“TikTok is under CFIUS review. We will be making a recommendation to the president this week so we have lots of alternatives”
Here it comes 👀 reuters.com/article/us-usa…
Here it comes 👀 reuters.com/article/us-usa…
While it seems like the Treasury is looking at CFIUS among many different options, we have to look at the history of Grindr and recognize that CFIUS is not exactly equipped to handle these complex challenges.
Breaking: “President Donald Trump plans to announce a decision ordering China’s ByteDance Ltd. to divest its ownership of the popular U.S.-based music-video app TikTok” bloomberg.com/news/articles/…
The firesale begins: businessinsider.com/microsoft-tikt…
ByteDance was already vetting offers to sell a majority stake to investors. It’s unclear if the Treasury changes that possibility, with ByteDance potentially forced to completely divest.
Just last night it was reported that ByteDance was considering IPOing the western TikTok business in conjunction with a seperate listing in China. That is almost certainly off of the table now.
Reactions across the hawks in D.C.:
POTUS confirms that the White House is looking at options surrounding TikTok, as he departs to Florida. No direct confirmation of a forced divest.
More reactions pouring in from D.C.:
The intitial reaction from Snap investors: 👁👄👁 
The practicality of a knife slicing through TikTok will be very challenging. ByteDance shares infrastructure with TikTok, like AI tools and moderators, as well Chinese engineers because TikTok Global has failed to acquire equal engineering resources.
More details on the looming Executive Order: wsj.com/articles/trump…
The Microsoft talks are quite interesting and complicated given Microsoft China, which has really been one of the few western outposts. How would TikTok fit under that umbrella? Would it also be airgapped from China?
Note too that Microsoft just spunoff their chatbot, one of the few western social products operating in the region.
Tesla too falls under that problem. The question cannot simply be about ownership, but rather, influence. American companies have on a number of occasions also found themselves influenced by their operations in the Chinese market.
This is where we are: “While the administration was prepared to announce an order as soon as Friday, according to three people familiar with the matter, another person said later that the decision was on hold, pending further review by POTUS” bloomberg.com/news/articles/…
Real teeth in this statement from Rubio. Finally.
Excellent point about LinkedIn’s role in China that adds big questions:
Like any western platform, a TikTok under Microsoft would be faced with adversarial actors connected to the Chinese government. The indictments coming out of D.C. may make Congress question whether Microsoft has the capability, and willingness, to win. ft.com/content/0a0e62…
And... we’re back to Trump’s instincts
“Trump told reporters that he firmly rejected the reported spinoff deal involving Microsoft buying TikTok, NBC News reported.” cnbc.com/2020/07/31/tru…
“President Donald Trump on Friday told reporters he will act as soon as Saturday to ban Chinese-owned video app TikTok”
Trump: “As far as TikTok is concerned we're banning them from the United States”
“I have that authority. I can do it with an executive order or that”
Trump: “As far as TikTok is concerned we're banning them from the United States”
“I have that authority. I can do it with an executive order or that”
What would a U.S. ban look like? It depends how it is implemented, but U.S. enterprises would likely quickly break off relationships. There would be no censorship, but TikTok would disappear from Apple’s App Store and Google Play. Then AWS would wind down ByteDance as a customer.
When the decision came down in India, this was Google's statement: "While we continue to review the interim orders from the Government of India, we have notified the affected developers and have temporarily blocked access to the apps that remained available on the Play Store"
Additionally, TikTok complied and wound down the India region using their pre-existing region-lock infrastructure. This includes SIM card identifiers, meaning the app was not simply accessible for most users with a VPN.
TikTok has more controls, given the app collected user-provided region information, as well as usage metadata. I don't believe TikTok has gone as far as utilizing that data trove to region-lock. And I frankly think their goodwill has come to an end; it's a survival game now.
When the Hong Kong market was wound down more recently, this was the message TikTok users received. Like India, users with Hong Kong SIM cards could not easily circumvent the shutdown.
Should it come to an App Store blockade in the United States, and TikTok is fighting for survival, the company could distribute the APK to be side-loaded on Android. Google and Apple would, however, retain the power to declare it malware and halt that circumvention.
No matter the tool that Trump administration would leverage, the mobile market is so centralized that TikTok would face too many chokepoints to remain competitive, even survive. The outlook is bleak.
I would suspect this is the likely outcome:
The ACLU responds:
From earlier this month, the Electronic Frontier Foundation position:
A total divest in the U.S. now on the table:
"ByteDance was previously seeking to keep a minority stake in the U.S. business of TikTok, which the White House had rejected. Under the new proposed deal, ByteDance would exit completely and Microsoft Corp would take over TikTok in the United States"
"Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added."
This is of course complicated by the fact that POTUS explicitly declared a ban yesterday. With upwards of $50B on the table, that may make Microsoft and outside investors weary.
How would a divest of the United States operations work? I have no idea! Nor are these concerns isolated to the United States, with the United Kingdom, Australia, and Japan now looking at revoking ByteDance market access.
TikTok's operating structure complicates these matters further, with TikTok not actually being one app, but several, distributed under two separate shell corporations on the app stores.
ByteDance has moved to close the gap between TikTok in the U.S. and the original TikTok aka Trill (which I believe was the TikTok operating in India) recently — making this situation even more complex, with the company sharing Musically infrastructure.
What exactly is Microsoft buying here?
Douyin is separated from the TikTok family, but I couldn't tell you how Trill and Musically (which became TikTok in the U.S.) share data. Users are accessible between them, but the algorithms are... different.
Trump’s instincts appear to be winning out and have put acquisition talks on hold. wsj.com/articles/micro…
“Before Mr. Trump’s remarks, the two sides believed the broad strokes of a deal could be in place by Monday, the people said.”
“The companies were caught off guard by the president’s comments, said one person familiar with the matter. Another person said the WH has been involved in the discussions for weeks and made it clear from the outset that the desired outcome was for TikTok to be ‘American owned.’”
An acquisition appears to be the outcome that much of Congress wants:
From the data security side of things, an acquisition may be the better outcome because it would mean an American enterprise works to re-shore data and set the parameters. If a ban would occur, how would ByteDance be held accountable in a cleanup?
But again, it remains unclear what ‘U.S. operations’ actually means. Will Microsoft acquire the TikTok operating in the U.K. and Australia? Does the White House value ‘data diplomacy’ and is that entering the discussions?
Navarro just doubled down.
After pumping Kodak and their plans to produce drugs, including hydroxychloroquine, Peter Navarro talks TikTok with Judge Jeanine. Navarro made it explicitly clear that he does not like Microsoft, or TikTok being acquired.
“By tomorrow, Monday, you will know [the outcome of the TikTok dispute]”
Early Saturday, TikTok headlined this message from the U.S. market General Manager.
If there was nothing remaining that ByteDance could do to rectify this situation, I do hope they at least do this:
If this does come to a ban, I would also hope that ByteDance takes the higher road and works with creators to export their data in a standardized, open format that would allow creators to bring their content and audience elsewhere.
Chinese state media reacting by sharing a video describing how it may be possible to subvert a ban in the short term
Earlier, the Global Times, the closest state-run outlet to the Chinese Communist Party, shared the TikTok GM’s message to users
We will watch the messaging become far more vitriolic, as it always does in the ‘Wolf Warrior’ era.
The Hu Xijin tweet is here! It hones two lines of rhetoric: 1) the U.S. is afraid of China’s success 2) the attack on TikTok is a personal retaliatory attack by Trump. The latter is more interesting; it shows that state media may try to divide the electorate on the TikTok issue
Like clockwork, the Chinese influence machine comes to life ⚙️
Huawei was among the top topics that the PRC bot networks on Twitter focused on. Given the increasingly adversarial tone of state media on this issue, I would anticipate that TikTok joins the list. Listen 👂 finance.yahoo.com/news/china-twi…
The process begins in Australia:
Chinese state media continues to position TikTok similarly to Huawei
From the interference side of things, this firefighting is not comforting. It’s quite difficult to list comparisons.
Recall how the Obama White House — in today’s context, naively — treaded lightly on Google being attacked and choosing to exit China. “Our concern is with actions that threaten the universal rights of a free Internet” nytimes.com/2010/01/15/wor…
The chopping block grows: “Comments from US secretary of state Mike Pompeo on Sunday suggested additional action against a wider range of Chinese technology companies would follow.” ft.com/content/2eb185…
Mnuchin today: “The president can either force a sale or the president can block the app ... and I’m not going to comment on my specific discussions with the president, but everybody agrees it can’t exist as it does”
The same division in the White House that has played out during the Trade War is also occuring surrounding TikTok, with the Mnuchin faction more eager for a divestment, it seems. The Daily covered this last week:podcasts.apple.com/us/podcast/the…
The GOP is holding the divestments tone:
Mnuchin: “We are not keeping TikTok in its current form”
There’s bipartisan support for this: “I have [previously] urged that TikTok be closed down”
Schumer goes on to demand that questions about TikTok’s data security and plans going forward are answered prior to Microsoft acquiring the company
Schumer goes on to demand that questions about TikTok’s data security and plans going forward are answered prior to Microsoft acquiring the company
Microsoft just announced that it is continuing talks for an acquisition blogs.microsoft.com/blog/2020/08/0…
Microsoft: “Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States.”
Extending the timetable: “Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020.“
“The discussions with ByteDance will build upon a notification made by Microsoft and ByteDance to the Committee on Foreign Investment in the United States (CFIUS). The two companies have provided notice of their intent”
The important details: “[This proposal] would involve a purchase of the TikTok service in the United States, Canada, Australia, and New Zealand and would result in Microsoft owning and operating TikTok in these markets.”
Notably absent in Microsoft’s letter is the mention of India, or allies like Japan that are already discussing similar measures. I would assume this means there will be two truly seperate TikToks operating around the globe.
Also notably absent is mention of the United Kingdom, a substational TikTok market, that has followed the United States in many of these tech issues.
Will Microsoft and ByteDance make an anticompetitive market agreement that would divvy up the globe, preventing the seperate TikToks from expanding to competing markets? If so, will users be accessible between them? Will social media become truly fractured, w/ the west airgapped?
I am speculating. But there are substantial questions outstanding. One of the very concerns surrounding TikTok was that there was never just one global network, but rather, regions that ByteDance sat between as a curator, and possibly, a geopolitical censor.
If ‘TikTok’ became a western, eastern divide, what would that mean for the world? If the next Jasmine Revolution or Hong Kong protest broke out online, could the west see, interact, and support it? Or would a fractured global market make us all Mainland China?
Needless to say, the story of TikTok is only the beginning. We’re embarking on challenging conversations that will determine the fate of the idealistic global Internet.
POTUS agrees to an extended timetable:
How the Friday night chaos came to be:
“The negotiations between ByteDance and Microsoft will be overseen by the Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel that has the right to block any agreement” reuters.com/article/us-usa…
Infuriating is one word to describe the last CFIUS review. The stakes are high with TikTok, but I think we’ll exit this with a disappointing cabal of duct tape reuters.com/article/us-gri…
Reuters: “Trump changed his mind [on a ban] following pressure from some of his advisers and many in his Republican party, one of the sources said. Banning TikTok would alienate many of its young users ahead of the U.S. presidential election”
“State-backed newspaper China Daily on Monday called ByteDance the victim of a ‘witch hunt’ from the United States, and said Washington had not provided evidence to support its allegation that TikTok posed a threat to U.S. national security.”
