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🇺🇸 TikTok’s ban in the US

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The US House of Representatives has passed a bill proposing a TikTok ban unless its Chinese parent company, ByteDance, sells it. The US is concerned over the Chinese government having access to data of US users. The bill's fate now rests with the Senate, and if enacted, it could reshape the tech landscape, signalling a broader geopolitical tug-of-war between China and the West.

EDITOR’S RAMBLE 🗣

Happy Pi Day — it’s observed on 14 March since 3, 1, and 4 are the first three significant figures of π.

You know how we eat pancakes on Pancake Day?

Maybe it’s time we should do the same on Pi Day. 🥧

- Idin

🇺🇸 TikTok’s ban in the US

What's going on here?

The House of Representatives (one of the two houses of Congress that drafts and votes on US laws) has voted through a bill to ban TikTok from app stores, unless it is sold by ByteDance (its Chinese parent company).

Why is it being banned?

In short, the US government believes that TikTok represents a threat to American national security while it’s owned by ByteDance.

The Chinese government has the right to ask companies operating in China to hand over their data in some circumstances. And that’s what the US is worried about - the Chinese government looking through data on the 170m American TikTok users and that leading to a national security risk.

So is TikTok actually banned now?

Not yet — the bill that bans it has just been voted through one of the two houses of Congress, the House of Representatives. It’s now going to be considered by the second house, the Senate. It’ll only become law once it’s (1) approved in the Senate and (2) signed into law by President Biden.

But, if that all happens, ByteDance would have six months to sell TikTok to a company that’s not based in China.

If it doesn’t, it would be removed from app stores and blocked in the US.

What’s TikTok saying?

Well, TikTok’s not happy.

It’s argued that the bill isn’t practical - China would have to approve any sale and a sale process like this could take more than 6 months anyway!

To satisfy the US, TikTok’s spent more than $1.5bn (£1.3bn) on “Project Texas” — a plan to separate the data from its American users to add an extra layer of protection. The safeguard is running but the US government clearly doesn’t think this is enough!

Despite the claims of the close links to Chinese government, the CEO of TikTok, Shou Zi Chew, isn’t even Chinese - he’s Singaporean… which he made clear again, and again, and again in this exchange with a US Senator 👇

How would a ban affect its US users?

The app wouldn’t just disappear from people’s phones overnight.

American users would just not be able to update the app and wouldn’t be allowed to redownload it on a new phone. So, over time, the app’s usage would fall in the US.

What about TikTok’s rivals?

The ban would help its rivals.

Instagram and YouTube, both of which also host short-form video content, should see more people spending time with them.

But the real winners would be Meta (Instagram and Facebook’s parent) and Alphabet (Google’s parent company) because, well, ad spend! The advertising money that’s spent on TikTok will end up being funnelled towards these other platforms!

What’s the big picture effect?

Global politics can impact business — especially if you’re in the tech business and hold tonnes of data.

It's more than just about TikTok; it’s a warning for all tech firms that in this era where data privacy is SO important, they’ll have to align with the political and legal frameworks of each of the lands they operate in.

(Here’s why OpenAI, another data-rich company, moved to Ireland.)

Global businesses don't just sell products or services; they navigate different international laws and geopolitical tensions.

And as a commercial lawyer, being aware of general attitudes in different areas of the world is useful.

You’ll hear the phrase “commercial lawyers shouldn’t advise in a vacuum”.

Understanding stories like this will help with that.

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A BIT OF FUN 😄

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IN OTHER NEWS 🗞

  • 🏦 Nationwide is set to acquire Virgin Money for £2.9bn, shaking up the UK's banking sector. This bold move expands Nationwide's reach into business banking and brings it closer to the UK's four major high-street banks (Barclays, HSBC, Lloyds and the RBS). Clifford Chance and Slaughter and May are leading on Nationwide’s bid.

  • 🌐 Etoro, the trading giant, is considering a New York IPO over London, despite its strong UK ties. The firm's considering New York because of its vast investor pool, contrasting the UK market's recent struggles. This trend isn’t new — New York is beating London in IPOs recently (here’s why).

  • 🇪🇺 The EU is on the brink of the world's first detailed AI laws. The AI Act is nearly ready, just waiting for sign-off from all 27 member-states. This groundbreaking legislation is set to reshape the AI landscape, introducing mandatory EU Council approvals for AI models, outlawing AI-based social scoring, and tightening the reins on public biometric surveillance.

  • 🤖 Thomson Reuters rolled out its AI legal assistant, CoCounsel Core, in the UK. It’s already been introduced in Canada, Australia, and the USA. This launch is making waves, especially with major UK law firms like Addleshaw Goddard and Linklaters already using the AI product for tasks like bulk document analysis.

  • 🐠 UK's top supermarkets, including Asda, Iceland, M&S, and others, are taking a stand with a massive £675m lawsuit against several fish farmers. They allege there’s a cartel-like conspiracy over Atlantic salmon supply. This legal battle follows investigations by the European Commission and the US Department of Justice, about a suspected price-fixing issue that's rippled (no pun intended) through the seafood industry. Stephenson Harwood is understood to be acting on behalf of the supermarkets.

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