1 00:00:04,400 --> 00:00:07,800 Speaker 1: Welcome to text Stuff, a production from I Heart Radio. 2 00:00:12,600 --> 00:00:15,720 Speaker 1: Hey there, and welcome to tech Stuff. I'm your host, 3 00:00:15,880 --> 00:00:19,160 Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio 4 00:00:19,280 --> 00:00:22,600 Speaker 1: and I love all things tech and Back in March 5 00:00:22,760 --> 00:00:29,360 Speaker 1: twenty twenty, which, according to my notes here was approximately 6 00:00:29,600 --> 00:00:33,880 Speaker 1: a billion years ago, I did an episode about the 7 00:00:33,960 --> 00:00:38,080 Speaker 1: video social media platform TikTok. Now, in case you have 8 00:00:38,320 --> 00:00:43,320 Speaker 1: somehow missed out on the TikTok craze entirely, I'll explain 9 00:00:43,440 --> 00:00:48,240 Speaker 1: what that is briefly. It's an online video sharing app 10 00:00:48,640 --> 00:00:52,920 Speaker 1: that let's users create videos, typically stuff like lip sinking 11 00:00:53,040 --> 00:00:56,040 Speaker 1: videos using an archive of sound clips. But they could 12 00:00:56,040 --> 00:00:59,800 Speaker 1: also shoot very short, like you know, fifteen second long 13 00:01:00,080 --> 00:01:05,000 Speaker 1: videos that can be anything from a stunt to a joke. Uh. 14 00:01:05,120 --> 00:01:09,840 Speaker 1: They can even create really sophisticated editing tricks to make 15 00:01:09,880 --> 00:01:12,480 Speaker 1: it look like you're doing you know, magic tricks and stuff. 16 00:01:12,959 --> 00:01:15,760 Speaker 1: They could use reply feature to create a duet like 17 00:01:15,880 --> 00:01:19,080 Speaker 1: experience where you can create a video that's sort of 18 00:01:19,120 --> 00:01:21,479 Speaker 1: in response to a previous video and have them play 19 00:01:21,520 --> 00:01:24,000 Speaker 1: side by side and create the appearance of an interaction 20 00:01:24,000 --> 00:01:27,040 Speaker 1: between the two. It's pretty cool stuff. Lots of folks 21 00:01:27,280 --> 00:01:32,119 Speaker 1: have used TikTok creatively, from making political or social commentary 22 00:01:32,600 --> 00:01:35,400 Speaker 1: to you know, doing those kind of cool special effects 23 00:01:35,400 --> 00:01:38,319 Speaker 1: sort of videos. I've seen some really clever ones, and 24 00:01:38,760 --> 00:01:42,480 Speaker 1: there's good stuff, and of course there's plenty of bad 25 00:01:42,560 --> 00:01:45,960 Speaker 1: stuff on there too. And by bad, I don't just 26 00:01:46,080 --> 00:01:49,960 Speaker 1: mean folks who haven't mastered the skills of creating videos, 27 00:01:50,360 --> 00:01:54,800 Speaker 1: but also people just you know, behaving badly, spreading misinformation 28 00:01:55,040 --> 00:01:59,320 Speaker 1: or disinformation, or being hateful. In other words, it's a 29 00:01:59,400 --> 00:02:04,000 Speaker 1: microco some of the Internet at large. TikTok was already 30 00:02:04,040 --> 00:02:10,600 Speaker 1: in the news back in March. Now it's August twenty twenty. 31 00:02:10,720 --> 00:02:14,040 Speaker 1: I had to look to make sure and uh, TikTok 32 00:02:14,120 --> 00:02:16,919 Speaker 1: is popping up in headlines again, and enough has happened 33 00:02:17,040 --> 00:02:19,880 Speaker 1: since that March episode that I kind of needed to 34 00:02:19,919 --> 00:02:23,160 Speaker 1: do another episode about this. Part of that is because 35 00:02:23,200 --> 00:02:26,120 Speaker 1: the President of the United States has a bit of 36 00:02:26,160 --> 00:02:29,960 Speaker 1: a vendetta against the service. Now, as I record this, 37 00:02:30,320 --> 00:02:34,880 Speaker 1: he has signed an executive order to impose sanctions against TikTok. 