Mark Zuckerberg and Bill Gates were both cast along the lines of opportunistic patriots this week, as they were separately positioned as solutions to America’s Tik Tok problem.
Zuckerberg meanwhile joined Gates in a particularly exclusive group of individuals – the centibillionaire club, with his Facebook stockholding taking his wealth above US$100bn for the first time – as Facebook stock advanced to highs boosted by the launch of Instagram Reels.
It marks the social network founder as the third member of the group at the top of Bloomberg’s Billionaires Index behind Gates (net worth of around US$120bn) and Amazon’s Jeff Bezos (US$190bn).
Facebook stock jumped 6.4% on Thursday and continued to rise this morning as the Reels launch gathered steam, following a drip-fed release across selected markets earlier in the week.
Instagram Reels vs Tik Tok
Instagram Reels is essentially an add-on to the core Instagram platform.
It comprises features that are distinctly similar to those popularised in the Tik Tok app – just as Instagram Stories picked up the ephemeral features that made SnapChat unique and integrated it into the pre-existing Instagram app.
The emergence of Instagram Reels is particularly significant given the increasing scrutiny and pressure being put on China-backed Tik Tok.
Donald Trump’s administration is the latest and probably loudest critic of Tik Tok, amidst broader data security and privacy concerns. Like Trump’s embargo against Chinese smartphone maker Huawei, the US government is threatening to ban the Chinese app.
America’s concerns are the highest-profile, though it follows other states such as India that have already banned the social video platform.
Trump last night signed a new executive order which could lead to the app being banned in 45 days time, unless it is sold to a non-Chinese entity.
Amidst Tik Tok’s high profile privacy concerns Facebook and founder Zuckerberg evidently aim to capture market shares by providing an alternative app for America’s millennial and Gen Z social media users.
At the same time, Gate’s Microsoft moved to attempt the acquisition of Tik Tok’s US operations as another opportunistic move.
Led by chief executive Satya Nadella Microsoft is working to do a deal with Beijing start-up ByteDance, the owner of Tik Tok, with a deadline set for mid-September.
Microsoft, in a statement, said: “Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks.”
“During this process, Microsoft looks forward to continuing dialogue with the United States government, including with the president.”
Under its proposal, Microsoft promises the Trump administration that all data connected to American users will be transferred to and remain in the United States, and that all user data outside of the United States would be deleted.
In Friday’s deals Microsoft stock was priced at US$215.06, down 0.59%, whilst Facebook was up US$6.16 or 2.32% changing hands at US$271.44.
ByteDance valuation drops in ‘grey market’
ByteDance, which also owns Tik Tok’s China-based sister platform Douyin, is meanwhile moving towards a stock market float – with an IPO potentially valuing the company at a peak of US$220bn in ‘grey market’ trading.
“The prospect of losing one of its most valuable businesses entirely is not likely to help ByteDance’s quest for a generous market valuation when it does eventually go for an IPO,” said Chris Beauchamp, analyst at IG Markets.
“But as the IG grey market on ByteDance has shown, investors are likely to take a dim view of any move to sell TikTok to a competitor, no matter how necessary it may be.”
Beauchamp, in a note, added: “For a while, ByteDance seemed to be well-placed to push forward in a post-Covid world.
“While the grey market dropped sharply at the time of huge market volatility in February, there was a clear read-across to the firm from other big tech stocks, which were huge beneficiaries of the enforced lockdown. After dropping back towards $75 billion in valuation terms, the price then went on a tear, moving through $100 billion and then $200 billion, before peaking at $220 billion.
“But since then the price has come back down, as IG clients began to view the $200 billion price tag as too rich.
“Increasing US-China tensions also played a part, but almost all the post-February gains have now been given back as talk of a TikTok sale dominates financial media.”