Given Microsoft made no mention of the United Kingdom, I guess that rules out a TikTok HQ in London or Dublin? What will come of this already-important European presence? cnbc.com/2020/07/20/tik…
I am not sure if it is merely coincidental or by design that the deal Microsoft hashed out overlaps with the Five Eyes countries, excluding the U.K.
We might end up with like 7 different TikToks
TikTok👏as👏a👏protocol
ByteDance PR really going for it
“Collision and conflict of different cultures”
While ByteDance attacks Facebook for plagiarism — and let’s be honest, Facebook clones everything — ByteDance fails to mention that Douyin was a knockoff of Musical.ly, which itself was inspired by Flipagram. ByteDance revised history after it bought them all.
ByteDance could never speak these words, but despite projecting onto the chaotic retaliatory White House and opportunistic competitors, these are the true ‘unimaginable difficulties’ it faces. At the heart of ByteDance’s shrinking horizons is Beijing:
On TikTok, Chinese are already isolated from the rest of the world — obscured behind a firewall in a censored bubble. That’s not the case for WeChat, and if this momentum continues, the Chinese people may become even less accessible, and vice versa.
The story arc here 💯
I am so confused: “ByteDance’s founders are to announce their intention to set up shop in London... A deal, possibly even unveiled tomorrow, could see ByteDance’s founder Zhang Yiming and TikTok’s creator Alex Zhu relocating to London.” thesun.co.uk/news/12295304/…
Reuters: “TikTok owner ByteDance will move its headquarters to London from Beijing under a deal approved by British ministers, The Sun newspaper reported.”
I have doubts
If the U.K. is truly competing for jobs and embraces a TikTok Global, owned fully by ByteDance, that would mean that Europe and the U.S.-led countries (under Microsoft) would be disconnected from each other. I don’t think anyone at the table is considering the ramifications.
“One [British minister] told The Sun: ‘this isn’t like Huawei where there are national security concerns.’”
Statement: "ByteDance is committed to being a global company. In light of the current situation, ByteDance has been evaluating the possibility of establishing TikTok’s headquarters outside of the US, to better serve our global users" reuters.com/article/us-chi…
I have no idea what that means 🤷♂️
Why Microsoft may want TikTok: "TikTok could help correct a Microsoft blindspot and even influence how other software and services are developed inside the company... Google is planning to leverage YouTube to integrate its Stadia streaming service" theverge.com/2020/8/3/21352…
"Microsoft had been planning to use Mixer for Xbox game streaming, but the service never gained enough traction... Not hard to imagine watching a Call of Duty video on TikTok & then being able to click & instantly play the game as it streams to your phone via Microsoft’s xCloud"
Given ByteDance's other products, TikTok has always felt like a means to bring the mini-app paradigm into the west. Snapchat has thus far led there with Snap Games, and soon Minis, and Microsoft may follow the path and bring TikTok to parity techcrunch.com/2020/07/20/sna…
The latest: "President Donald Trump said TikTok will have to close its U.S. operations by Sept. 15 -- unless there’s a deal to sell the social media network’s American operations." bloomberg.com/news/articles/…
POTUS: "I don’t mind whether it’s Microsoft or someone else, a big company, a secure company, a very American company buys it."
Art of the Deal shit from POTUS: "It’ll close down on Sept. 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal, so the Treasury of the United States gets a lot of money.” yoink 💰
POTUS: "Whatever the price is that goes to whoever owns it -- because I guess it’s China, essentially, more than anything else -- I said a very substantial portion of that price is going to have to come into the treasury of the United States.”
We're living in this meme, absent Yang
I do agree with the White House here. There would be a lot of ramifications should more than one TikTok spinoff, and we're not equipped to deal with that. This has to be a TikTok deal, not a market deal.
Somewhere within ByteDance, there's probably an analyst scrolling with fervor to find Barron's TikTok to try to get insight into this hostile takeover refinery29.com/en-us/2020/06/…
All roads lead to Roblox
For the non-shitposting record, Barron's Roblox wasn't actually leaked, and he may not have either accounts, but that was the conspiracy that ran across TikTok on the "Save Barron" campaign.
"Mr. Trump said that such a purchase would funnel a large amount of money to China, and argued that the United States should receive money in return for letting the deal happen, without explaining how that would work." nytimes.com/2020/08/03/tec…
If TikTok were to become the next Facebook, selling the global assets now — this early — would actually prevent hundreds of billions of wealth creation for ByteDance and its investors.
On CNN today, Navarro doubled down on the anti-divestment talking points, referencing Bing's censorship in China, their role in the Great Firewall, and even thinking outloud about a Microsoft China divestment. “This is not a white-hat company" cnn.com/videos/busines…
Good commentary here.
This is the truly unfortunate outcome, with the horizon's of Chinese talent shrinking, but the last line tells you all you need to know about how we arrived here.
While it is true that ByteDance is a newcomer, with fewer political connections and Mainland jobs to offer, I would disagree with this: "It is much easier for the world’s teens to find another internet craze than for governments to rip out their telecoms infrastructure."
The network lock-in of these platforms is immense. I began following Musically with the thought that what the teens were doing then, is what the world would do in a few years. Douyin made that ever more clear — and now we've arrived there with TikTok. We're only at the start.
By the time it was acquired, the Musically MAGCON demographic was aging out of the platform. The window of creation had not grown — the same broadcasted faces were played out, and growing up. My inclination was that the growth and usage stalled out, withered.
Users were genuinely upset that the brand they grew up with died, even if it was no longer the same. I was convinced it was suicide, and I was so very wrong. As TikTok broadened the creation window & algorithm, that graph became more, not less, valuable.
I do not think that the White House is thinking beyond November, but in discussing TikTok, we must recognize that we may be looking at a Facebook in 2008. The national security concerns will compound, not dither, as this company engulfs our attention.
TikTok is only at the start of a long journey that will compound in complexity along with the acceleration of mobile computing. There will be new paradigms and algorithms. It will become more deeply rooted in society, in ways we cannot foresee.
Leading to the 2024 election, TikTok may be the platform at the forefront as it nears domestic saturation. We may watch and interact with presidential debates on TikTok. Adversarial actors may flood the platform with disinformation, may attack the algorithms. We must foresee that
As Facebook had failed in the lead-up to 2016, and continues to this day, TikTok is already failing to counter these type of threats, of the information landscape collapsing on conspiracy — and the company may not be incentivized to succeed.
If the concerns weren't substantiated before, TikTok is most certainly becoming more important to Beijing every day as this tit-for-tat escalates, and Sino-U.S. relations collapse.
I would not always simply cast ByteDance as a willfull actor, either. For the Chinese market, it has become one after threats. To what extent, and whether cooperation extends beyond the domestic market, remains unknown. We know that occurs in the west too: nytimes.com/2015/08/16/us/…
Simply operating in China ignites a slew of threats, by design. But China is not known for its free press. Does the world, do Chinese engineers, actually know the extent to which domestic attacks occur? How many Chinese companies are attacked by their gov?
I expand upon that here:
Actual rent seeking lol: "It's a little bit like the landlord-tenant. Without a lease, the tenant has nothing. So, they pay what is called 'key money' or they pay something, but the United States should be reimbursed or should be paid a substantial amount"
"Microsoft added as much as $77 billion in market value on Monday after it confirmed on Sunday that it was continuing talks about buying the popular social-media platform TikTok in the US." markets.businessinsider.com/news/stocks/mi…
The Hua Chunying tweet:
The Global Times stance is even more aggressive than I would have expected: globaltimes.cn/content/119640…
"Barbaric"
It is quite interesting that the Global Times makes this point. Is it a subtle way to say 'we work to contain Chinese nationalists'? At the same time, the bot networks circumvent the firewall, & the MOFA encourages gated Chinese users to come to Twitter to share their opinions.
Just because the average Chinese user can not easily access TikTok does not mean the Chinese government could not reach TikTok — as it does to Twitter, Facebook, and beyond. A strange description.
What's happening to Zhang Yiming right now highlights the rock and hard place that Chinese founders live between, which has been at the heart of this all. Government censors steer the public discourse, and now, look where ByteDance finds itself.
Zhao Lijian, MOFA: “Trump’s move is threatening to split the internet, and this is something the world should avoid. Countries should sit down and discuss the limits of national security when it comes to internet governance.”
Meanwhile in Hong Kong: the threat of the national security law being used to strong-arm dissenting social media posts hongkongfp.com/2020/07/31/hon…
Zhang sent a letter to ByteDance employees today: "Many people got it wrong. The focus was never CFIUS investigating into the national security concern of our acquisition... Their actual goal is a full ban, maybe even more..." en.pingwest.com/a/7421
「因为传公司将出售TikTok美国业务的新闻，很多人在微博里骂公司和我。我看到头条圈里有人说半夜被微博评论气哭，有人替我和人吵架怼到手酸，也很多同事加油鼓励。」
「昨天加班到天亮，睡觉前打开头条圈，看到有人发早上5点半的深圳来福士大楼的照片，属于公司的楼层灯还亮着。」
「而在美国等部分国家，有一些政客全面攻击中国和中国企业至少在短期内形成了一定的氛围，乃至有更全面视角和中肯看法的人也不能公开说公允的话。」
Despite the accusation that a CFIUS divest was never a goal, there is really no substance to this ByteDance letter. It casts a shadow of victimization, describing concerns as 'misunderstandings,' w/o acknowledging Chinese data governance and persistent cyber & information threats
The comparison isn't exact, but I think you should read this Facebook letter to the Attorney General and DHS. In it, Facebook argues against encryption backdoors.
In no statement has ByteDance argued that the Internet Security Law, & Xi's grip on tech, weakens Chinese companies
In no statement has ByteDance argued that the Internet Security Law, & Xi's grip on tech, weakens Chinese companies
Even in a situation such as this, with ByteDance facing the loss of hundreds of billions of dollars of wealth creation, is the company arguing that the law it lives under weakens its competitiveness. In no way has it acknowledged why these concerns exist — because it cannot.
The rhetoric from the Party continues to escalate:
The China Daily declared the TikTok debacle ‘bullying’ and ‘theft’ today, and implied that the Chinese government would retaliate should an acquisition — not just a ban — occur. reuters.com/article/us-usa…
The state media illustrations are great tho
This was an interesting report this morning: "Multiple sources tell me that Apple has expressed interest, albeit no sources inside of Apple, and that at least one other strategic has expressed interest" axios.com/newsletters/ax…
It was followed by: "Update: An Apple spokesperson tells Axios that there are no discussions about buying TikTok and the company isn't interested."
The Verge followed: "Apple says it’s not interested in acquiring TikTok... The company tells The Verge that there are no talks at present to acquire TikTok, and it has no plans to pursue such a deal." theverge.com/2020/8/4/21354…
I would wager that Apple was in fact strategically thinking about the prospect of a TikTok acquisition. It would fit. But, I would also add that the 'theft' and 'smash and grab' rhetoric coming out of Chinese state media quickly made them reconsider.
I would guess this bet, and the race behind it, keeps Cook awake at night: timesofindia.indiatimes.com/business/india…
This 👇
The game has changed. The State Department just expanded the focus of the 'Clean Network' initiative, and it covers everything from submarine cables to the App Store. How this plays out remains up in the air, but it tells us that the WH wants a debundle. state.gov/announcing-the…
There is a lot to unpack; I frankly don't know what is within the legal bounds of the Executive branch, or how it could demand and implement such a radical network debundle.