38 00:02:35,120 --> 00:02:38,520 Speaker 1: But by the time you hear this episode, I'll expect 39 00:02:38,560 --> 00:02:41,840 Speaker 1: we'll understand a little more regarding how those sanctions will 40 00:02:41,880 --> 00:02:45,120 Speaker 1: play out. We've got some hints right now, but it's 41 00:02:45,160 --> 00:02:47,840 Speaker 1: still kind of vague. The assumption right now is that 42 00:02:47,880 --> 00:02:51,800 Speaker 1: American companies will be banned from advertising on TikTok, you know, 43 00:02:51,840 --> 00:02:55,040 Speaker 1: advertising is kind of where TikTok gets its revenue, and 44 00:02:55,160 --> 00:02:59,200 Speaker 1: that companies like Apple and Google will remove TikTok from 45 00:02:59,240 --> 00:03:03,560 Speaker 1: their app store, respectively. Trump also stated that the sanctions 46 00:03:03,560 --> 00:03:06,880 Speaker 1: will hit unless the company agrees to a deal where 47 00:03:06,960 --> 00:03:10,679 Speaker 1: some US company will acquire it. In other words, it 48 00:03:10,720 --> 00:03:14,240 Speaker 1: will move from the hands of ownership it currently sits 49 00:03:14,240 --> 00:03:17,280 Speaker 1: in to new ownership. Now, I'll get back to some 50 00:03:17,360 --> 00:03:21,919 Speaker 1: of the reasons that the Trump campaign and administration may 51 00:03:22,000 --> 00:03:27,280 Speaker 1: have to pursue a campaign against TikTok beyond the you know, 52 00:03:27,520 --> 00:03:30,520 Speaker 1: stated reasons. They don't all have to do with trade 53 00:03:30,520 --> 00:03:33,120 Speaker 1: wars and national security in other words, but we'll get 54 00:03:33,160 --> 00:03:36,040 Speaker 1: to that towards the end. Now, another reason TikTok is 55 00:03:36,040 --> 00:03:39,520 Speaker 1: in the news is because Microsoft is making a move 56 00:03:39,560 --> 00:03:43,560 Speaker 1: to purchase some or perhaps all of TikTok. It all 57 00:03:43,560 --> 00:03:47,480 Speaker 1: depends on the reports you read and believe, and whether 58 00:03:47,560 --> 00:03:49,600 Speaker 1: or not it's it talks to acquire some of it 59 00:03:49,680 --> 00:03:51,880 Speaker 1: or the whole ding dang durn thing. I mean, at 60 00:03:51,880 --> 00:03:55,400 Speaker 1: the time I'm recording this. Microsoft disputes that it's after 61 00:03:55,480 --> 00:03:58,040 Speaker 1: the whole company. Part of it has to do with 62 00:03:58,080 --> 00:04:01,680 Speaker 1: an ongoing discussion about whether or not TikTok stands as 63 00:04:01,680 --> 00:04:06,360 Speaker 1: a threat to national security in the United States, because again, 64 00:04:06,400 --> 00:04:10,120 Speaker 1: the parent company for TikTok is a Chinese company called 65 00:04:10,200 --> 00:04:13,600 Speaker 1: byte Dance. So when Trump is saying an American entity 66 00:04:13,840 --> 00:04:17,000 Speaker 1: must buy TikTok, the current candidate to do just that 67 00:04:17,120 --> 00:04:20,000 Speaker 1: happens to be Microsoft. But what I really want to 68 00:04:20,000 --> 00:04:23,320 Speaker 1: focus on for much of this episode is what Microsoft 69 00:04:23,360 --> 00:04:25,720 Speaker 1: and the US government are kind of using as a 70 00:04:25,760 --> 00:04:29,760 Speaker 1: justification to rest ownership of TikTok away from byte Dance, 71 00:04:30,200 --> 00:04:33,160 Speaker 1: at least in some parts of the world. And that's 72 00:04:33,200 --> 00:04:36,919 Speaker 1: the Committee on Foreign Investment in the United States or 73 00:04:37,160 --> 00:04:40,760 Speaker 1: c f i u S. Because whether you care about 74 00:04:40,800 --> 00:04:44,200 Speaker 1: TikTok or not, this committee has played a big part 75 00:04:44,320 --> 00:04:47,480 Speaker 1: in several big moves in the tech industry, or in 76 00:04:47,520 --> 00:04:53,279 Speaker 1: some cases prevented big moves from ever happening. So let's 77 00:04:53,360 --> 00:04:57,520 Speaker 1: trace the history of this committee, because until recently, I 78 00:04:57,520 --> 00:04:59,560 Speaker 1: don't think a lot of people had heard about it. 79 00:04:59,640 --> 00:05:02,120 Speaker 1: Even out you may not have heard about it unless 80 00:05:02,120 --> 00:05:05,680 Speaker 1: you were specifically looking into news stories about all this stuff, 81 00:05:06,240 --> 00:05:09,240 Speaker 1: but the Committee has been active for a while and 82 00:05:09,680 --> 00:05:14,560 Speaker 1: has been instrumental in some major deals, and yet tends 83 00:05:14,600 --> 00:05:18,160 Speaker 1: to kind of get overlooked. By the end of this episode, 84 00:05:18,200 --> 00:05:21,160 Speaker 1: I'll