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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hey Sarah here, we're bringing you an episode of The

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Speaker 2: Big Take DC hosted by David Gura. You'll be hearing

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Speaker 2: from him a lot more from now on. He's joining

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Speaker 2: us as a new host of The Big Take, based

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Speaker 2: here with me in New York City. Here's David.

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Speaker 1: The US House of Representatives passed a bill last week

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Speaker 1: that would ban TikTok unless it's Chinese owners sell the platform,

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Speaker 1: and many of the apps one hundred and seventy million

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Speaker 1: American users are not happy about it.

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Speaker 3: Oh, US Government of America, You've made a big mistake.

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Speaker 4: When it comes to banning the renegade app.

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Speaker 5: Is the one time that they decide to unite forces

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Speaker 5: and come together.

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Speaker 1: They look like bas Scooby Doo villains that need to retire,

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Speaker 1: and I wish they would. It's not the first time

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Speaker 1: lawmakers have gone up against this super popular app. Former

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Speaker 1: President Donald Trump signed an executive order to ban it

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Speaker 1: back in twenty twenty, but it was blocked in court,

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Speaker 1: and last year Congress took up the idea of regulating it,

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Speaker 1: but attempts to ban it outright have failed. Now, renewed

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Speaker 1: concerns have it back on the top of lawmaker's desks.

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Speaker 1: Today on the show, it's the US government versus TikTok.

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Speaker 1: Why is Washington picking this fight again? And now does

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Speaker 1: it really stand a chance of addressing that China related

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Speaker 1: national security concerns they're worried about? And could any version

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Speaker 1: of that proposal actually work? From Bloomberg's Washington Bureau, This

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Speaker 1: is the Big Take DC Podcast. I'm David Gerra. Seleiah

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Speaker 1: Mosen is promoting her new book out this week called

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Speaker 1: Paper Soldiers, How the weaponization of the Dollar changed the

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Speaker 1: world order.

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Speaker 6: Depending on who you ask, the TikTok algorithm is either

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Speaker 6: this hugely sophisticated, unique, powerful tech tool that is a

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Speaker 6: able to discern what you're interested in, with the inside

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Speaker 6: joke on the app being it knows me better than

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Speaker 6: I know myself, or as some lawmakers see it, it

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Speaker 6: is an incredibly sophisticated spy device for espionage to collect

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Speaker 6: information that I didn't even know about myself.

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Speaker 1: Alex Birinka is a tech reporter at Bloomberg, and she

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Speaker 1: says the very thing that makes TikTok users rabid for

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Speaker 1: the app is what the government is so concerned about

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Speaker 1: it's stickiness. Users love the app because it feeds them

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Speaker 1: content that seems perfectly tailored to their interests, whether that's

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Speaker 1: a viral fetapasta recipe or a puppy video.

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Speaker 6: They spend upwards of an hour on the app every

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Speaker 6: single day. It is absolutely an enviable asset to have.

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Speaker 1: That asset. The captive eyeballs and data of millions of

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Speaker 1: American users ultimately belongs to a Chinese tech company called

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Speaker 1: byte Edance, which owns TikTok, which makes many US lawmakers uneasy.

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Speaker 1: We've seen politicians coming out of briefings with the FBI

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Speaker 1: and the Justice Department saying, essentially, trust us, this app

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Speaker 1: is a problem, but we can't share the details.

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Speaker 6: Lawmakers and officials largely have thrown out a lot of hypotheticals,

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Speaker 6: not a lot of specific evidence.

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Speaker 1: So I turned to Dan Flatley, a national security reporter

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Speaker 1: at Bloomberg. Dan, I want to ask you about the

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Speaker 1: chorus of criticism or the concern that we're hearing from lawmakers.

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Speaker 1: What are they saying about the specific risks they think

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Speaker 1: this poses to national security?

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Speaker 3: Well, the number one risk is data security. So TikTok's

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Speaker 3: parent company, Byteedance, is based in China has ties to

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Speaker 3: the Chinese government, and there is a concern that the

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Speaker 3: Chinese government could at some future date compel Byteedance to

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Speaker 3: turn over whatever data it has from TikTok to the government,

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Speaker 3: and then that data can be used with other types

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Speaker 3: of data that China has collected, either through hacks or

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Speaker 3: other forms of cyber attack, or just data that they've

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Speaker 3: bought on the open market to profile people or to

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Speaker 3: blackmail people, or for some other purpose that we don't

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Speaker 3: know about now. TikTok, it should be noted, has always

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Speaker 3: disputed this and has basically said TikTok Incorporated is a

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Speaker 3: US incorporated company. The data is walled off from any government,

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Speaker 3: But that has done very little to assuage the concerns

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Speaker 3: of members of Congress who just see a real threat there.