'Clean Carrier' demands a disconnect — going as far as asking allies to do the same — of Chinese carriers, which are state-owned enterprises. Would this encompass international gateways? Does this mean Sino-U.S. phone calls would no longer be possible?
Is 'carrier' broadly interpreted as telecoms? Does this demand mean that projects like Google's Los Angeles-Hong Kong backbone is officially off of the table? Would VPN providers be restricted from offering U.S. nodes to users in Hong Kong and Mainland China?
'Clean Store' demands a 'untrusted applications' be removed from App Stores. It muddies the water in merely pointing out the PRC; does that mean it includes all PRC apps? Will *every* Chinese company be blacklisted from the App Store and Google Play?
Would this include Chinese-owned companies like Riot Games? Would Tencent's PUBG MOBILE be banned from U.S. app stores, like the Indian government has been exploring?
'Clean Apps' seems to further pressure Huawei, demanding that U.S. companies remove their products from Chinese app stores like Huawei's. It seemingly also asks that U.S. companies go out of their way to make them inaccessible on Chinese smartphones. No side-loading?
U.S. companies are not known for their access to Chinese users, thanks to the Great Firewall, but would this demand mean that Microsoft can longer support LinkedIn or Bing in China? What other companies would face fallout from these measures?
As is the case of Tencent's role in the video game industry, it is also explicitly called out regarding its Cloud. These cloud servers offer a stepping stone to U.S. users. Does 'most sensitive personal information' have bounds? Or is Tencent, Baidu, & Alibaba ☂️ restricted?
There is no substance here that solves the problems at play. It's radical, for the sake of being radical.
Even if these demands were implemented, in what way would 'clean from China' mean that U.S. companies are more secure? How does it protect American users and companies from adversarial actors operating in every single country?
The word 'clean' is also misguided and offensive. The Chinese engineers building decentralized protocols are solving the root of these issues, taking heat from their government while doing so, but this casts them as 'unclean'
True frameworks that could change the directionality of the Internet would architect a more secure landscape, not subtract players like whack-a-mole. More on that here:
Great commentary here. I very much agree with this: "These people are fundamentally unserious."
This would answer a lot of big questions posed by a fractured TikTok. "US group explores whether it can add regions including India and Europe to deal for video app’s US arm" ft.com/content/45d739…
👀
The Executive Order:
FT: "One person involved said the discussions were like 'multi-dimensional chess' given the number of stakeholders in the process, including governments and minority shareholders in ByteDance."
How does the EO impact this?
"Microsoft has discussed adding an agreement whereby it would have 1yr to separate TikTok from its Chinese parent... 2 people following the talks closely said that the timeframe would be difficult... [1 said] it could take between 5 and 8 yrs"
"Microsoft has discussed adding an agreement whereby it would have 1yr to separate TikTok from its Chinese parent... 2 people following the talks closely said that the timeframe would be difficult... [1 said] it could take between 5 and 8 yrs"
"One person close to ByteDance in India said there was a 'deal in the works' with Microsoft for TikTok India but that if it fell through, ByteDance could sell TikTok India either to foreign investors or Indian buyers. ByteDance would then license its technology to the company"
It is clear that the Chinese side wants to keep the global business:
WeChat also received an executive order tonight:
The video game industry takes a sigh of relief with this line: "any transaction that is related to WeChat by any person"
Both executive orders in full here:
Unlike TikTok, which is split between Mainland China and Global businesses, there is no out for WeChat. If I understand how 'transaction' is defined here, WeChat will be barred from the App Store and Google Play within 45 days.
Given the CFIUS review, can Microsoft even close this deal in 45 days? Utter chaos
This verbiage may strong-arm a deal for ByteDance to sell the global business:
If the WeChat order extends to Apple and Google's businesses globally, that means Chinese users will effectively be air-gapped from the world, with WeChat limited to Chinese-owned app stores in Mainland China.
While WeChat is used in the U.S. to communicate with friends and family in Mainland China, it is also used to manage supply chains and Chinese contractors. We may be talking about massive disruption here.
Given the very broad 'Clean Network' initiative, will Alibaba's DingTalk be next? That would mean more global supply chain disruption, as suppliers and contractors migrate back to email.
The bar was so low but I think the White House just accidentally nuked international commerce
Clarity on the timeline:
Sept 20 is the day:
I could be wrong about my interpretation that the WeChat ban doesn't affect Tencent more broadly, but Reuters is reporting otherwise:
If Tencent was impacted more broadly, we're talking about Riot, Activision Blizzard, and Epic (including Fortnite and Houseparty) potentially being impacted. Tencent is also an investor in Snap, Reddit, Spotify, and Tesla.
How many U.S. companies are leveraging Tencent Cloud? Would all have to migrate to different providers and regions within 45 days?
I think this would be the most devastating impact of the impending WeChat ban:
Wait and see game for the Tencent holdings:
Meanwhile over at the *checks notes* internet regulatory body
Tencent's role in Hollywood has continued to grow as well, with these efforts now up in the air. The White House, I suppose, accidentally banned their own propaganda
"The production staff was able to fly aircraft around secured facilities and restricted airspace usually reserved for Naval Aviators... The production crew received escorted access to a Nimitz-class aircraft carrier" military.com/off-duty/2019/…
Top Gun: Maverick previously received criticism after pieces of the film were modified, with what can really only be seen as Chinese influence, whether by Tencent itself, or Hollywood's eager desire to access Chinese audiences.
Scenarios such as that, and there are many, do make it clear that the world cannot continue down this path of unfettered economic and information influence. What we've witnessed over the last week is chaos, not an answer to these real challenges.
The Executive branch powers at play:
Uh, what? No clarity on Tencent until the blacklist is in effect?
To me, this is by far the most troubling aspect of the Executive Order. Circumventing the ban may be a crime for U.S. users.
Great question:
If Apple can no longer distribute WeChat and Toutiao in Mainland China, we may be looking at Apple's entire Greater China business going down the drain. Tens of billions of dollars of revenue lost annually.
Twenty percent of smartphones in China are running iOS. Huawei and other manufacturers could fill the void, but the societal disruption would be massive.
The reality for a lot of Chinese diaspora right now. Some have migrated to Line over the last few weeks, but it won't be the same
This 👇
We should expect better from the White House, but the reason WeChat is being targeted is because it *is* a surveillance and control apparatus, and the reason there are few alternatives is *because* China blocks competitors. Chinese have always lost because of Beijing's path.
The embarrassing chaos of this moment shouldn't make us lose sight of the real problems that exist. These are not the answers, but we do need answers.
👇
A little less chaos: the WeChat order does not impact all Tencent businesses.
The question that remains is: will Apple and Google be forced to end all relationships with WeChat and ByteDance in 45 days?
WeChat Pay is also used by Chinese students and tourists across the U.S. to access their funds back at home. The world becomes more difficult in every way in the absence of WeChat. link.medium.com/RyARLPpoK8
A helpful perspective that puts a WeChat ban in a different category than the Great Firewall. Real the whole thread.
A great point: we should have never arrived here in the first place. The aggression from Beijing has grown under Trump, but these problems began long ago.
There is an equal problem in not challenging TikTok and WeChat.
TikTok will compound in importance — and threat — everyday as it becomes the next Facebook. While WeChat may not grow, it would probably be leveraged more often, especially in places like Hong Kong.
TikTok will compound in importance — and threat — everyday as it becomes the next Facebook. While WeChat may not grow, it would probably be leveraged more often, especially in places like Hong Kong.
Good WeChat context. The case is stronger than TikTok:
Much more history here. The same could very well be true as TikTok grows into a major global force.
TikTok's statement:
Is TikTok really 'shocked' though? This has been building for 2 years now. The company failed to alleviate concerns along the way, brushing them off and integrating deeper with ByteDance in a greedy global push. This was always a possibility in the post-2016 era.
The full statement:
ByteDance goes full Global Times in the way it describes the concerns surrounding the company
I'm not joking. This disinformation from the Global Times that denies the atrocity in Xinjiang and threatens researchers reads like that ByteDance statement. globaltimes.cn/content/119387…
The Global Times, I mean, TikTok: "We will pursue all remedies available to us in order to ensure that the rule of law is not discarded"
"We make our moderation guidelines and algorithm source code available in our Transparency Center"
Genuine question: has anyone been to the TikTok Transparency and Accountability Center that reportedly opened in May? Is this a real place? Platform 9 3/4 to get there?
Genuine question: has anyone been to the TikTok Transparency and Accountability Center that reportedly opened in May? Is this a real place? Platform 9 3/4 to get there?
We all want TikTok to be better, the best. But these statements muddy the water, discredit concerns, & deny all that we do know. TikTok is an economic vehicle in the fight for its life — but gaslighting won't decouple infrastructure, e2e encrypt, or build nextgen moderation tools
We have seen no proposals from TikTok that speak to the reality of how platforms and technology work, or the challenges that companies like ByteDance are faced with inside of the PRC. Denial, after denial, of the genuine, valid concerns will only make this fight bipartisan.
Tencent's statement:
A number of China Tech stocks fell off a cliff with this announcement:
"That means the Chinese government is able to control a significant portion of the information overseas Chinese receive, even outside its borders. This could have real domestic political implications, as many members of the Chinese diaspora are voters" nytimes.com/2020/08/07/bus…
"The downside of this executive order is that it’s addressing these concerns by taking steps that also make it harder to directly communicate with ordinary people in China."
"[A WeChat ban] puts this administration’s policy into conflict with another one of its stated goals: to maintain openness and friendly connections with the Chinese people"
The statement Tencent should produce today: “We are committed to an open, secure Internet & we would like to work with the White House to address their concerns. We will pursue end-to-encryption, onshore data and operations with trusted partners, & opensource the WeChat protocol”
Tencent unfortunately won’t say that because the response from Beijing would be more aggressive than anything they are experiencing in the U.S. right now.
There are a number of strategies that WeChat could take to isolate global users and their conversations, but they would certainly run against the interests of the Chinese government, and that makes all of these ideas ever impractical.
I find this statement from Senator Warner to be a bit short sighted. “Is TikTok a problem? Yes, but on the hierarchy of problem we are talking about, an app that allows you to make funny videos [does not really rank]” nytimes.com/2020/08/07/us/…
With the user graph TikTok is building, the company may bloom into something so much bigger than it is today. A projection of where the global ambitions could go is already playing playing out in China: newsfeed, personal & workplace messaging, e-commerce. It’s a superapp company
TikTok is fundamentally not a dancing app for kids. It is a next generation social media platform, with the conversation already far deeper than Musically, owned by a company exploring smartphones and operating systems. ByteDance wants to be infrastructure.
The NYT reports the existence of a series of CIA classified assessments regarding TikTok. There are a few technical holes in the reporting that alarm me, but I frankly think we shouldn’t hold our breaths on the CIA’s capabilities.
Unfortunately, I think a lot of the CIA’s intelligence assets in China are either dead or producing Tesco Christmas cards, in part because of the Chinese gov’s surveillance capabilities. Their greatest China failure is the pandemic we are living through finance.yahoo.com/news/cias-comm…
This part, on what is *already* happening via WeChat in Mainland China (and potentially elsewhere), is such an understatement that it makes me question the capabilities of the assessments.
There is this notion throughout this latest reporting that dismisses threats as merely theoretical. But, historically, how many examples are there of theoretical threats remaining theoretical? The problem is that there *are* weaknesses, and there *is* a track record.