talk more about what's specifically going on with TikTok, 85 00:05:21,279 --> 00:05:23,640 Speaker 1: as well as my own sort of complicated thoughts on 86 00:05:23,680 --> 00:05:26,320 Speaker 1: the whole thing, because this is one of those situations 87 00:05:26,360 --> 00:05:31,479 Speaker 1: where I really don't know what the right move is. Now. 88 00:05:31,680 --> 00:05:34,480 Speaker 1: Like a lot of historical stories, it can be tricky 89 00:05:34,520 --> 00:05:37,719 Speaker 1: to figure out just where I should begin with this one. 90 00:05:37,880 --> 00:05:40,760 Speaker 1: I mean, you can cite a specific law or action, 91 00:05:41,320 --> 00:05:44,400 Speaker 1: but chances are whatever you site will have a precedent. 92 00:05:44,839 --> 00:05:46,360 Speaker 1: And I don't want to trace this all the way 93 00:05:46,360 --> 00:05:49,200 Speaker 1: back to the founding of the United States or even 94 00:05:49,200 --> 00:05:52,320 Speaker 1: further back than that. But really we need to focus 95 00:05:52,360 --> 00:05:55,640 Speaker 1: on the modern industrial age. So for that reason, I'm 96 00:05:55,680 --> 00:05:58,520 Speaker 1: going to talk first about the War Powers Act of 97 00:05:58,600 --> 00:06:03,160 Speaker 1: World War Two. Nineteen forty one, Japanese forces attacked the 98 00:06:03,279 --> 00:06:07,560 Speaker 1: US at Pearl Harbor in Hawaii. Two weeks later, the U. 99 00:06:07,640 --> 00:06:10,760 Speaker 1: S Government put into place the War Powers Act of 100 00:06:10,880 --> 00:06:14,880 Speaker 1: nineteen forty one. This act expanded the federal government's powers 101 00:06:14,920 --> 00:06:18,480 Speaker 1: and authority, giving the Executive Branch. For those who are 102 00:06:18,520 --> 00:06:21,640 Speaker 1: not familiar, that would be the branch that the president 103 00:06:21,880 --> 00:06:25,560 Speaker 1: is in. Gave that branch a great deal of flexibility 104 00:06:25,640 --> 00:06:28,440 Speaker 1: to reshape the government to focus efforts on all things 105 00:06:28,520 --> 00:06:31,800 Speaker 1: related to war. Then you had the War Powers Act 106 00:06:31,800 --> 00:06:35,719 Speaker 1: of nineteen forty two. That one gave US military branches 107 00:06:35,800 --> 00:06:38,640 Speaker 1: the authority to seize US land for the purposes of 108 00:06:38,760 --> 00:06:42,280 Speaker 1: establishing and expanding bases, among other things, and it also 109 00:06:42,320 --> 00:06:45,080 Speaker 1: allowed the government to fast track the research and development 110 00:06:45,120 --> 00:06:49,120 Speaker 1: of atomic weapons, leading to the Manhattan Project. The president 111 00:06:49,200 --> 00:06:53,200 Speaker 1: here was that in times of national emergency, the federal 112 00:06:53,240 --> 00:06:56,880 Speaker 1: government could expand powers beyond what would normally be acceptable 113 00:06:57,080 --> 00:07:00,839 Speaker 1: in the United States. By nineteen fifty, the US was 114 00:07:00,880 --> 00:07:04,360 Speaker 1: in a post World War to boom period. But that 115 00:07:04,480 --> 00:07:08,080 Speaker 1: year the Korean War started and the US got involved. 116 00:07:08,400 --> 00:07:11,520 Speaker 1: While the central conflict was in Korea. For the US, 117 00:07:11,960 --> 00:07:15,720 Speaker 1: this was part of an ongoing power struggle with the 118 00:07:15,720 --> 00:07:19,520 Speaker 1: then Soviet Union. The US government passed a law called 119 00:07:19,520 --> 00:07:24,520 Speaker 1: the Defense Production Act of nineteen fifty. This law granted 120 00:07:24,560 --> 00:07:28,000 Speaker 1: powers to the US president to influence domestic businesses for 121 00:07:28,040 --> 00:07:31,760 Speaker 1: the purposes of national defense. The ideas that, again, in 122 00:07:31,800 --> 00:07:35,520 Speaker 1: a time of crisis, the president can command industry in 123 00:07:35,560 --> 00:07:39,800 Speaker 1: this country to provide what is deemed quote essential materials 124 00:07:39,840 --> 00:07:43,920 Speaker 1: and goods end quote for the purposes of boosting national defense. 