TikTok Ban Nearly Certain, Says Analyst — But There Are 2 Ways Out

A TikTok ban in the U.S. has become an almost certainty, according to analysts. This is despite last-ditch efforts from the Chinese short-video app to salvage things.

Matter Of Time: Terming TikTok CEO Zi Chew’s testimony before Congress last week as a disaster, Wedbush analyst Daniel Ives said it is a matter of “when and not if” the app is banned in the U.S. The analyst puts the probability of a ban at 90%.

The Committee on Foreign Investment in the U.S., or CFIUS may formally come out with its recommendation for a ban after considering the Chinese company’s “Project Texas,” which would help secure the app’s U.S. consumer data in a secure Oracle-built facility, he said.

Way Forward: The U.S. ban will give ByteDance, the parent of TikTok, a defined timeline to sell or potentially spin-out strategic TikTok assets over a 3-6 month period, Ives said.

While the price tag could be eye-popping, TikTok's strategic value and the consumer platform will have a number of financial and tech strategic players interested, the analyst said.

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Private equity consortium and a number of tech stalwarts, including Microsoft Corp. MSFT, Apple, Inc. AAPL, Oracle Corp. ORCL and Alphabet Inc GOOG GOOGL could potentially be interested depending on the structure and price tag, he added.

Ives also raised the possibility of an IPO and potential spin-off but he expects the potential detachment from ByteDance to be a very complex process with much scrutiny from U.S. regulators.

“We would also expect aggressive legal challenges from ByteDance in the US which would delay any near-term 202 area code edicts from being implemented,” Ives said.

For Meta Platforms, Inc. META and Mark Zuckerberg as well as Snap, Inc. SNAP and Alphabet, Inc. GOOGL GOOG, “watching the TikTok hearing was like eating popcorn watching a good movie,” the analyst said.

The social media disruption from TikTok will clearly benefit Meta and in the eyes of the Street, he added.

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