Yikes: the valuation of TikTok’s U.S. business (I assume including Australia, New Zealand, and Canada) has collapsed to $20B. caixinglobal.com/2020-08-08/exc…
Here comes the court battle 🍿 npr.org/2020/08/08/900…
“[TikTok] will file the federal lawsuit as soon as Tuesday, according to a person who was directly involved in the forthcoming suit... It will be filed in the U.S. District Court for the Southern District of California, where TikTok's American operations are based”
“The lawsuit will argue that President Trump's far-reaching action is unconstitutional because it failed to give the company a chance to respond. It also alleges that the administration's national security justification for the order is baseless, according to the source.”
“‘It's based on pure speculation and conjecture,’ the source said. ‘The order has no findings of fact, just reiterates rhetoric about China that has been kicking around.’”
That statement about ‘rhetoric’ simply isn’t true because we *know* facts about ByteDance and Chinese tech companies more broadly. The question is whether the same manifests in TikTok. The hard evidence there is more limited, but there is evidence of hardline moderation.
“The source familiar with TikTok's internal discussions on the matter says the president's order appeared rushed and did not include carveouts or exceptions for TikTok to maintain any legal representation, which the company plans to argue is a violation of due process rights.”
“TikTok will likely underscore in their litigation. For instance, the authority cannot be used to regulate or prohibit either "personal communication" or sharing of film and other forms of media, which TikTok can argue is the primary use of its app.”
TikTok may not have much ground here:
It’s hard to imagine that any court battle with the U.S. government won’t turn into a fact finding mission. The order named ByteDance LTD directly, whose COO is TikTok’s CEO. These are heavily intertwined companies. We’d learn a lot more about the platform’s moderation.
I don’t think the western world would like what discovery turns up on the calculus inside of ByteDance that led the company to exit the Hong Kong market, either.
“A shouting match broke out in the Oval Office... In front of Trump, trade adviser Peter Navarro and other aides late last week, Steven Mnuchin began arguing that the Chinese-owned video-sharing service TikTok should be sold to a U.S. company.“ washingtonpost.com/technology/202…
Never ending plot line. Twitter would probably neglect TikTok, but I think it’s the most cultural fit. Hard to say how they could raise the capital though wsj.com/articles/twitt…
The fingerprinting comes to light: "TikTok skirted a privacy safeguard in Google’s Android operating system to collect unique identifiers from millions of mobile devices" wsj.com/articles/tikto…
"The tactic, which experts in mobile-phone security said was concealed through an unusual added layer of encryption, appears to have violated Google policies limiting how apps track people and wasn’t disclosed to TikTok users. TikTok ended the practice in November"
"The identifiers collected by TikTok, called MAC addresses, are most commonly used for advertising purposes... A Google spokesperson said the company was investigating the Journal’s findings and declined to comment on the loophole allowing some apps to collect MAC addresses."
"Apple Inc. locked down iPhone MAC addresses in 2013, preventing third-party apps from reading the identifier. Google did the same two years later in Android. TikTok bypassed that restriction on Android by using a workaround"
"TikTok collected MAC addresses for at least 15 months, ending with an update released Nov. 18 of last year, as ByteDance was falling under intense scrutiny in Washington"
“My guess is that the reason they do [those encryption calls] is to bypass detection by Apple or Google because if Apple or Google saw them passing those identifiers back they would almost certainly reject the app"
Some of the technical details are lost in that WSJ report, but you can read more about TikTok's encrypted app_log calls in Elliot Anderson's reverse engineering here. I suppose Joel Reardon built on this and looked backward at older APK versions.
Till Kottman (who is for some reason now suspended from Twitter) also pointed out back in December that TikTok uses a whacky socket routine to exfiltrate this app_log data if DNS isn't returning, which may be the case in some company networks.
I can't say I'm surprised that ByteDance would be vacuuming up MAC address information. That may play into why these telemetry routines are the way they are. I suspect a lot of it is also a product of China's legacy networks and firewalled ecosystem.
If we recall, Uber was caught for similar fingerprinting circumvention techniques on iOS. That, too, was a product of China's ecosystem, where promotion fraud was rampant and was destroying Uber's bottomline in the market. nytimes.com/2017/04/23/tec…
This was how Uber hid their practice. ByteDance's infrastructure is less sophisticated, but I would also not at all be surprised if there are more obfuscation techniques playing out to curtail research into aspects of the company like TikTok's blackbox algorithm.
There are certainly more apps that break the rules like TikTok, many stealing more sensitive private information. But this fingerprinting data, attached to a network of identity, does bring real national security concerns. Don't let that be undersold.
At the end of the day, there will always be adversarial actors. We need to solve these problems from both sides, demanding companies like ByteDance meet strict criteria, under strict penalties, while also incentivizing Apple & Google to harden their platforms & report subversions
TikTok was caught up in the BlueLeaks trove. This is notable: "The documents also reveal that two representatives with bytedance.com email addresses registered on the website of the Northern California Regional Intelligence Center" theintercept.com/2020/08/10/blu…
"The accounts for which TikTok handed over data in the BlueLeaks dump range from influencers with tens of thousands of followers to people who primarily post for friends. One user contacted by The Intercept said they were unaware that their information had been given to LE"
"TikTok recently sought out a law enforcement response specialist and is currently recruiting a global law enforcement project manager. The team that reviews law enforcement requests is based in Los Angeles"
There is really nothing unexpected in BlueLeaks about TikTok's LE data requests & the OSINT reports. But, we can assume that TikTok wanted to avoid the same paper trail for the Hong Kong market, thus the exit. How BD shares data w/ Chinese authorities remains shrouded in secrecy.
There has been a side narrative about how the White House views TikTok because of its potential role in the unrest & Tulsa rally embarrassment, and the BlueLeaks may add more weight to those theories. My view has been that Tulsa hasn't played too much into this; it began long ago
We'll probably hear more news by the end of the week, and have a lawsuit or two in front of us, but it definitely feels like we're in a bit of an impasse as everyone tries to figure out how to decipher the Executive Orders and proceed.
It's op-ed time, I suppose. This one was... wild. There is real truth in how the Communist Party desires to erode competing systems, and views the information and media laterals as a core tenant. But TikTok isn't crack cocaine (wtf) bloomberg.com/opinion/articl…
I think Ben Thompson nailed that influence perspective here — without mentioning crack stratechery.com/2020/the-tikto…
This thread on Li Zhanshu and the history of 'Document #9' and how it has defined China and its aggressive advancements is very helpful context for deciphering the threats of TikTok and beyond
The Global Times reacted to that Bloomberg op-ed and it is also wild. "If any digital platform with an AI algorithm is considered digital fentanyl, Facebook, Twitter, Instagram are all opium. Obviously, Ferguson is cool w/ those addictive US social media." globaltimes.cn/content/119745…
The extent to which Chinese state media reinforces this does make me ever more alarmed: "Does anyone believe after watching videos of people singing, dancing or doing magic tricks, teenagers from Western countries can be brainwashed by socialism?"
I think this op-ed under estimates the specific threat that a massive Facebook-scale company operating from China could represent to western democracies. But it is absolutely right that our data is leaking far beyond TikTok — and the EOs won't fix that. washingtonpost.com/outlook/2020/0…
One of the saddest stories in this has been that of WeChat's sunset. It is a true threat, and is almost certainly surveilled (to what extent, we don't know), but the world will grow more apart as a result of the ban. Sad reactions all around wired.co.uk/article/wechat…
The chaos surrounding WeChat and Tencent has calmed a bit since the orders dropped. The verbiage was unbelievably broad, but analysts are growing more confident in deciphering their bounds. Guosen Securities maintains a buy rating: technode.com/2020/08/10/tru…
Globally, countries continue to follow the U.S. and India in evaluating the extent of these threats. "A spokesman for Paris-based CNIL said the agency opened an investigation after receiving a complaint in May, but declined to give details" bloomberg.com/news/articles/…
"In June, the EU's data protection chiefs pledged to coordinate [investigations into TikTok], after the Netherlands’s data-protection comm said in May that it is looking into TikTok’s policies to protect children’s data. The U.K.’s data watchdog also has a similar probe pending"
Last week, Australia pulled back a bit. "Morrison said there was 'nothing at this point that would suggest to us that security interests have been compromised or Australian citizens have been compromised because of what's happening w/ those applications'" smh.com.au/politics/feder…
"Prime Minister Scott Morrison said on Wednesday morning the Australian government had had a "good look" at whether to ban apps such as TikTok and concluded there was 'no reason for us to restrict those applications at this point'"
Following the announcement of a similar probe in Japan, the Chinese government threatened that "[a ban] would have a 'large impact' on bilateral relations." reuters.com/article/us-usa…
To my surprise, some of the most interesting pushback has been within Microsoft itself. A Yammer poll inside of the company showed that 63% of employees didn't think Microsoft should proceed with an acquisition. businessinsider.com/microsoft-tikt…
A Yammer comment from a Microsoft employee: "Especially since Satya became CEO, I've felt nothing but pride to be part of this company. This is the first time in a long time that I've had doubt gnawing at the pit of my stomach that maybe we're not doing the right thing."
"This employee called the idea a "bribe" and said that even the appearance that Microsoft would be willing to make such a deal could make customers and employees question the company's integrity."
Another Microsoft employee: "This deal is unethical from pretty much any perspective... That Microsoft would even be considering stepping into this situation is unthinkable"
And another: "Even if it turns out we were pursuing acquiring them before this, and the POTUS was just [talking] about tax revenue benefits not an explicit payoff, the fact the US government is forcing the sale still looks bad on us. We should walk away"
These employee reactions followed Bill Gates commenting on the TikTok deal and declaring that entering the social media market was a poison chalice. wired.com/story/bill-gat…
We've learned a bit more about the anxiety inside of ByteDance and Microsoft on how a deal like this could proceed in such a short timetable. reuters.com/article/us-usa…
As I've long said: "TikTok is functionally and technically similar to ByteDance-owned Douyin, which is available only in China, and shares technical resources with it and other ByteDance-owned properties, people familiar with the matter said."
"ByteDance started working on their technological separation several months ago amid scrutiny from the U.S. government, a source familiar with the process told Reuters. It began planning for a split as part of a strategy to shift its power from China, Reuters has reported."
"While the code for the app, which determines the look and feel of TikTok, has been separated from Douyin, the server code is still partially shared across other ByteDance products, the source said."
"To ensure uninterrupted TikTok service, Microsoft would likely need to rely on ByteDance’s code while it reviews and revises the code, and moves to a new back-end infrastructure to serve users"
"Any continuing technical or operational reliance of the U.S. business on the Chinese company after the sale generally would have been unacceptable to the Committee on Foreign Investment in the United States (CFIUS)"
"Another challenge Microsoft faces is how it will transfer what is viewed as TikTok’s secret sauce, the recommendation engine... TikTok uses recommendation algorithms that are independent from Douyin, according to two sources familiar with the matter."
“Algorithms are not worth anything without the data. Segmenting the data for those countries is a significant task.”
"Not only would TikTok have to be separated from ByteDance, it would have to be broken up from TikTok’s other regions [unless a global market acquisition occurs]. This adds to the technical challenges because of the amount of data involved."
