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Can Biden ban Tiktok and save Meta? We ask a lawyer.

Updated: Nov 1

Part of managing money for expatriates is our team investigates stocks. Recently our team flagged Meta Platforms during a survey of technology stocks for a deeper dive.


Meta Platforms, aka Facebook, is now 74% below it's all time high in August 2021. Yet Meta has a strong market position, good valuation metrics and a history of high growth and high profits combined with a fortress balance sheet. It could be oversold, so it is worth a second look to see what might turn around its current malaise.


The biggest challenge is that Tiktok is capturing the youth of today. Meta is not.


The clock is ticking: Tiktok is beating Meta among today's youth.


Then, someone asked: what would happen if Biden or the government banned Tiktok?


It seems entirely possible. There is regular reporting on Tiktok data sharing practices. Not only that but both Democrats and Republicans are competing to be the most anti-China.


Both the pretext and will exist. But does the US government have the means to act?


Q: Can President Biden or government ban Tiktok?


So we booked a chat with a US engineer and lawyer Donald C. McMillan III.


He is an engineer & lawyer who has litigated several jury trials in Federal & State Courts in both civil and criminal matters. As an engineer, he tested new technologies with multiple US government agencies and deployed terrestrial and satellite networks across 18 countries. He currently works with Federal litigants as a court appointed expert in forensics and computer applications in complex data intensive matters.


Donald's personal website is http://www.donaldmcmillan.com


Owen: What are your thoughts on a potential Tiktok ban by the US government?


Donald: Firstly, as to the current state of freeware, I long for the day that social media apps take their rightful place in history alongside the sextant and flint-stones. Perhaps one day we’ll have as much of a chance of having any one of the later in our pockets as we do these unregulated free downloads in their current form. In thinking further of our conversation on a complete ban on any social-media application, it would require a great deal of speculation on how a US government agency would enforce a nation-wide ban on a private citizen utilizing a publicly available free application for their personal and private use.


Owen: So, understanding that your opinion is speculation and can't be relied on for investment decisions, in your expert opinion, is a ban even possible or likely?


Donald: Any national ban is certainly to face a multitude of litigation from numerous entities in opposition to such, including private citizens. It is arguably never wise to say that it would be absolutely impossible, but rather it is highly unlikely or even improbable for a number of reasons.


...never wise to say that it would be absolutely impossible, but rather it is highly unlikely or even improbable for a number of reasons.

Far too many unanswered questions remain as to how any outright national ban would be implemented including under what agency and against whom.


Owen: So does no government department have the power to control apps approval?

Typically, when we see Federal or State regulations, or any use limitation on a private individual in the US, it relates to a funding mechanism or a license issued by some government agency or issuing authority.


Any use limitation on a private individual in the US, it relates to a funding mechanism or a license issued by some government agency or issuing authority.

A governmental agency could certainly be authorized to limit what someone may possess, or access, where there is cause for such by way of a specific grant of authority through a regulation or law. For example, if you want access to a secure facility, the ability to lawfully drive a vehicle, fly a plane, or perhaps get a license to perform a certain task in the field of engineering or medicine, then an agency or authority at the state or federal level, could impose certain requirements or prohibitions according to a strict set of proscribed rules and guidelines.


Additionally, some agencies can certainly relate your access to available funding to a certain set of requirements that they are specifically authorized to impose. An example of this is the requirement for insurance to lawfully drive a car.


Are you aware of any examples that might pertain to Tiktok?


A rather applicable example is where an individual has need to gain access to a secure government facility wherein their electronic communication devices would be subject to certain requisites, assuming they are even allowed to possess such a device while inside that facility.

But outside of security services, is a ban for private citizens possible? What might the process look like?


It is hard to visualize where a private citizen sitting on their front porch would be absolutely prohibited from accessing a free social-media application for their personal and private use. Even if any government agency could find some justifiable reasoning behind a complete ban of any freely available social-media application, the issue of jurisdiction and the limitations of that jurisdiction is altogether another matter.

In the US, the individual States & the National Government are at times, by design, in opposition and serve as limiting factors on one another as do the American people, who are uniquely poised to block or outright halt actions taken against private citizens. The power to block any implementation of an outright ban through the Judiciary must not be overlooked when considering the reality of any action. The lines between the Federal Government's jurisdiction and the rights afforded each unique State in the US, as well as the individual rights of citizens, are routinely on full display across multiple agencies and through the ongoing litigation throughout the US Courts.

Thinking of which agency would be tasked for enforcement or oversight of a complete ban on a social-media application, one would then have to analyze that particular agency's rules making process or procedural practice, which is also a factor for when and how the complete ban would be enacted and enforced. This again assumes the regulation would have survived that agency's rule making process and was not defeated through litigation. Equally true are the hurdles that a House or Senate sponsored Bill must overcome to get out of Committee and then the obstacles it must overcome to be signed into law. It remains obscure as to where, how, & by whom a nation-wide blanket ban of a social-media application would be authorized and enforced assuming it could survive the inevitable challenges that would take years to litigate.


Sextants went obsolete: Eventually free social media apps will too.


Given the current operations of Congress and Administration as well as those agencies at the State level, it requires far too much speculation to see where and how a blanket ban of any free application across the US comes to life. But again, while it could be argued that flint rocks and the sextant are great tools, at some point they became obsolete.


By the time the current US Congress, Administration, and States all agree together on what a complete ban looks like and how it would be enforced, perhaps then too, we’ll simply see the next new thing that replaces what we have now.


Owen: So you are saying that any ban is highly unlikely in the short term. That it is more likely that technology and society move away from social media apps before the government gets organized. It's hard to say if your last sentence is hopeful or pessimistic.

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Postscript: To further illustrate this point on the limits of government, just after my chat with Donald, President Biden asked the Consumer Financial Protection Bureau to create rules around bounced check fees. An executive order couldn't do that job.


Investment Takeaway: We are avoiding Meta.


This column isn't a full review of Meta's potential. However buying it based on the expectation the a ban on Tiktok is forthcoming, probably isn't a good bet. We have a fuller review of Meta coming soon on Seeking Alpha. But we can share some spoilers.


We are avoiding Meta stock. It is bleeding users in rich countries to Tiktok, advertising is slowing generally and competition is growing and and it doesn't look like the multi-billion dollar investment in the metaverse will save the day.


But as always, talk to your investment advisor before you invest. Buying stocks is risky! Short selling is even riskier!

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