American Companies Brace for Chinese Retaliation After TikTok Ban

By Thea Felicity

Mar 17, 2024 09:44 AM EDT

People walk past an advertisement featuring the TikTok logo at a train station in Zhengzhou, in China's central Henan province on January 21, 2024. China on March 14, 2024 slammed the approval of a US bill that would ban TikTok unless it severs ties with its Chinese parent company, blasting Washington's "bandit" mentality and vowing Beijing would "take all necessary measures" to protect the interests of its companies overseas.
(Photo : Photo by GREG BAKER/AFP via Getty Images)

Earlier this week, VCPost broke the news of an "overwhelming" vote for TikTok ban bill. In an ultimatum, the US House Senate gave ByteDance, its parent company, a chance to sell the app instead to one of the interested American companies to curb the imposed ban.

Now, should ByteDance fail to sell TikTok, a ban will trigger a flurry of analysis and speculation among financial analysts and publicly traded companies. 

In an analysis by Forbes, one of the most pressing concerns revolves around the potential retaliation from the Chinese government against American companies with business interests in China. 

READ NEXT: House Votes Overwhelmingly to Ban TikTok in US Unless Chinese Parent Company ByteDance Sells Stake

How Will China Retaliate Against American Companies In Light of TikTok Ban?

Analysts express particular apprehension for companies such as Apple and Tesla, whose operations are heavily reliant on the Chinese market and could face reprisals from Beijing should a TikTok ban be enforced.

Oracle, TikTok's American data storage provider, could stand to experience a notable revenue loss if the ban materializes. However, analysts suggest that its overall valuation may remain relatively stable due to the robust growth of its data center business. 

This means that if TikTok were to be banned, it wouldn't just affect TikTok itself, its parent company or any American companies. It would also have consequences for the wider digital advertising industry. 

For one, TikTok generates significant revenue from advertising in the US, so if a ban were to disrupt this revenue stream, it could have implications for other companies that rely on digital advertising. 

This could lead to changes in how advertising dollars are spent and allocated across various platforms, potentially affecting the overall advertising ecosystem.

In response to concerns over Chinese government access to user data, the House of Representatives has taken proactive measures by passing a bill requiring ByteDance to divest from TikTok. 

This action means increasing regulatory pressure on tech companies linked to China, driven by concerns about national security and user privacy, as previously mentioned by a VCPost report.

Which American Company Will Benefit From TikTok Ban?

On the other hand, some companies benefit from the potential redistribution of TikTok's advertising revenue. 

Analysts have pointed to companies like Meta, Alphabet, and Spotify as potential winners in such a scenario, as they could capture a larger share of the digital advertising market currently dominated by TikTok. 

For context, ByteDance remains a formidable player in the tech industry at the moment. With a reported internal valuation of $268 billion, comparable to Netflix's but still smaller than Alphabet and Meta, the stakes are undeniably high.

READ MORE: Republican Megadonor Threatens to Cut Off Funds to GOP Lawmakers Unless They Support the TikTok Ban Bill

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