More news to come 🤷♂️
TikTok is not just amidst the backdrop of the Trade War, but is now entering as a foothold. “Chinese officials intend to bring up Trump’s prospective bans on transactions with the two apps on national security grounds” bloomberg.com/news/articles/…
It’s almost unfathomable to imagine that Beijing will loosen its grip on the Great Firewall and open up the information space as a trade gesture. Nor can commodity and tariff frameworks capture the complexity of a global social media platform. I’m not seeing the point.
More on the recent discovery of MAC address scraping by TikTok. It wasn’t utilizing the previous encrypted app_log routine that Alderson wrote about, but a seperate further obfuscated xlog routine. They really didn’t want this to be discovered.
CGTN didn't hold back in their attack of the Zucc news.cgtn.com/news/2020-08-1…
The Global Times did similar: "After wooing China in the hopes of getting Facebook into the Chinese market, Zuckerberg has done a complete about-face. Some netizens said Facebook should be called Facelessbook" globaltimes.cn/content/119659…
"We had thought there was a good man among the internet giants, but he has shown his true face & his integrity is broken to pieces. It takes many things and a long time to see a person clearly, and it seems that 'the Chinese people's son-in-law' has ended his fate with China" 💀
Chinese state media isn't known for its nuance, and in reality, Zuckerberg's stance is more careful. “I am really worried…it could very well have long-term consequences in other countries around the world.” buzzfeednews.com/article/ryanma…
After all, the movement that broke this seal and led to the TikTok ban in India began with WhatsApp, and with what many Indian users and politicians felt was digital colonialism. nytimes.com/2018/08/31/tec…
The rollercoaster continues. "Chinese giant ByteDance is engaging in early discussions with Reliance Industries Limited for backing TikTok’s business in India in a move to potentially save the popular video app’s fate" techcrunch.com/2020/08/12/byt…
"Reliance and ByteDance began conversations late last month and have yet to reach a deal, the sources said, requesting anonymity as the talks are private. TikTok’s business in India is being valued at more than $3 billion, one of the sources said."
Once again, Chinese market access leads the conversation — not the substantive threats and worrisome incentives. “Apple Inc., Ford Motor Co., Walmart Inc. and Walt Disney Co. were among those participating in the call” wsj.com/articles/corpo…
“Some U.S. entertainment and sports concerns, meanwhile, are worried... The National Basketball Association, for example, has a deal with Tencent to stream its games in China. NBA spokesman Mike Bass said the league is ‘awaiting further clarity on the executive order.’”
There is absolute truth to the chaotic Executive Order, and how it may cut off WeChat and Douyin advertising in China, but that is only a part of what these companies are thinking about. I suspect they really fear Beijing’s supply backlash & anti-American sentiment.
The anti-Japanese sentiment across China in 2012 pummeled Japanese automakers. State media over the last few years has been building up the Trade War to drive the conversation in a similar direction, with TikTok and WeChat pushing the stakes higher nytimes.com/2012/10/10/bus…
"Chinese tech giant ByteDance censored content it perceived as critical of the Chinese government on its news aggregator app in Indonesia from 2018 to mid-2020, six people with direct knowledge of the matter told Reuters." reuters.com/article/us-usa…
"The sources said that local moderators were instructed by a team from ByteDance’s Beijing headquarters to delete articles seen as 'negative' about Chinese authorities on the Baca Berita (BaBe) app."
Senator Hawley: “If ByteDance will censor BaBe in Indonesia, what’s to stop it from censoring TikTok in the United States? We shouldn’t trust any assurances they make. This is another reason TikTok as it currently exists should be banned in the United States.”
"Indonesia, a country of 270 million where over half the population is under 30, is one of ByteDance’s fastest-growing markets. TikTok had more than 147 million downloads in the country"
"BD bought Indonesian news aggregator BaBe in 2018 after TikTok was briefly banned... In seeking to reverse the ban, BD agreed with Indonesian authorities to hire a team of local TikTok mods... Soon after, mod guidelines for BaBe [were] crafted by a team from BD's Beijing HQ"
"BaBe moderators were also told not publish any articles on the TikTok ban while negotiations with the Indonesian government were underway"
"Under the new BaBe guidelines, articles from partner media outlets that were perceived as critical of the Chinese government would either not be republished on the BaBe app or would be taken down from the app, according to the six sources."
"Articles with the keyword 'Tiananmen,' a reference to China’s 1989 Tiananmen Square crackdown, or to Mao Zedong, the founder of modern China, were among those taken down, one person with direct involvement said."
"Another direct source described articles about tensions between Indonesia and China over the South China Sea as being banned on the app, even when they came from the country’s official news agency, Antara."
This is the same tone that TikTok had taken pre-Hong Kong until the more recent opening of the flood gates with Black Lives Matter. “They wanted a non-political happy tone for the app." It's a strategy that is a direct result of the Chinese market, and ByteDance's clashes there.
The news surrounding BaBe is the at least the fifth leak of instructed censorship in moderation guidelines from ByteDance properties. There was The Guardian's document trove on the global TikTok shadow banning of Tiananmen Square & Falun Gong theguardian.com/technology/201…
There was The Guardian leaks out of Turkey that showed ByteDance had designed guidelines to restrict content that criticized Erdoğan, as well as held his hardline anti-LGBTQ stance in the country — as if TikTok was digital diplomacy theguardian.com/technology/201…
There was Netzpolitik's leak and the reporting on disability gating: netzpolitik.org/2019/discrimin…
There was also The Intercept's follow-up reporting with documents that leaked out of Brazil on how TikTok kept to this 'happy feed' strategy by restricting the reach of content from people that were 'deemed too ugly, poor, or disabled for the platform' theintercept.com/2020/03/16/tik…
In those guidelines, TikTok also seemingly acted like an enforcer of the state, going as far as laying out national security implications of broadcasting military movements.
Like this latest round of reporting on BaBe, TikTok's enforcement has historically always led back to Beijing.
Can we all agree that these concerns are not conspiracy theories? TikTok's early moderation was a product of an ecosystem constricted — and designed — by censorship. It happened, and ByteDance will continue to remain culpable to its home market.
At the same time that BaBe was being censored in Indonesia, ByteDance's Toutiao-family products in India were allowing misinformation to spread technode.com/2018/11/23/byt…
ByteDance would sue over that reporting. “The content on Huxiu is obviously a rumor & libel. It’s malicious slander. Whether it’s Chinese or foreign publications, Chinese or foreign authors, they must respect the truth, laws, and principles of journalism" techcrunch.com/2018/12/19/tik…
Would I be surprised if Toutiao's sister product for the west, TopBuzz, came with its own baggage? No. Frankly, it never received enough attention, despite becoming a massive traffic boon for publishers. niemanlab.org/2019/09/that-c…
In June, ByteDance shut down TopBuzz. I'll let you guess the reason. reuters.com/article/us-chi…
The point that needs stressing is that all of these possibilities that have played out around the globe are not just in ByteDance's past. Absent no safe path forward, we're looking at a Facebook-scale company reaching into every lateral of tech. These issues will only compound.
The anonymous Qiao Collective think tank (which has yet to release funding disclosure) dropped their highest production piece yet today. It was about TikTok, and declared the concerns propaganda.
A breakdown of the lines this anonymous institution holds: "It should be unsurprising, then, that one will find zero mention of the vast detention camps for Uyghurs in Xinjiang in the writing of Qiao" newbloommag.net/2020/06/22/qia…
This is almost identical to how Chinese state media has positioned this issue.
Another big issue for TikTok that makes the acquisition more challenging: “In July, TikTok classified more than a third of its 49 million daily users in the United States as being 14 years old or younger, according to internal company data and documents“ nytimes.com/2020/08/14/tec…
“While some of those users are likely to be 13 or 14, one former employee said TikTok workers had previously pointed out videos from children who appeared to be even younger that were allowed to remain online for weeks.”
“The TikTok data seen by The Times shows that the number of daily U.S. users in July whom the company estimated to be 14 or younger — 18M — was almost as large as the number of over-14 users, around 20M. The rest of TikTok’s U.S. users were classified as being of unknown age.”
This is a big, previously unreported snippet: “TikTok does not rely only on users’ self-reported dates of birth to categorize them into age groups. It also estimates their ages using other methods, including facial recognition algorithms that scrutinize profile pictures & videos”
“Another way TikTok estimates users’ ages, these people said, is by comparing their activity & social connections in the app against those of users whose ages have already been estimated. The company might also draw upon information about users that is bought from other sources”
“One of the former employees, who left TikTok this year, said the app did not use the classifications to automatically restrict or take down videos that might be from users under 13, or to secure permission from those users’ parents or guardians.”
“In Britain, the share of daily users who were classified as 14 or younger was around 43 percent this spring, the data shows. In Germany, the share was more than 35 percent, and in France in February, it was 45 percent.”
The FTC’s next investigation won’t like this: “TikTok primarily uses the classification system to inform corporate strategy, according to the people with knowledge of the matter. “
Opaque, non-user facing facial recognition will push a lot of people over the edge on their thinking around TikTok. Utilizing that facial data as a metric for strategy, without acting on it for age gating, is a COPPA violation.
There is a lot of history surrounding Musically and TikTok that we are going to learn as the current and former employees continue to talk. The golden gooses will continue to be in moderation policy, but I’m holding out for the inevitable news of ByteDance data sharing.
We got another Executive Order tonight.
“It's currently unclear if the new Executive Order overrides a previous one signed last week that gave ByteDance two options: sell TikTok in 45 days, or have TikTok banned in the US by then.” en.pingwest.com/a/7521
“Trump’s executive order said there is ‘credible evidence that leads me to believe that ByteDance … might take action that threatens to impair the national security of the United States.’”
The White House utiizled the DPA: “The order, which invokes the Defense Production Act, demands that ByteDance divest from TikTok's U.S. operations within 90 days.” thehill.com/policy/nationa…
The Executive Order via the Treasury is quite complicated because it both targets the Musical.ly acquisition as well as TikTok. It also oddly preempts a formalized divest via CFIUS, but demands CFIUS be involved in the approval process. home.treasury.gov/system/files/1…
This order also demands that ByteDance destroys data related to TikTok and Musical.ly. That would encompass more than TikTok itself should a divest fail, but may mean ByteDance has to destroy shared infrastructure. TikTok data is surely in utilized in ML models, etc.
This is a nightmare demand: "Immediately upon divestment, ByteDance shall certify in writing to CFIUS that it has destroyed all data." It's not even possible; the TikTok deintegration would take far longer than 90 days.
I would assume this is fairly standard for CFIUS, but it's eye popping for a tech company. The U.S. government is now granted access to all TikTok premises in the U.S. to perform audits. "CFIUS shall conclude its verification procedures within 90 days after the [divestment]"
The impossible position for ByteDance:
Yesterday's formalization of the TikTok process still leaves us with so many questions surrounding WeChat. Is the U.S. government asking Apple to revoke global market access? If so, Apple is deeply threatened. bloomberg.com/news/articles/…
As these possibilities surrounding WeChat are settling in, this is the reality for the diaspora and students: "the brunt of the new ban’s consequences will again fall on ordinary people caught between the two nations." lausan.hk/2020/who-bears…
A great piece from @_KarenHao on her father's immigration story and how WeChat became a rekindling force. “If WeChat is banned, I will basically disappear from the WeChat family group. Everything will be changed. It would be a huge impact to my life.” technologyreview.com/2020/08/13/100…
"At a human level, [WeChat's ban] would be the weakening or severing of hundreds of millions, maybe billions, of connections—a loss undeniable albeit difficult to quantify."