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Speaker 3: And then, of course, the secondary threat, or maybe the

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Speaker 3: primary threat, depending on how you look at this, is

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Speaker 3: whether the app could be used in some sort of

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Speaker 3: influence operation.

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Speaker 1: The thinking goes a foreign government or some other entity

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Speaker 1: could use the app to push certain perspectives to US users,

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Speaker 1: to promote propaganda or misinformation.

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Speaker 3: Talking to folks on the hill. One of the developments

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Speaker 3: that really sort of galvanized. A lot of support for

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Speaker 3: this push was the aftermath of the October seventh attacks

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Speaker 3: in Israel.

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Speaker 1: Since October seventh, lawmakers have expressed concern that TikTok's algorithm

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Speaker 1: has been favoring pro power Palestinian content on the platform.

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Speaker 1: On top of that, it's.

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Speaker 3: An election year, so there's a lot of focus on

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Speaker 3: the voters that TikTok is reaching. This is a very

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Speaker 3: coveted demographic, a lot of potential young voters, a lot

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Speaker 3: of young people, and politicians are interested in reaching those

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Speaker 3: kinds of voters.

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Speaker 1: It's sort of a perfect storm and one that brought

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Speaker 1: lawmakers together across the aisle in this rare moment of bipartisanship.

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Speaker 3: What you have, at least according to the folks that

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Speaker 3: I've talked to, was a moment in which all parties

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Speaker 3: are sort of worried about China. Some parties want to

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Speaker 3: take a really hard line. There's potentially more of a

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Speaker 3: concern from Republicans on kind of traditional national security issues

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Speaker 3: with regard to China. There is a concern more from

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Speaker 3: Democrats about misinformation and disinformation. TikTok sort of found itself

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Speaker 3: right in the middle of that than diagram.

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Speaker 1: This led lawmakers to hit the gas on passing legislation

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Speaker 1: to rein in TikTok, But unlike most previous TikTok bills,

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Speaker 1: this time around, lawmakers didn't immediately jump to a ban.

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Speaker 1: Could you walk us through this bill? I gather it's

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Speaker 1: about a dozen pages long. But what does it spell out? Exactly?

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Speaker 3: Essentially, it spells out a process by which TikTok would

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Speaker 3: be forced to sell itself to a US company or

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Speaker 3: a company that's located in what we would call a

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Speaker 3: quote unquote friendly country, so anybody but China essentially, but

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Speaker 3: also you don't want to be sold to Russia or Iran.

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Speaker 3: It would require TikTok to do this sale within six months,

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Speaker 3: otherwise it would face a band in the US, so

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Speaker 3: it would be blocked from app stores, it would be

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Speaker 3: blocked from internet service providers. You wouldn't be able to

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Speaker 3: get any updates to it, and essentially it would just

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Speaker 3: sort of die of starvation because the back end stuff

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Speaker 3: would no longer be able to happen.

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Speaker 1: In other words, this is an ultimatum to bite dance.

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Speaker 1: Congress is saying, sell off TikTok to a new owner

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Speaker 1: or the US is going to ban the app.

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Speaker 6: This bill moved incredibly fast.

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Speaker 1: Tech reporter Alex Birinka again, from.

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Speaker 6: Its introduction to its vote, it moved it a speed

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Speaker 6: that we haven't really seen before or not in recent years.

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Speaker 6: With the makeup of Congress as it is right now.

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Speaker 1: TikTok saw this happening and it tried hard to slow

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Speaker 1: this down. As lawmakers prepared to vote on the bill,

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Speaker 1: the app sent out alerts urging millions of users to

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Speaker 1: call their representatives and stop the TikTok shut down. TikTok

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Speaker 1: users made videos of their own too, and that campaign

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Speaker 1: went viral.

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Speaker 6: Do you want to save TikTok, Let me tell you

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Speaker 6: a couple of things that you can do. We had

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Speaker 6: lawmakers coming out to the steps of Capitol Hill of

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Speaker 6: the week this bill was voted on, complaining about just

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Speaker 6: the vast number of phone calls they were getting.

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Speaker 1: These people will listen to us because they want to

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Speaker 1: keep their jobs, so let's make sure to spam their inboxes.

