up and an injunction was granted to prevent the app from being outlawed. The Biden administration later revoked the planned ban, ordering a national security review in its place, but Chinese tensions and data privacy concerns eventually swept both sides of the aisle and recently led to a notable House hearing. However, Congress has passed a bill to outlaw the app on federal devices, as well as a probe from CFIUS and even proposed legislation to ban the app in the U.S. (note that all American social media networks are blocked in China).
Go deeper: Many SA analysts have previously commented on how restrictions on TikTok could impact rivals like Instagram Reels (META), YouTube Shorts (GOOG) (GOOGL) and Snapchat Spotlight (SNAP). "This ban, if it materializes, is more about tomorrow than today for the likes of Meta Platforms," wrote Tradevestor, in an article entitled, What A TikTok Ban Could Mean. Others, like Bluesea Research, explore what competition or a ban would mean for Google (see Global Trends Provide A Massive Tailwind), as well as Julian Lin, Investing Group author of Best Of Breed Growth Stocks, on what effects recent developments are having on Snap (read Risks Are Rising But Stock Is Cheap).
Also check out Wall Street Breakfast's
prior survey on whether TikTok should and will eventually be restricted.
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