“If I lose access to the WeChat public accounts, I’m going to lose a lot of visibility into what Chinese policy makers are thinking and what policies they're introducing, and how they're explaining them and discussing them with one another in Chinese for a Chinese audience"
“Losing access to that as a research community would be tragic. It would definitely harm the US ability to make smart decisions about how to deal with China in the future.”
“If we set ourselves up for a new cold war and there’s no ability to monitor actual events in China, I think we could miss opportunities to have better outcomes in the long term. Essentially tearing down any connection between the 2 places is a recipe for enduring conflict”
An op-ed from human rights activists Times Wang & Yang Jianli who have worked to litigate Tencent on behalf of censored/monitored diaspora. Yang is a survivor of the Tiananmen Square massacre. "WeChat’s practices undermine free speech in the United States" washingtonpost.com/opinions/2020/…
Stories such as this need to be a part of this conversation.
"[The WeChat ban] might undermine the government’s stated interest in 'engaging and empowering' ordinary Chinese people... There is no reasonable alternative that can sustain the same level of grass-roots communication flows between people in China and people outside of it."
"We agree that using WeChat on official devices poses a potential security risk, and neither of us has WeChat on our own devices"
"The ultimate goal should be to undermine censorship and enhance transparency and freedom of expression — not to simply mirror the Chinese government’s behavior, unbound by any principle other than an eye for an eye."
"The ultimate goal (which should be woven into all aspects of the government’s China policy, and not just as it relates to WeChat) should be to tear down the Great Firewall someday and hopefully someday soon."
Human Rights Watch's @Yaqiu wrote on this issue in Foreign Policy yesterday. "The threat WeChat poses should also be taken seriously. WeChat isn’t just a tool for many users; it’s a trap." foreignpolicy.com/2020/08/14/wec…
"The centrality of WeChat in information acquisition and communication among the Chinese diaspora, especially first-generation immigrants from China, should be a source of real concern elsewhere."
"Over the past couple of years, I’ve been interviewing members of the Chinese diaspora around the world on the Chinese government’s activities undermining human rights abroad. A reoccurring problem I run into is that some of my sources only wanted to use WeChat to communicate"
"WeChat is also where many members of the Chinese diaspora obtain info... A survey of Mandarin speakers in Australia found that 60% of those polled identified WeChat as their primary source of news & information, while only 23% said they regularly accessed [mainstream sources]"
"Some of the most popular publications catering to the diaspora originated on WeChat... In this sense, news produced by a local Chinese-language outlet in New York goes through censors in Beijing before it reaches the Chinese-speaking community in New York."
"The impact of living online in WeChat’s ecosystem means that people outside China are subjected to the same censorship and propaganda, which shapes their worldview in ways more amenable to the Chinese government."
"Even people who only use WeChat to communicate with people in China are generally aware of its censorship and surveillance capabilities and may self-censor, even unconsciously. The effects can be insidious"
"The gov's censorship rules are never clear, and enforcement is consistent. Nobody knows where the red line is. So to play it safe, you try to stay far away from sensitive issues. When you can’t talk about something, you gradually learn to avoid thinking about it"
I wholeheartedly agree with HRW's broader view of the possibilities to challenge these nuanced threats.
This interview with Senator Wyden is quite good. Trump has forced his way in as the figurehead of this discussion, but there is real bipartisan support exploring these issues. The questions Wyden presents are about how we can proceed with a broader outlook protocol.com/ron-wyden-tikt…
For what it's worth, the Intelligence Committee has way of molding more nuanced opinions of China. If more people knew what they know, opinions might change.
I was reminded of this WeChat example. It's always challenging to trace the source of these nationalist threats, but you might guess who would care about an art exhibit like this.
Asiye Abdulaheb's story of how the China Cables came to be fits into that pattern, with the exception that it occurred over Messenger instead. nytimes.com/2019/12/07/wor…
Last night’s Executive Order was a surprise product of CFIUS, after all. Mnuchin’s statement: “CFIUS conducted an exhaustive review of the case and unanimously recommended this action to the president” bloomberg.com/news/articles/…
“Large VC and PE firms including Sequoia Capital and General Atlantic have billions of dollars on the line and are trying to make the sale of TikTok a more competitive process, which could drive the price higher, avoid a fire sale to Microsoft, and ensure [the right bidder]”
“Goldman Sachs Group Inc. and Blackstone Group are among the financial firms that have been jostling for a role in any deal, but the attempts haven’t made headway, according to three people familiar with the deliberations,”
Bloomberg: “TikTok investors who thought they’d hit a home run are struggling with a precipitous decline in value and have completely misjudged the political reality... Leone also underestimated the negative impact of the venture firm’s relationships in China“
Didn’t know this: “Neil Shen, the head of Sequoia China who oversaw the Bytedance investment, is one of the thousands of delegates to the Chinese People Political Consultative Conference, a non-legislative government advisory body.”
I laughed out loud at the last paragraph. There’s no formative tech policy anywhere in the pipeline, that’s for sure. bloomberg.com/news/articles/…
And... the White House has gone off the rails once again. The stakes have skyrocketed. uk.reuters.com/article/us-usa…
Shopify, Amazon, etc. would implode if Alibaba and Chinese supply chain infrastructure is shattered.
RIP to wanting rational China policy
TikTok goes full Facebook by launching @tiktok_comms to compete with information on Twitter that they deem to be 'misinformation' bloomberg.com/news/articles/…
TikTok's combative communications blog is dubbed 'The Last Sunny Corner on the Internet' tiktokus.info
On this new blog, TikTok amplifies news stories that benefit their cause without providing the full context
To me, it feels like the way these quotes from The New York Times and The Washington Post are presented pushes a bit over the line. This isn't a hustling startup's landing page — this is the most valuable startup in the world pulling endorsement-like quotes out of the media
A Bloomberg Opinion piece that asks for more info from the White House, TV journalist Fareed Zakaria's monologue, and a cherrypicked quote from Joseph Steinberg's blog post — that describes the threat of Chinese governance over ByteDance — are among the 'experts agree' section
I fixed it
Facebook tried this, and it wasn't well liked.
Never a dull moment
FT: "Larry Ellison’s Oracle has entered the race to acquire TikTok, the popular Chinese-owned short video app that President Donald Trump has vowed to shut down"
"The tech company founded by Mr Ellison had held preliminary talks with TikTok’s Chinese owner, ByteDance, and was seriously considering purchasing the app’s operations in the US, Canada, Australia and New Zealand"
What a mess: "ByteDance is opposed to selling any assets beyond those in the US, Canada, Australia and New Zealand, said a person close to the company."
"Twitter had also held early stage talks with TikTok, but there were serious concerns about the US social media group’s ability to finance the deal, said people briefed about the matter."
"Mr Ellison, one of the world’s richest people, is one of the few people in Silicon Valley who has openly supported Mr Trump. In February, the 76-year-old billionaire entrepreneur held a fundraiser for the US president at his estate in Coachella Valley"
I'm throwing Dr. Oz into the rig as the future TikTok CEO
Oddly, Zoom broke pack recently and migrated to Oracle Cloud — probably for better terms as a tentpole client. A neat deal. I suppose TikTok could fit into Oracle's model in that regard to take away a growth property from the public cloud providers. oracle.com/customers/zoom…
We're in a different era than when YouTube was acquired in 2006. Absent Google, YouTube would have floundered because of bandwidth costs. That's not true anymore. But YouTube certainly helped to build the Google Cloud (and prospects like game streaming) that we know today.
I truly don't think the old-school leadership at Oracle could allow something like TikTok to prosper, but we are not merely talking about a dancing app for kids — this is the future of computing, and Ellison will want to be there too.
Last year, Oracle took the dive and brought much of its China operations to a standstill. CFIUS (and Trump by proxy) would prefer these deep cuts over the challenges that Microsoft faces in curtailing to the Chinese market. ft.com/content/16ffdc…
“They still need PeopleSoft, so they’re going to re-hire in India and the US. The way they’re doing it, it gives us the impression they want to get rid of us as quickly as possible"
How many more buyers can pop out of the woodwork? We must be closing in
Oof
POTUS confirms
Oracle may be ahead because of this: “For Microsoft, the deal’s attractiveness diminishes if it needs to be a shared product owner with Reliance Industries or Bytedance in non-US markets.” cnbc.com/2020/08/18/why…
I'm not sure this is exactly true: "The way TikTok is structured means means the subsidiaries in New Zealand, Canada, and Australia report to the U.S." The structure of TikTok Inc and TikTok PTY LTD clash a bit; I have to assume that the latter controls the Singaporean backups.
An op-ed from @superwuster is making waves today. "There is more to this situation, though, than meets the eye... Behind the TikTok controversy is an important struggle between two dueling visions of the internet."
nytimes.com/2020/08/18/opi…
nytimes.com/2020/08/18/opi…
"We need to wake up to the game we are playing when it comes to the future of the global internet. Idealists of the 1990s & ’00s believed that building a universal network, a kind of digital cosmopolitanism, would lead to world peace & harmony. Noone buys that fantasy any longer"
Here we go again
👁
Twitter SPAC incoming
Taiwan enters the game: "Taiwan is planning to ban mainland Chinese streaming giants iQiyi and Tencent Holdings from operating services on the island, the Ministry of Economic Affairs said in a notice on Tuesday." scmp.com/tech/policy/ar…
"The formal order, which will be announced on September 3, will prohibit Taiwanese individuals and organisations from working with mainland Chinese video streaming companies"
"iQiyi, a Netflix-like platform backed by Chinese search giant Baidu, applied in 2016 to set up a Taiwan subsidiary. Authorities rejected the application as online streaming is not on the list of permitted services open to mainland Chinese operators, the notice said."
"Platforms like iQiyi and Tencent’s WeTV have circumvented the restrictions by forming alliances with local broadcasters and distributors to promote and sell their video streaming services on the island. iQiyi – which may have as many as 6 million subscribers across Taiwan"
Here we go: "TikTok is preparing to mount a legal challenge as early as Monday to President Donald Trump’s executive order" reuters.com/article/us-usa…
"TikTok plans to argue that the Aug. 6 executive order’s reliance on the International Emergency Economic Powers Act deprives it of due process, according to the sources. TikTok will also contest its classification by the White House as a national security threat"
"TikTok’s legal challenge would not shield ByteDance from having to divest the app. This is because it does not pertain to the Aug. 14 order on the sale of TikTok, which is not subject to judicial review."
"The move shows that ByteDance is seeking to deploy all the legal ammunition at its disposal as it tries to prevent the TikTok deal negotiations from turning into a fire sale."
The clock is still counting down. 25 days to close a divest deal. axios.com/tiktok-deal-od…
"ByteDance is between a rock and a hard place, and has a fiduciary duty to get value for TikTok. But it could decide that no deal is better than a bad deal, if the politics at home get too hot."
We learned that Alphabet had entered the chat this morning: "Google parent Alphabet Inc. considered participating in a group bid for TikTok, but the effort fizzled in recent days" bloomberg.com/news/articles/…
"Several firms discussed forming a consortium to invest in the popular video-sharing app, with Alphabet weighing a minority, non-voting stake through one of its investment arms... Alphabet didn’t lead the initiative. It isn’t clear which U.S. company did, or why the effort ended"
Google frankly needs a TikTok because YouTube's mobile initiatives are going absolutely no where. A total void of investment and fiduciary duty. At this rate, Google won't get a Facebook-scale messaging app off the ground either.
