What Parties Does TikTok Exclusion in the USA Harm? A Financial Event Study
Abstract
We examine financial market responses to news of a potential TikTok ban. Focusing on U.S. legislative actions from 2019 through 2024, our event study suggests that markets anticipate higher probabilities of a ban to increase returns for large technology platforms while small firms’ returns remain flat. We interpret the results to imply a reduction in competitive pressure following elimination of TikTok from the U.S. market. Further, results for competitors and complements as well as acquirers and non-acquirers do not strongly indicate that one group benefits disproportionately to the other when the likelihood of a ban changes. Double-sorting on size reveals that firm size dominates the industry position or acquirer status in predicting the company’s price reaction to a potential TikTok ban, presumably from expectations of heightened market concentration in the sector. These findings provide empirical evidence of the unintended economic consequences of regulatory interventions targeting foreign-owned digital platforms, raising broad concerns about competition, innovation, and the consequences of a TikTok ban in the U.S.
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