The U.S. Supreme Court's decision to uphold a law that could lead to a TikTok ban in the United States has sparked significant interest in potential beneficiaries, including Alphabet's YouTube. Analysts at Morgan Stanley have highlighted that YouTube Shorts, Alphabet's short-form video platform, stands to gain from the potential shift in user engagement and advertising dollars. With TikTok's U.S. user base of 170 million potentially left without access, platforms like YouTube are poised to capture a portion of the $10 billion in ad revenue and 32 billion hours of user engagement that TikTok currently commands.
While Meta's Instagram is seen as a major contender, YouTube has been actively preparing to attract TikTok creators and users. Recent changes to YouTube Shorts, such as extending video lengths and hosting boot camps for creators, aim to make the platform more appealing to those accustomed to TikTok's format. Despite the potential for increased engagement, Morgan Stanley notes that YouTube Shorts monetizes at a lower rate than traditional YouTube content, which could limit the immediate financial impact for Alphabet. However, even a modest gain in user time could contribute to a slight increase in ad revenue over the coming years.
Alphabet's stock (GOOGL) closed at $196 on January 17th, reflecting a 1.6% increase from the previous close of $192.91.