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TikTok Doesn't Have Just An India Problem

Image via Tony Liao on Unsplash

Yesterday we wrote about India’s Ministry of Electronics and IT blocking 59 apps developed by Chinese firms, including most notably TikTok.

The Indian government said the apps "are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order."

It appears India may have started a trend as the United States is now apparently "looking at" the possibility of banning social media apps developed by Chinese firms as well.

"We are taking this very seriously. We are certainly looking at it," U.S. Secretary of State Mike Pompeo said when asked if the U.S. should ban TikTok and other Chinese social media apps.

Pompeo compared the threat of Chinese social media apps to that of Chinese telecommunications companies Huawei and ZTE, saying "we have worked on this very issue for a long time."

"Whether it was the problems of having Huawei technology in your infrastructure we’ve gone all over the world and we’re making real progress getting that out. We declared ZTE a danger to American national security," Pompeo said. "With respect to Chinese apps on peoples' cellphones, the United States will get this one right too."

TikTok provided essentially the same response to the potential ban in the U.S. as it did to the ban in India.

"TikTok is led by an American CEO, with hundreds of employees and key leaders across safety, security, product, and public policy here in the U.S.," a TikTok spokesperson said. "We have no higher priority than promoting a safe and secure app experience for our users. We have never provided user data to the Chinese government, nor would we do so if asked."

As we detailed yesterday, TikTok's growth hinges on its ability to operate in countries with the largest number of internet users. India, which has the second-largest number of internet users globally, has accounted for 30% of the app's downloads, the most of any country.

The U.S., which has the third-largest number of internet users globally, has accounted for just over 8% of the app's downloads, the third-most of any country.

However, despite accounting for less of TikTok's downloads than India, the U.S. represents nearly 20% of lifetime user spending on the app, the second-most of any country behind China.

The news caused shares of Snapchat to jump nearly 6% yesterday, reaching their highest level since just after the company's IPO in February 2017.

If the U.S. follows through and bans TikTok, the recent private market valuation in excess of $100 billion may very well start to look a bit too generous. Furthermore, a ban of TikTok in the U.S. is likely to receive a warm reception from Facebook and Snapchat, who would gladly fill the void of the increasingly popular app.

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