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Speaker 6: But lawmakers also, particularly the ones who are critical of TikTok,

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Speaker 6: saw this as kind of just another way that TikTok

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Speaker 6: has a hold over the minds and hearts of users.

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Speaker 1: Lawmakers like Republican Congresswoman Kathy mac morris Rogers. She's the

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Speaker 1: chair of the House committee that advanced the bill this morning.

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Speaker 4: Prior to our hearing, TikTok used as influence and power

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Speaker 4: to force users to contact their representatives if they wanted

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Speaker 4: to continue using TikTok.

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Speaker 1: She basically cites that call in campaign as evidence that

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Speaker 1: TikTok needs to be stopped and implicated the Chinese Communist

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Speaker 1: Party or the CCP.

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Speaker 4: This is just a small taste of how the CCP

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Speaker 4: weaponizes applications it controls to manipulate tens of millions of

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Speaker 4: people to further their agenda.

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Speaker 1: TikTok has done a few things to reassure lawmakers that

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Speaker 1: American user data is safe. The company works with Oracle,

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Speaker 1: a US based tech company, to protect American user data

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Speaker 1: from bad actors and foreign governments. They're also taking another approach,

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Speaker 1: lobbying lawmakers directly.

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Speaker 6: I got to review one of the pamphlets they're passing

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Speaker 6: out to lawmakers defending themselves against some of the Department

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Speaker 6: of Justice's claims. They say things like, you think we

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Speaker 6: share all this information, Well, that's just what every social

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Speaker 6: media company shares, like name, email address, phone number. And

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Speaker 6: by the way, TikTok doesn't ask you for your real name,

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Speaker 6: or your employment status or your relationship status like some

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Speaker 6: other apps do.

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Speaker 1: It's a lobbying pushed that actually aligns with what many

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Speaker 1: tech critics and privacy advocates are saying. They've been trying

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Speaker 1: to press the issue even further, to blow.

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Speaker 6: This up and actually say, hey, this shouldn't just be

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Speaker 6: about TikTok, this should be about comprehensive data privacy policy.

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Speaker 6: TikTok behind the scenes has been fanning those flames, saying, yes,

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Speaker 6: we would love industrywide policy, don't single us out.

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Speaker 1: According to Alex, privacy experts think this is a fair point.

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Speaker 1: She spoke to one named Callie Schroeder, who works at

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Speaker 1: a privacy advocacy organization called EPIC.

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Speaker 6: She said, look, if the Internet is a calender, then

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Speaker 6: banning TikTok from the US is like plugging one of

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Speaker 6: those tiny holes, and you're leaving all the rest open

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Speaker 6: for data to kind of seep out, not only from

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Speaker 6: rivals who have had a litany of data breaches and

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Speaker 6: kind of bad situations come up, but also from things

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Speaker 6: like data brokers. These third parties that vacuum up hordes

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Speaker 6: of information from the Internet and sell it to the

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Speaker 6: highest bidder.

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Speaker 3: It's very unusual to see a specific company named in

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Speaker 3: legislation like this, and that actually has some members of

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Speaker 3: Congress concern. You know, does this actually address the problem

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Speaker 3: or is this just kind of.

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Speaker 5: A band aid?

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Speaker 3: Okay, today it's TikTok, Tomorrow it may be something else.

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Speaker 3: Do we need to pass a piece of legislation every

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Speaker 3: time this.

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Speaker 1: Happens, Whether it's a problem with TikTok alone or with

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Speaker 1: the entire social media environment. Lawmakers have decided there is

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Speaker 1: cause for concern. But now that the House has passed

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Speaker 1: this bill, it goes to the Senate, and if it

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Speaker 1: manages to become a law, which again is a long shot,

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Speaker 1: there are still huge questions about how to actually implement it.

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Speaker 1: That's coming up. The US House of Representatives has given

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Speaker 1: TikTok's parent company, Byte Dance a warning, we want the

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Speaker 1: app out of Chinese control, and we're not afraid to

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Speaker 1: force your hand. But that bill still faces some hurdles.

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Speaker 1: It's already slowed down sin's landing on the Senate's plate,

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Speaker 1: and even if it does pass the Senate, which is

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Speaker 1: again a long shot, and the President were to sign it,

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Speaker 1: there is no indication that byte Dance or the Chinese

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Speaker 1: government would give this up without a fight. Here's my

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Speaker 1: colleague Alex Barinka.