It's not surprising that Google would bid, given how the company — like Facebook — has sought to leverage the White House's China policy. It's more surprising that they wouldn't follow through. TikTok might be the only antitrust get out of jail free card. wsj.com/articles/googl…
TikTok has confirmed the lawsuit:
This will probably go nowhere, but I’m here for it 🍿
I was taken aback when I heard of this. On Friday, TikTok leveraged the ongoing family dispute involving a 15 y/o girl - a minor - not only for marketing, but seemingly as an attack on the White House amidst the divest battle. Genuinely gross. au.news.yahoo.com/tik-tok-posts-…
What were they thinking?
I suppose this was part of the standard operating procedures that also led the company to mischaracterize a 17 y/o girl as a Bin Laden sympathizer in covering-up a moderation scandal. TikTok is true uplifting force for users like these young women, but the company must do better.
TikTok U.K. is important to watch during this tumultuous time. Notably, it may continue to operate separately, under ByteDance, if the 4 Eyes divestment line goes through as reported. They’re still pushing forward:
“TikTok’s UK and European users’ data is stored in the US, with plans to move it to Dublin in the next two to three years as the company says it is building a $500m data centre there.”
Strong assurances from the U.K. head: “Waterworth, who joined TikTok a year ago, said he ‘never had a concern’ about the company’s connection to China.” 🥴
Like we saw from Big Tech before Congress earlier this month, TikTok executives can’t even acknowledge the adversarial, hostile environment in which they operate because of the market access implication. They’re hardening behind the scenes, but never acknowledge that crucial why.
TikTok isn’t restricting codebase access and migrating resources to qualify for a non-existent western rulebook. TikTok is racing to meet industry standards because the company does have Mainland vulnerabilities that haven’t been resolved by touting ‘Singapore’ cold storage.
These will be ongoing discussions until the Chinese operating environment becomes more trusted. But the moral of this story seems to be lost on TikTok U.K. as it propels more unprecedented ad buys instead of building technology that will never need the same level of trust.
Zoom has a long way to go, but TikTok could learn a few things. blog.zoom.us/navigating-a-n…
Namely, Zoom is rolling out end-to-encryption, and investing further. There isn’t a public-facing comparison or promise like this from TikTok. blog.zoom.us/end-to-end-enc…
We finally got the behind the scenes of Zuck's October Georgetown speech and the meetings in D.C. that followed: wsj.com/articles/faceb…
This news is being leveraged a bit to dissuade concerns surrounding TikTok. By all means is Facebook enjoying this, but TikTok's concerns are real, not a creation of Zuck. I pointed this out in November:
WSJ: "In a private dinner at the White House in late October, Mr. Zuckerberg made the case to President Trump that the rise of Chinese internet companies threatens American business, and should be a bigger concern than reining in Facebook, some of the people said."
"Zuckerberg discussed TikTok specifically in meetings with several senators, according to people familiar with the meetings. In late October, Sen. Tom Cotton (R., Ark.)—who met with Zuck in September—and Sen. Charles Schumer (D., N.Y.) wrote a letter to intelligence officials"
"Facebook has established an advocacy group, called American Edge, that has begun running ads extolling U.S. tech companies for their contributions to American economic might, national security and cultural influence." 👀
"Facebook overall in the first half of this year spent more on lobbying than any single company, according to data from the Center for Responsive Politics. In 2018, by contrast, it ranked eighth among companies, the center’s data show."
"Facebook spokesman Andy Stone said Mr. Zuckerberg has no recollection of discussing TikTok at the dinner."
"Facebook’s advocacy has angered people inside TikTok, according to people familiar with the matter."
Quite the cast: "Zuckerberg reiterated his concerns about China during the White House dinner with Mr. Trump, the President’s son-in-law Jared Kushner, and Facebook board member Peter Thiel, who has been a backer of Mr. Trump, according to people briefed on the conversation."
Thiel's world view on China, and his America-focused investments, are helpful context to decipher his presence at that meeting. latimes.com/business/story…
We had learned of this meeting previously, but the WSJ's latest reporting roped in the TikTok and China focus, and highlighted how impactful it was in bringing us to where we are today with bipartisan intrigue surrounding TikTok. nbcnews.com/tech/tech-news…
"In 2019, the annual Freedom on the Net study on Internet freedom around the world gave the U.S. a score of 77 with other nations receiving a much lower number, for example, China was given a score of 10."
"for example" lol
"for example" lol
Chairs are like Facebook
Facebook's American Edge has only done about $4000 of ad buys on Facebook facebook.com/ads/library/?a…
From May: "American Edge has come together with the aid of top Democratic and Republican operatives, including Jim Papa, a former aide to President Barack Obama, and Danny Diaz, who has advised GOP governors and presidential campaigns on media strategy" washingtonpost.com/technology/202…
Facebook is pushing back on today's WSJ story about TikTok:
I think Facebook is generally right. Zuckerberg has obviously given oxygen to these concerns, but bipartisan inquiry pre-dates the Kushner, Thiel, Zuckerberg White House meeting. Some are projecting a Facebook-Trump cabal because of that meeting, but there is no evidence of that.
Facebook is also right to be concerned about what this precedent sets. With Navarro attacking American companies like Microsoft, and TikTok being chopped up with a butcher knife and auctioned off without growth markets, it's not clear that anyone wins this buzzfeednews.com/article/ryanma…
This will never be as simple as a Tulsa Rally retaliation or a Zuckerberg-directed scheme. The Trade War, the swing state farmers, Huawei, the pandemic and the reelection all play into the instincts of this White House that brought us to an unprecedented ban on a Chinese app.
To answer how TikTok was pushed up this administration's agenda, you might have better odds putting your money on sociopaths just wanting to destroy a shiny thing than any clear policy framework.
TikTok: “Today we are filing a complaint in federal court challenging the Administration's efforts to ban TikTok in the US.” newsroom.tiktok.com/en-us/tiktok-f…
They lost me at the second line: “As a company we have always focused on transparency, so we want to explain why we are taking this step.”
The keyword of the argument laid out here is ‘led.’ Much of ByteDance’s moderation resources have been within Mainland China. That may have, and still be, the case for TikTok, meaning staff in Mainland China are permissioned to download TikTok data to China as part of their job.
The way the social media industry operates is frankly frightening. We’re not where we need to be — and the stakes are a lot higher than Beyoncé. For every story we learn of in the west, there are multitudes more playing out in China, many by the government theverge.com/2020/7/27/2134…
This is a bad faith rewriting of history. Musical.ly was a Cayman Islands corporation that, according to the FTC complaint, owned & directed the California Musical.ly, Inc. ByteDance even argues the exact opposite of this, declaring TikTok a U.S. corp
Musical.ly, the Chinese enterprise, that became TikTok, the U.S. enterprise, by way of the Chinese conglomerate. New day, new identity 🥴
Oops, I mean, actually TikTok is Cayman Islands company
Hey, at least the lawyers are getting rich
Stokel is doing a great job of pulling out the important arguments surrounding the CFIUS process:
Hell of a way to drop the DAUs
MAUs too:
I think we can all agree that CFIUS is bizarre:
Like the concerns surrounding Tencent, the White House's action is a huge hinderance on ByteDance and its future goals. This is a company that wants to play big in music streaming, workplace communication, and anywhere, and everywhere, else.
It hasn't been much of a success, but ByteDance literally built a phone — and is reportedly building an operating system for future devices. It's investing in the same direction as Apple and Facebook, for good reason. The horizons are now shrinking. theverge.com/2019/11/4/2094…
Is there any comparison to how the Chinese government has thrown itself into this negotiation?
And... Mayer is out. That was quick.
"Mayer did not anticipate the extent to which TikTok would become involved in tensions between China and the US, said the people familiar with the matter"
“He didn’t sign up for this"
“He didn’t sign up for this"
"'He has put himself in a sensitive political zone,' said one person familiar with his time at Disney, speaking when Mr Mayer first joined ByteDance. 'He will have to align himself with both his Chinese masters and public scrutiny in the US.'"
That quote from a Disney source highlights just how much we — and Mayer — knew about this game. Disney is not blind to how China operates, nor the the sensitive areas that have had global pushback brewing, like the Hollywood censorship. This failure is his own.
Mayer's dual operating role was the writing on the wall that ByteDance would struggle to — and fight back on a — spinoff of TikTok.
Zhang's statement highlights that ByteDance still isn't ready for a full-globe spinoff. "The political circumstances we are operating within could have significant impact on [Mayer's] job in any scenario, but particularly given his global role while he's based in the US.”
Another potential buyers in the market fire sale, SoftBank entered the race: theinformation.com/articles/softb…
We also learned that TikTok had approached Netflix to gauge their interest.
"The streaming giant reportedly passed on the invitation"
Netflix probably made the right call: it doesn't need or want this decouple drama, or TikTok's moderation baggage. businessinsider.com/tiktok-netflix…
"The streaming giant reportedly passed on the invitation"
Netflix probably made the right call: it doesn't need or want this decouple drama, or TikTok's moderation baggage. businessinsider.com/tiktok-netflix…
I, for one, will not be fulfilled until Quibi starts bidding on TikTok
future tiktok ceo and coo right here
So, uh, Peter Navarro's "American puppet” comment appears to have been the truth of this relationship
CNBC: "The fact that [Kevin Meyer] is stepping down does indicate that we are likely to see a deal with a Microsoft or an Oracle, more likely Microsoft, and that deal could come in the next 48 hours or so."
With Mayer being burned in this relationship, I think a lot of tech CEOs and Wall Street may hold this point of view going forward:
On the Chinese side, ByteDance employees are wondering out loud if Mayer is putting his personal interests first. This is setting a dark tone for any east-west talent sharing.
It's worth noting that in Zhang's letter to employees, U.S. GM Vanessa Pappas was promoted to 'interim head of TikTok.' It does not explicitly mention either C-suite, though the CEO interpretation is being reported. Clarity on who was always in charge... en.pingwest.com/a/7623
With collaborative horizons in the west shrinking, nationalists in China are leading the conversation. Under the 'wolf warrior' era, patriotic netizens are now casting ByteDance as weak, with no backbone, for even considering cooperating or selling TikTok scmp.com/tech/apps-soci…
The hard-lining Global Times editor is now trying to rope in the monster he created at home
At this table, no one feels as though they are winning. Buyer or not, Microsoft walks away with greater scrutiny of their China operations from every stakeholder. ByteDance walks away with global horizons in shambles, knowing the precedent is set and that the fights will roll in.
Should ByteDance walk away with a splintered TikTok, the battles in Europe and Asia are just around the corner, and the now-decoupled engineering teams and intellectual property may mean ByteDance has to rebuild upon shaky foundations.
I struggle to see a near future where ByteDance can afford to look beyond China. ByteDance relished in years of VC infusion, of eager and enthralled eyes and ever expanding ambition. The good days may have come to an end, and there may be no post-growth Tencent playbook to follow
Pappas' statement also uses the title 'head' with no mention of CEO. I suppose ByteDance is missing a COO, and TikTok no longer has a C-suite?
Congrats to the now-CEO Cayman Islands lawyer?
The gift that keeps on giving: "Walmart has been working with SoftBank on a potential acquisition" cnbc.com/2020/08/27/tik…
"TikTok is likely to sell its U.S., Canadian, Australian and New Zealand operations for a valuation in the $20 billion to $30 billion range, but a price still hasn’t been decided, the people said."
