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TikTok CEO's Congress Showdown: How Other Social Media Stocks React
TikTok’s CEO, Shou Chew spoke before Congress about the social media platform’s data and safety as the US considers a ban. How does this hearing impact other social media stocks?
TikTok’s CEO, Shou Chew, testified before the members of Congress about data and safety on the social media platform as the US considers a ban on the app on Thursday, March 23, 2023. An intense and extraordinary 5-hour hearing featured the social media platform’s alleged ties to China’s government, harmful content for teens, and addiction issues.
Throughout the hearing, Chew repeatedly denied lawmakers’ arguments that TikTok’s Beijing-based parent company ByteDance could access American user data.
In the United States, TikTok is used by over 150 million people, but it is facing a possible ban. There has been an intense wave of scrutiny over the App by government officials concerned that Chinese government officials may gain access to user data, and the App may be weaponized by China in order to spread misinformation.
“ByteDance is not an agent of China or any other country," said the CEO in his opening testimony.
In his ongoing arguments, Shou Zi Chew emphasizes that there is no evidence that TikTok shared U.S. user data with Chinese authorities. Nonetheless, policymakers fear that the Chinese government might force the company to comply.
“Our approach has been to work transparently and cooperatively with the U.S. government and Oracle to design robust solutions to address concerns about TikTok’s heritage.” The CEO further justified. However, McMorris Rodgers condemned the rebuttal as “We do not trust that TikTok will ever embrace American values,”
Rep. Dan Crenshaw: ‘If the CCP tells ByteDance to turn over all data that TikTok has collected inside the U.S. … do they have to do so, according to Chinese law?’
Rep. Dan Crenshaw: ‘If the CCP tells ByteDance to turn over all data that TikTok has collected inside the U.S. … do they have to do so, according to Chinese law?’— NowThis (@nowthisnews) March 23, 2023
TikTok CEO Shou Zi Chew: ‘Congressman, first, I’m Singaporean.’ pic.twitter.com/qKzlpnTcwG
Congress keeps grilling the CEO with direct questions that link with absurd answers.
Rep. Richard Hudson (R-NC) asks TikTok CEO Shou Chew: “Does TikTok access the home WiFi network?”
As the app needs to be connected to the internet, Chew explained that they have to do so. Just like any other app. “It could be technical.”
Other questions such as ‘How do you determine what age [users] are?’
Chew: ‘ask the user what age they are.’.
Chew attempted to soothe lawmakers’ concerns by pointing to TikTok’s Project Texas, which pushes all U.S. user data through Oracle’s servers rather than its own systems. The effort, which TikTok says cost $1.5B is meant to create a sort of firewall between U.S. users’ data and the Chinese government.
As part of TikTok’s legacy data removal, Shou Zi Chew says that legacy U.S. data from Virginia and Singapore servers are being deleted: “We expect that to be complete this year. When that is done, all protected U.S. data will be under the protection of U.S. law.”
“The bottom line is this – American data is stored on American soil by an American company overseen by American personnel.” Shou Zi Chew further emphasis.
TikTok CEO testifies amid growing calls to ban app:— MSNBC (@MSNBC) March 23, 2023
“The bottom line is this – American data is stored on American soil by an American company overseen by American personnel.” pic.twitter.com/GpA12JLRVc
How does the user react?
A group of TikTok creators has gathered in Washington, DC to endorse the platform as a tool that has helped their communities become inspired and supportive. In addition, it has provided them with the opportunity to make a living.
Despite the hearing, Congressman Jamaal Bowman denounced the efforts to ban TikTok in the U.S. “TikTok is a space where creators share their ideas with the rest of the country and the world. Why do we need to ban a platform that 150 million Americans use?”
In a statement after the hearing, a TikTok spokesperson criticized the representatives, saying: “Shou came prepared to answer questions from Congress, but, unfortunately, the day was dominated by political grandstanding that failed to acknowledge the real solutions already underway through Project Texas or productively address industry-wide issues of youth safety.”
TikTok's possible solution.
They are committed to protecting 150 million Americans on TikTok.
A safe environment for teenagers.
Firewall protecting US users’ data
The app will remain a place for free expression and ‘will not be controlled or manipulated by any government’.
Market Reaction towards other social media platforms.
Meta’s share price is currently trading at $204.28, up 2.24% with an additional 0.44% after hours.The company that house for Facebook and Instagram had been increasing with YTD rise of 63.76%.
The same scenario replicates with Snap Inc as the social media stock currently trading at $11.39, up 3.08%, with an additional 0.88% increase after-hours. Since March 13, 2023, the share price has been rising steadily. In YTD progression, the share increased by 28.70%.
Vimeo, another online video and streaming site increased by 2.87% with 0.84% after hours. With a YTD upside of 2.87%, the company has fluctuated heavily, but remains calm.
The popular video app, Youtube, is owned by Google, the company that recently implemented a new feature called Youtube Shorts, which is similar to the interface of TikTok. Currently, the company’s shares are trading at $105.60, up 2.16% in the last 24 hours. Like other social media stocks, Google’s stock has been increasing in value since the start of the year, 18.49% in this case.
It's important that these big tech companies be held accountable and remain transparent. However, they are being grilled by people who have no clue about technology. TikTok's debate is far from over.
The key takeaways/market update is a series by AxeHedge, which serves as an initiative to bring compact and informative In/Visible Talks recaps/takeaways on leading brands and investment events happening around the globe.
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