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Speaker 6: TikTok right now is valuable for China, probably because it's

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Speaker 6: valuable for byte Dance. We know, according to our sources

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Speaker 6: that they aim to sell almost eighteen billion dollars worth

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Speaker 6: of goods on the app in the US in its

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Speaker 6: first year of operating TikTok Shop. So when it comes

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Speaker 6: to just like economic lift and having a parent company

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Speaker 6: and byte Dance that owns some of the big guest

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Speaker 6: apps in the world, it becomes really, really, really important.

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Speaker 1: The Chinese government has made it clear that it would

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Speaker 1: have to be involved in any potential sale of TikTok,

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Speaker 1: but it's unclear who the US expects has that kind

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Speaker 1: of cash lying around.

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Speaker 6: The bill itself doesn't specify what kind of sale or

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Speaker 6: divestiture would make lawmakers happy. So I kind of tapped

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Speaker 6: my old deals reporting hat I used to cover M

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Speaker 6: and A for US at Bloomberg, particularly in tech, and

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Speaker 6: I think there are three specific options that I really see.

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Speaker 1: The first option is Byteedance would sell TikTok to a

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Speaker 1: US company or one that's more friendly to the United States.

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Speaker 6: The problem with that is under the current administration, the

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Speaker 6: Anti Trust Regulator has been very, very tough on big tech.

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Speaker 6: So when you think of the names that could afford

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Speaker 6: a check of thirty five to forty billion dollars, which

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Speaker 6: is what Bloomberg Intelligence values, TikTok's US business at the

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Speaker 6: list is short, it's Meta, it's Alphabet, it's Apple, it's Amazon,

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Speaker 6: it's all the names that the Anti trust regulator would

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Speaker 6: be hard pressed to not get involved and block that

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Speaker 6: kind of deal.

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Speaker 1: So that leaves two other options. One is a sale

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Speaker 1: to private investors, so a group of venture capitalists investors

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Speaker 1: who would keep it in private control. The other is

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Speaker 1: investors buy it then take it public on the market.

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Speaker 1: Steven Manuchin, the former Treasury Secretary, has already said he'd

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Speaker 1: be interested in rounding up a group of investors to

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Speaker 1: buy the app. No matter who buys it, the bill

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Speaker 1: specifies that the President would have to sign off on

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Speaker 1: the sale. Of course, to get to that point, the

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Speaker 1: bill would have to become law.

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Speaker 6: Now as we are recording this it is March. The bill,

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Speaker 6: if passed, would give basically six months for TikTok to

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Speaker 6: be sold or blocked. If this passes, say in May,

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Speaker 6: which would be pretty quick for this bill to get

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Speaker 6: through the Senate, that would put that deadline in November.

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Speaker 6: And this November is election season, so this timeline will

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Speaker 6: be really important as legislators look at this bill and

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Speaker 6: potentially continue to hear from users who are staring at

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Speaker 6: their ballots, thinking about who they're going to vote for,

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Speaker 6: and thinking about who might try to snatch this app

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Speaker 6: that they love from their hands.

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Speaker 1: Which would make things tricky for President Joe Biden, whose

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Speaker 1: campaign joined TikTok for the first time this year.

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Speaker 6: They have been posting dozens of videos and clearly trying

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Speaker 6: to reach an audience there. For the Democratic Party, young

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Speaker 6: people have been incredibly important in Biden's first election. Young

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Speaker 6: people turned out at record levels in the last midterm election.

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Speaker 6: Some experts say that young Democrats blocked the prophesized red wave.

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Speaker 6: So when you look at what Biden has to lose,

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Speaker 6: it is those voters.

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Speaker 1: White House officials have said they want to see some

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Speaker 1: changes to the bill, but President Biden has said he

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Speaker 1: would sign it into law, which could alienate some young voters.

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Speaker 1: There's already been backlash against lawmakers who have targeted TikTok,

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Speaker 1: particularly those who have used the app in the past,

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Speaker 1: like one North Carolina A congressman.

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Speaker 6: Jeff Jackson, is currently in the US House of Representatives,

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Speaker 6: but he is running for attorney general in his state.

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Speaker 6: He has been one of the most successful examples of

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Speaker 6: a politician on TikTok, and he also voted for this bill,

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Speaker 6: and after that happened, he has been just blasted on

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Speaker 6: the app. He's lost over one hundred thousand followers of

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Speaker 6: his two point five million, and he's had to come

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Speaker 6: out with a few response videos basically trying to justify

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Speaker 6: his decision.