BREAKING: WALMART IS TEAMING UP WITH MICROSOFT ON TIKTOK BID
ALSO BREAKING: MY BRAIN cnbc.com/2020/08/27/wal…
ALSO BREAKING: MY BRAIN cnbc.com/2020/08/27/wal…
Vudu, now streaming on TikTok
Walmart's statement on the TikTok bid:
The U.S. is a different market where live e-commerce hasn't quite taken off of in the same way as Douyin in China, but Instagram is beginning to show how social media can be a strong e-commerce funnel. The playbook is laid out for Walmart to build a Shopify.
Would Bezos bite?
Walmart really wants in: "It's possible that Walmart also has had discussions with Oracle, which also continues to negotiate with ByteDance." axios.com/sources-micros…
The paradigm hasn't taken off, but Amazon and Snap are partnered in a 'Product Finder' feature for visual CPG search. Walmart will need similar partnerships as we truly enter the augmented reality era in the next few years. TikTok+Microsoft is a good bet techcrunch.com/2018/09/24/sna…
The Walmart + Microsoft proposition began yesterday:
With Walmart in the mix, Microsoft will surely wind up paying less for TikTok than the $26.2B they spent on LinkedIn — maybe even half as much.
Similar to Oracle's play, the cloud business may be part of Microsoft and Walmart's calculus. Facebook doesn't get enough credit for its infrastructure; maybe only Azure and AWS could compete.
The problem, however, is that ByteDance may only be selling off the Four Eyes markets, presumably with a non-compete clause for global expansion. It brings into question the importance of global infrastructure, and whether cloud margins are a real problem.
A lot of truth about complication. I would guess Microsoft sees in Walmart risk reduction for future antitrust action. It leaves the wholly owned Instagram a greater target.
The Tencent-Alibaba investment rivalry in China is quite different from Big Tech. Here, we rarely see anything outside of all or nothing ownership. Google Ventures is the most prolific counter; maybe joint-ventures and drawing lines via investment become more common going forward
Microsoft would want TikTok to deeply integrate with Xbox (specifically xCloud game streaming), and combine XR resources. Apple and Facebook continue to invest in AR, and Microsoft has no mobile distribution. With a partner in the way, could Microsoft ever fully integrate?
While it may hold back regulators, Walmart isn't bringing much to the table for this loyalist grifting White House.
Interesting
A profile of ByteDance founder Zhang Yiming is out today. You should read it. "He isn’t a Communist Party member." wsj.com/articles/entre…
How the 26yo blogger exuberating the Silicon Valley ethos, advocating against censorship, winds up at the helm of one of China's most censored platforms is a sad story of Xi's China. For Zhang, TikTok was never the true fight of his life. That began 2017-12-29 at home in Beijing.
Helpful context about how the Microsoft deal came to be. It was also reported today that TikTok was in talks with Azure to become a core customer.
Before Walmart entered: "Oracle, the technology giant led by Larry Ellison, has taken the lead position to acquire the Chinese-owned social app TikTok for a proposed deal of $20 billion in cash and stock, TheWrap has learned." thewrap.com/oracle-nears-2…
"The proposed deal would comprise $10 billion in cash, $10 billion in Oracle stock and 50% of annual TikTok profit to flow back to TikTok’s China-based parent company, ByteDance, for two years."
Isn't the revenue share violating the Executive Order?
Isn't the revenue share violating the Executive Order?
TikTok held a town hall today:
"For weeks, chatter among TikTok employees about what some have begun to refer to as 'D-Day,' or simply 'Sept. 15' have popped up in video meetings and the company’s internal messaging app, Lark."
"China’s ByteDance told engineers of its popular short-video app TikTok this week to make contingencies should it need to shut down its U.S. operations" reuters.com/article/us-usa…
"ByteDance told TikTok engineers in a memo this week to draw up plans for shutting down the app in the United States, the sources said"
"ByteDance is also making separate plans for TikTok U.S. employees and vendors to be compensated in the event of a shutdown, one of the sources added. TikTok has already implemented a hiring freeze in the U.S. for most open positions because of the uncertainty"
"ByteDance views the shutdown preparations as a back-up plan, and is working toward a deal that would keep TikTok operating in the United States without interruption, the sources said."
Kind of insane that ByteDance reportedly only requested engineers to draw up contingency plans this week. I take it that Indian users' data is still sitting on servers?
Senator Hawley is having a field day this week
"Beijing Trojan Horse" is a new one
Smart taking laying out the Douyin e-commerce path that TikTok will follow, and why Walmart may want that nytimes.com/2020/08/28/tec…
A new CyberScoop interview with TikTok's new CISO Roland Cloutier (as of March). A lot of half truths and misdirection here, ignoring recent history and operations. "Let's not use broad terms." Spoiler: Beijing moderators & engineers have accessed the data cyberscoop.com/tiktok-lawsuit…
"It doesn't matter."
I take it that Microsoft will be finding a better fit from within their ranks
I take it that Microsoft will be finding a better fit from within their ranks
This doesn't really acknowledge how this works. There are a number of witness accounts implying Chinese authorities have had WeChat data. ByteDance and Tencent do not report data requests. Alibaba has police on site. On top of this, the environment is ripe with vulnerability.
Tencent received a 0/100 score by Amnesty International in their 2016 report because it had refused to adopt end-to-end encryption, and never stated it wouldn't build a backdoor, for obvious reasons. The reality has grown much worse since 2017. amnesty.org/en/latest/camp…
Earlier this month, RFA reported a story based on court records — which are notoriously less than transparent — of a Chinese man being detailed for sending a video to an American user over WeChat. "The [evidence] screenshots they provided weren't mine" rfa.org/english/news/c…
"The evidence against him included documents from China's Cyberspace Administration and central propaganda department indicating that these departments directly monitor WeChat conversations."
We know less about ByteDance, & how it interacts with the Cyberspace Administration, because it is younger. But we do know that it almost ceased to exist when Toutiao was removed from app stores for not censoring enough content. You can imagine how the relationship evolved since.
I am sure I sound like a broken record on this TikTok issue, but I do this because I feel as though the full story is not fully being aired. There is so much we do not know, and I don't think we can afford to wait 5 years, and billions of users later, to find out.
The lobbyists have been unleashed. A lot of great background on how Microsoft is maneuvering in D.C.
“Mr. Trump saw a tweet by Senator Lindsey Graham, a close ally of the president and one the people Mr. Smith talked to, calling a Microsoft deal “win-win.” Soon, Satya Nadella, Microsoft’s chief executive, was on the phone with Mr. Trump, and got his blessing”
Triller bidding on TikTok. Incredible
👏👏👏
China is retaliating by restricting AI exports. If the threat is followed through, that may mean TikTok is dead in the water and ByteDance loses out on tens of billions of dollars in a sale.
“The new restrictions, unveiled Friday by China’s ministries in charge of commerce and science and technology, cover a number of computing and data-processing technologies such as text analysis and content recommendation, and speech modeling and voice-recognition.”
These new AI interpretations are so broad that almost all modern software may fall under them, making the Chinese government the say all. Additionally, would Baidu and other Chinese opensource AI powerhouses be limited in research-sharing by licensing restrictions?
Likewise on the impact on Chinese tech, this may actually strengthen the White House’s case in the U.S. and beyond, further gutting Chinese tech horizons
Once again, Zhang Yiming is threatened and limited by his own government. If this tit for tat and Beijing’s endless desire for control continues, will China Tech talent bounce and build outside of China?
How soon will we see PRC exit restrictions on Chinese talent?
RIP TikTok I guess 🤷♂️ Navarro says thanks?
Neat perspective here. As government bodies and state media migrated to Douyin, there was a noticeable algorithmic shift (post censor feud) to amplify these ‘authoritative’ voices, and likewise for censoring. An interpretation of Beijing’s information control is baked into the IP
With 15 days left on the clock, a TikTok sale feels less likely than it did a week ago.
I don't think Microsoft is truly all that interested in TikTok's recommendation engine, w/ the user graph & winner paradigm more appealing, but this last minute gate complicates an already complicated negotiation. Without PRC approval, Microsoft would buy a database & broken app.
Compared to YouTube, the tech behind TikTok's FYP is probably quite similar. Where I think they're different is that TikTok was built from the perspective that content and the algorithm should be steered; while Big Tech has always been more reluctant. There is more happening BTS.
A smart point by @eugenewei in this new Vox piece is that the sheer amount of content and consumption being pumped through TikTok algorithms is part of what creates the new feel. It's like YouTube's algo in fast motion, because the content *is* that.
It won't be the end of the world if ByteDance retains AI IP, with Microsoft forced to patch up TikTok, but it would be chaotic and disruptive. But, I don't think that tech is truly worth export barriers — I think the PRC side was seeking disruption. I'm not sure we'll see a deal.
triller, reels, byte, and clash stonks up again
“The new rule is aimed at delaying the sale and is not an outright ban, the person said... Because the Chinese government review will take time, the TikTok deal may be delayed until after the U.S. elections in November” bloomberg.com/news/articles/…
“The revised rules would cover cross-border transfers of restricted technologies even within the same company, while the impact and consequences of failing to make appropriate applications would be very different if an international business is spun off”
I would imagine the U.S. restrictions on machine learning for satellite imagery face the same subsidiary roadblocks, but it’s hard to see how these broad restrictions help Chinese software companies just as they’re going global.
This is... every app? What does this compliance barrier strategically achieve?
"TikTok has chosen a bidder for its U.S., New Zealand and Australian businesses, and it could announce the deal as soon as Tuesday" cnbc.com/2020/08/31/tik…
Another dual operating role at ByteDance-TikTok that challenges the notion that it was ever independent
I take it that we won’t be seeing a TikTok deal finalized today
“After China signaled it will get involved in any deal’s approval, ByteDance founder Zhang Yiming is reconsidering his options and weighing the implications of Beijing’s involvement”
“The company’s regulatory team and deal negotiators are huddling to discuss whether it’s still possible to craft a sale that can win approval from both governments, an acquirer, venture investors and ByteDance itself”
“Beijing’s involvement could end up benefiting Zhang. China’s assertion that its regulators will weigh in on any TikTok asset sale could give Zhang a possible out... [The approval process means a deal] may well pass Trump’s target for banning TikTok.”
“I think now [Zhang Yiming] realizes he might have been wrong and that if he doesn’t want to sell the company, the only one who can help him is the Chinese government -- which is what he’s tried to avoid the past few years.”
The Chinese government comes out ahead: "TikTok Deal Talks Are Snarled Over Fate of App’s Algorithms" wsj.com/articles/tikto…
The question now is: will the Trump administration follow through and kill TikTok come Sept 15? Has the countdown already begun with the app stores ready to revoke ByteDance market access?
ByteDance is now trapped in no man's land.
"TikTok’s prospective buyers are discussing four ways to structure an acquisition from its Chinese owner ByteDance, which include buying its U.S. operations without key software" reuters.com/article/us-usa…
"Other options being considered include asking for Chinese approval to pass TikTok’s algorithm on to the acquirer of the short video app’s U.S. assets, licensing the algorithm from ByteDance, or seeking a transition period from a U.S. national security panel overseeing the deal"
Glad we're finally getting confirmation of this: "While the code for the app, which determines the look and feel of TikTok, has been separated from Douyin, algorithms for moderating and recommending content and the management of user profiles are shared."
Right now, it looks like September 20th will be GenZ pandemonium.
