TikTok ban: 5 reasons why this analyst thinks nothing will happen before elections

Over the past week, a new legislative proposal to ban TikTok unless ByteDance divests its US operations has rapidly gained momentum on Capitol Hill. However, analysts at Wolfe Research are skeptical the bill will be enacted anytime soon.

The firm's view, provided in a note to clients this week, comes despite the bill being scheduled for a House floor vote tomorrow and the fact they "fully expect the House will pass the bill by large margins," and President Biden indicating he will sign it into law if it reaches his desk.

"If this bill were to be enacted, we take ByteDance at their word that they will refuse to divest (or be prevented from doing so by Beijing), meaning that this would become an effective ban unless blocked by courts," said Wolfe Research, which "would see this outcome as a clear positive for competitors in the social media and digital advertising space, including META, SNAP, and GOOGL."

However, they are skeptical for a number of reasons, including the Senate having a long track record of killing or indefinitely delaying bills despite strong bipartisan support in the House, including several important bills that have been a focus for investors in recent months.

In addition, Wolfe Research notes that key Senators in both parties are arguing for caution about rushing ahead with the bill, with Senate leadership signaling a slow process that will give multiple committees a chance to weigh in.

"The current legislative pileup and the electoral calendar make it hard to see when this bill could realistically get through the Senate," said the firm's analysts.

Meanwhile, they feel "Trump's apparent flip-flop on TikTok" late last week scrambles the politics of this issue in both parties, while the bill raises First Amendment concerns that will be a "problem both in the Senate and in litigation."

By Sam Boughedda

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