Earlier this month, Montana became the first state in the U.S. to ban the popular short-form video app TikTok. And now the company has filed a lawsuit against the state.
“We believe that the Montana bill that was recently passed is simply unconstitutional,” TikTok CEO Shou Zi Chew said at the Qatar Economic Forum. “We very recently filed a lawsuit to challenge this in the courts, and we are confident that we will prevail.”
U.S. lawmakers have expressed concerns that the Chinese government may potentially access U.S. data through the app. But Chew denies that possibility.
“The Chinese government never asked us for U.S. users’ data, and we will not provide even if asked,” he said.
“We have built over the last two years something we call internally 'Project Texas',” Chew added. “What it really is is to ensure that American data is stored on American soil by an American company and overseen by American personnel.”
Concerns regarding TikTok’s potential impact on national security extend beyond the state level. Previously, TikTok said that the Biden administration wanted the app to be divested from its Chinese parent company or face a potential ban.
The possibility of further bans on TikTok poses a significant threat to its business. But it also presents opportunities for the app’s U.S. competitors. Here are three rival companies that could capitalize on the situation.
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As the parent company of Google, Alphabet was created in 2015 to give Google’s wild ideas some room to play. The company boasts a vast array of ventures, from dominating the search engine market to dabbling in self-driving cars and life sciences.
Alphabet also presents itself as a formidable competitor to TikTok. The company has introduced YouTube Shorts on its video-sharing platform, allowing users to create and share short-form videos directly competing with TikTok’s format.
According to Alphabet CEO Sundar Pichai, this new format has been gaining popularity.
“Last year, the number of channels that uploaded to Shorts daily grew over 80%,” he said during the company’s latest earnings conference call. “Those posting weekly on Shorts saw the majority of new channel subscribers coming from their Shorts posts.”
Commanding a market cap of over $1.5 trillion, Alphabet is already a tech behemoth. But the stock can still be volatile. Shares plunged 39% in 2022 but have surged 38% so far in 2023.
Facebook parent Meta Platforms is another mega-cap stock that took investors on a wild ride — shares of the social media behemoth tumbled 64% in 2022 but have already doubled in 2023.
While Meta’s main platform is renowned for its social networking features, the company has made notable efforts to challenge TikTok’s dominance in short-form video content. Meta introduced Reels on Instagram and Facebook, enabling users to create and share short videos with captivating effects and music.
During Meta’s first-quarter earnings call, CEO Mark Zuckerberg revealed that users are resharing Reels over 2 billion times every day.
“Reels are also increasing overall app engagement, and we believe that we're gaining share in short-form video too,” he added.
With a market cap of around $15.6 billion, Snap is considerably smaller than Meta and Alphabet. But its core product Snapchat is a social media platform that focuses on short-form video content, positioning it as a direct competitor to TikTok.
Snap initially gained popularity for its disappearing photo and video messages but has evolved into a feature-rich multimedia platform with augmented reality filters, chat functions and discoverable content.
In the first quarter, the company had 383 million daily active users, marking a 15% increase year over year. According to the latest investor presentation, Snapchat now reaches 90% of the 13- to 24-year-old population in over 20 countries.
But the stock hasn’t been a hot commodity. Shares of Snap are down about 30% over the last 12 months.
Stocks are volatile, and even mega-cap names like Meta and Alphabet are not immune to the market’s wild swings. If your goal is to earn a steady stream of passive income, you might want to look into reliable dividend plays — both in and outside the stock market.
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