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Speaker 5: I apologize I did not handle this situation well from

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Speaker 5: top to bottom, and that is why I have been

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Speaker 5: completely roasted on this app over the last forty eight hours.

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Speaker 1: TikTok users they did not accept Jackson's apology.

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Speaker 6: Congratulations, Jeffrey Jackson.

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Speaker 2: I'm officially giving you this award for the single dumbus

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Speaker 2: video I have ever seen on the Internet.

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Speaker 1: All this is to say lawmakers are in a tough spot,

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Speaker 1: not just Democrats who are scared of alienating young voters

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Speaker 1: in an election year. Republicans too. Former President Trump has

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Speaker 1: come out and said he's against the bill, even though

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Speaker 1: he once tried to ban TikTok by executive order. Now

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Speaker 1: he says this bill would give Meta too much power.

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Speaker 6: You'll remember after the January sixth insurrection, Facebook removed Donald

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Speaker 6: Trump from the platform. He was off the platform for

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Speaker 6: two years. So perhaps there's a little bit of animosity

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Speaker 6: there with Trump and Meta, which owns Facebook. But it

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Speaker 6: is incredibly fascinating and honestly put a lot of Republicans

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Speaker 6: in a bind.

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Speaker 1: And that brings us to the very last wrinkle in

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Speaker 1: this very complicated legislative picture. If byte Dance and the

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Speaker 1: Chinese government refused to sell TikTok, the US government would

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Speaker 1: ask American tech companies like Apple and Google to ban

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Speaker 1: it from their app stores. That sort of ban might

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Speaker 1: run into trouble with the Supreme Court.

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Speaker 6: There is a really interesting legal argument that's come to

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Speaker 6: the forefront. In nineteen sixty five, there was a US

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Speaker 6: Supreme Court case where the justices voted unanimously that the

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Speaker 6: First Amendment protects American's right to see and view communist propaganda.

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Speaker 6: There was a moment where the Post Office was looking

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Speaker 6: to block this sending of Chinese communist propaganda through the

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Speaker 6: postal service, and that was protected by the First Amendment.

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Speaker 1: Alex points out this kind of censorship of free speech

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Speaker 1: would be pretty draconian. It's worth noting TikTok's main competitor

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Speaker 1: is Instagram Reels, a video product owned by Meta, so

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Speaker 1: a TikTok ban would give Meta a lot of power

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Speaker 1: over the market. As Trump pointed out, Alex says, there's

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Speaker 1: also a compelling argument that a TikTok ban would hurt

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Speaker 1: other American tech companies by making the US look bad.

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Speaker 6: The biggest social media companies in the world are American companies.

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Speaker 6: And if America comes to the table and says we're

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Speaker 6: going to pluck this ji, this global gem in TikTok

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Speaker 6: and force it to be owned by another American company,

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Speaker 6: how does that look on the world stage.

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Speaker 1: All this is pretty unprecedented. Congress has never forced an

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Speaker 1: international company to sell off part of its business, and

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Speaker 1: my colleague Dan says they might not manage to do

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Speaker 1: that this time around. Either. The Senate famously slows down

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Speaker 1: the legislative process.

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Speaker 3: I don't have a crystal ball, and I've gotten in

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Speaker 3: trouble before trying to predict what Congress is going to do.

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Speaker 3: But unless the Senate moves quickly on this, which there's

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Speaker 3: no indication that they are at the moment, this is

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Speaker 3: going to get bogged down in months and months of

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Speaker 3: negotiations and nothing may ever happen with it.

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Speaker 1: That's a safe bed as far as congressional clairvoyance. I

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Speaker 1: think that's pretty good. Thanks for listening to The Big

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Speaker 1: Take DC podcast from Bloomberg News. I'm David Gura. This

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Speaker 1: episode was produced by Julia Press. It was mixed by

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Speaker 1: Ben O'Brien. It was fact checked by Naomi Ing. Aomi

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Speaker 1: Shaven is our senior producer. It was edited by Caitlin Kenney,

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Speaker 1: Aaron Edwards, and Michael Shepperd, who also provides editorial direction,

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Speaker 1: with Wendy Benjaminson and Elizabeth Ponsau. Nicole Beamster Boor is

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Speaker 1: our executive producer. Sage Bauman is Bloomberg's head of Podcasts.

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Speaker 1: Thanks for listening. We'll be back next week.