Meta Platforms, the parent company of Facebook, witnessed its shares reach an all-time high on Friday following a U.S. appeals court decision to uphold a law that mandates ByteDance, the China-based owner of TikTok, to divest its popular short-video app by early next year or face a ban.
This ruling, outlined in a court order issued by the United States Court of Appeals, requires ByteDance to divest TikTok ownership in the U.S. by March 31, 2025, or face a nationwide ban. The court dismissed ByteDance’s claims that the law violated constitutional free speech protections, emphasizing the government’s compelling interest in safeguarding national security and data privacy.
The court order states, “The evidence presented by the U.S. government highlights credible risks associated with ByteDance’s ownership of TikTok, including concerns about data access and potential exploitation by foreign entities. The Court deems these risks substantial and justifies the measures enacted by Congress and the Executive Branch.”
Impact on ByteDance
The ruling represents a significant blow to ByteDance, whose app is used by 170 million Americans. While the company plans to challenge the decision in higher courts, it faces mounting pressure to comply with the divestiture order to avoid the ban.
ByteDance argued that the law, enacted as Public Law No. 118-237, infringes on constitutional rights, but the court rejected these claims, citing national security concerns.
Meta Rise brings Optimism:
The ruling has created optimism in the tech industry, particularly for Meta Platforms. The company’s stock surged to an unprecedented $629.78 during the trading day, closing with a 2.7% gain at $625.37. Meta’s platforms, Facebook and Instagram, directly compete with TikTok for user engagement and advertising revenue.
Alphabet, the parent company of YouTube and Google, also benefited due to rise in shares of Meta, with their shares rising by 1.1%, closing at $174.68. Similarly, Truth Social operator Trump Media & Technology Group saw a 3.4% increase in its stock value to $34.89, signalling investor confidence in U.S.-based platforms.
Broader Implications
The case sets a precedent for how the U.S. handles foreign-owned digital platforms. Other companies may now face heightened scrutiny over data privacy and national security concerns. The ruling also signals a shift in market dynamics, offering U.S. tech giants a chance to expand their influence in social media and advertising.
While ByteDance continues its legal fight, the clock is ticking toward the court-mandated divestiture deadline. The coming months will determine whether TikTok remains a player in the U.S. market or if its users and advertisers will gravitate toward American competitors.
