US House lawmakers are convening to vote on the bill that could strong-arm TikTok parent company ByteDance to sell the popular social media platform or face a ban in the United States. By the time of this video's publishing, House lawmakers voted 352 to 65 to pass the bill.
CFRA Research Senior Equity Analyst Angelo Zino and 22V Research Senior Managing Director Kim Wallace talk about the broader implications if the bill goes through and how Senate leadership could be expected to vote on it.
"It does have support from the White House, but we also need to... understand that if this eventually kind of fully goes through, there's also kind of legal aspects to it. So what I would tell investors out there is don't expect to necessarily get an outcome in a way to kind of play this necessarily overnight..." Zino says, cautioning on the long-term effects of a ban down the road into 2025.
"We've heard from some leading Democrats who chair committees — Commerce and Intelligence — that they have reservations about some of the drafting of the bill," Wallace explains. "All points to a negotiation. Whether or not that's protracted... whether it's weeks, months, or longer, we're at the beginning of finding out."
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MADISON MILLS: A vote in the House of Representatives just getting underway on a bill that could lead to a nationwide ban on TikTok. Here's what Congressman Raja Krishnamoorthi, the Democratic sponsor of the bill, had to say on intentions behind the proposed legislation. Take a listen.
RAJA KRISHNAMOORTHI: This particular bill ensures that ByteDance divest itself of the vast majority of the ownership of TikTok. Our intention is for TikTok to continue to operate, but not under the control of the Chinese Communist Party.
MADISON MILLS: That vote under fast track rules requiring support by 2/3 of the House for the measure to pass. So for more on the vote, what it means for the social media landscape more broadly, we're going to turn to Angelo Zino, CFRA Research senior equity analyst. We also have with us Kim Wallace, 22V research senior managing director and head of Washington Policy Research. Thank you both so much for joining this morning. Angelo, I want to start with you because obviously, this has huge implications for any investors behind the company. What do they need to heading into this vote today?
ANGELO ZINO: Yeah. No, as far as this specific event, I think what you need to know is it's probably not going to get resolved in the immediate near term. So you're going to essentially kind of have this vote take place. It'll be interesting to see what the outcome looks like here. But if you do get strong support, obviously then it goes to the Senate.
And we'll see if the Senate decides to put this to the floor. But you know, listen, at the end of the day here, it does have support from the White House, but we also need to also understand that if this eventually kind of fully goes through, there's also kind of legal aspects to it.
So what I would tell investors out there is don't expect to necessarily get an outcome in a way to play this necessarily overnight. But as we see this thing play itself out here over the next couple of months, quarters, and as we go into 2025, if we were to see some sort of ban out there, that would have huge implications to a number of players on the US side of things.
SEANA SMITH: Kim, how are you looking at the odds that this is going to not only pass the House but the Senate? And then we talk about the potential fallout if, in fact, it does pass looking ahead to the current election, put that in perspective for us.
KIM WALLACE: Well, I think Angelo has done a good job. There are going to be periods of volatility for likely a protracted time as the legislation moves from the House to the Senate. I continue to believe that the vote counters in the House have this more right than wrong. They think they have over 300 votes. If that's right, that's above what I call psychological threshold of 291, which is the number of members in the House it takes to override a veto. So the president is on good ground if you get more than 291 from the House.
Angelo's right. As this moves to the Senate, we've already heard from the Senate majority leader, this is not on a fast track. We've heard from some leading Democrats who chair committees, commerce and intelligence, that they have reservations about some of the drafting of the bill. All points to a negotiation. Whether or not that's protracted and what protracted means whether it's weeks, months, or longer, we're at the beginning of finding out.
MADISON MILLS: Kim, I want to stay with you because I want to look a year ahead from now. I'm curious about how current President Biden's reaction to this potential ban as well as former President Trump's reaction to it and how they've handled it thus far, what does that tell us about how they might handle business dealings like this if either of them ends up sitting in the White House a year from today?
ANGELO ZINO: It's a perfect comparison of the contrasts between the two men. The legislation in the House wasn't struck over last weekend. Much of that drafting was done by the interagency task force that looked at this issue from the fourth quarter of '21 through the middle of '23. And so all of the language in 75-20 and 75-21 has been debated in committee and certainly vetted within the administration.
Former President Trump, on the other hand, has pivoted on his support for similar legislation, which is not unusual. We saw this from him in the ZTE Huawei circumstances 2 and 1/2-- or pardon me-- in the second half of his term. At first, he came out very strongly trying to isolate those companies and their products from the US market.
He heard from friends who happened to be investors, and he backed away from that position. We're seeing the same thing. One man, the former president is extraordinarily transactional in his personal contacts. The other man, Joe Biden is extraordinarily collegial, if you will, consensus building giving his history on Capitol Hill through his personal contacts.