Snap stock surges on report that Biden may ban TikTok

Shares in social media companies Snap and Meta jumped in after-hours trading on Wednesday after the Biden administration was reported to be considering banning TikTok in the U.S. unless Chinese tech giant ByteDance divests its stake.

Snap shares surged nearly 7% while Meta shares rose more than 2% after The Wall Street Journal reported that TikTok faces a possible ban in the U.S. if ByteDance fails to comply with the Biden Administration's proposition.

Both Snap and Meta face fierce competition for user attention from TikTok, and have introduced their own short-form video products to compete. In 2023, adults in the U.S. are predicted to spend an average of 55.8 minutes per day on TikTok, versus 30.8 minutes on Snapchat, 30.6 minutes on Meta-owned Instagram, and 30.2 minutes on Meta-owned Facebook, according to research from Insider Intelligence.

Last week, the White House voiced support for a recent Senate bill that would grant the Biden Administration the ability to ban TikTok in the U.S.

U.S. lawmakers have expressed concern that TikTok, by virtue of its Chinese ownership, poses a potential national security threat, with U.S. Senator Mark Warner, D-Va., recently saying that "This competition with China around who dominates technology domains, that really is where the nexus of national security lies going forward."

ByteDance has pushed backed against those allegations, and said in a statement on Wednesday, "If protecting national security is the objective, divestment doesn't solve the problem: a change in ownership would not impose any new restrictions on data flows or access."

The statement argued, "The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing."

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