125 00:07:44,600 --> 00:07:48,520 Speaker 1: So now the powers of the government were again expanded 126 00:07:48,680 --> 00:07:51,240 Speaker 1: and president was set in which a U. S President 127 00:07:51,560 --> 00:07:55,800 Speaker 1: could issue directives to private industry. By the way, if 128 00:07:55,840 --> 00:07:59,160 Speaker 1: you are so inclined, that act is available for free 129 00:07:59,240 --> 00:08:01,480 Speaker 1: on the internet. You can read the whole darn thing 130 00:08:01,520 --> 00:08:05,320 Speaker 1: if you like. It's more than a little dry, if 131 00:08:05,360 --> 00:08:10,000 Speaker 1: I'm being honest. This brings us up to nineteen seventy. Coincidentally, 132 00:08:10,440 --> 00:08:14,000 Speaker 1: the year I was born. Gerald Ford, who had served 133 00:08:14,040 --> 00:08:17,840 Speaker 1: as vice president to Richard Nixon, was president at this point. 134 00:08:17,960 --> 00:08:22,000 Speaker 1: After Nixon had resigned due to the Watergate scandal, Ford 135 00:08:22,120 --> 00:08:26,600 Speaker 1: issued an executive order, Executive Order number one one eight 136 00:08:26,800 --> 00:08:31,800 Speaker 1: five eight to be precise, titled quote foreign investment in 137 00:08:31,840 --> 00:08:35,959 Speaker 1: the United States in the quote, and this executive order 138 00:08:36,160 --> 00:08:39,920 Speaker 1: cited section seven twenty one of the Defense Production Act 139 00:08:39,960 --> 00:08:43,080 Speaker 1: of nineteen fifty. So there's a lot that we have 140 00:08:43,160 --> 00:08:48,040 Speaker 1: to unpack here. First, What exactly is an executive order? Well, 141 00:08:48,080 --> 00:08:51,240 Speaker 1: it's an official directive from the President of the United States. 142 00:08:51,520 --> 00:08:55,880 Speaker 1: The commands some action of the federal government. Every president 143 00:08:56,080 --> 00:08:59,959 Speaker 1: in US history has signed at least one executive order. 144 00:09:00,440 --> 00:09:03,640 Speaker 1: George W. Bush signed two d ninety one of them 145 00:09:03,720 --> 00:09:06,600 Speaker 1: during his two terms. That made him the president who 146 00:09:06,720 --> 00:09:11,319 Speaker 1: issued the most executive orders in history. Executive orders are 147 00:09:11,440 --> 00:09:15,280 Speaker 1: legal documents and typically instruct various government powers to take 148 00:09:15,320 --> 00:09:20,840 Speaker 1: specific actions. They're not always straightforward legal documents, and they 149 00:09:20,840 --> 00:09:24,760 Speaker 1: are sometimes controversial, and occasionally they end up being challenged 150 00:09:24,880 --> 00:09:29,520 Speaker 1: or even ignored. Okay, So what was Section seven twenty 151 00:09:29,600 --> 00:09:33,720 Speaker 1: one of the Defense Production Act of nineteen fifty as amended? 152 00:09:34,240 --> 00:09:36,400 Speaker 1: Because the Act has been amended since it was first 153 00:09:36,400 --> 00:09:38,960 Speaker 1: issued in nineteen fiftyes, so that's how we refer to 154 00:09:39,000 --> 00:09:43,120 Speaker 1: it now. Well, Section seven twenty one falls under the 155 00:09:43,240 --> 00:09:47,240 Speaker 1: General Provisions under Title seven of the Act, and the 156 00:09:47,280 --> 00:09:53,160 Speaker 1: title of that section is quote Authority to review certain mergers, acquisitions, 157 00:09:53,200 --> 00:09:57,240 Speaker 1: and takeovers end quote. Now, essentially, this part of the 158 00:09:57,280 --> 00:10:00,640 Speaker 1: Act established the authority of the federal government to investigate 159 00:10:00,679 --> 00:10:07,240 Speaker 1: any planned major changes in ownership among certain companies. Certain 160 00:10:07,559 --> 00:10:12,760 Speaker 1: doesn't really get defined, but the implication is companies that 161 00:10:12,800 --> 00:10:15,960 Speaker 1: are important to the welfare of the United States. So 162 00:10:16,040 --> 00:10:19,520 Speaker 1: the idea here is that some companies might be vitally 163 00:10:19,679 --> 00:10:23,000 Speaker 1: important to the US and for national security, and so 164 00:10:23,440 --> 00:10:27,320 Speaker 1: the ownership of those companies is a matter of national interest. 165 00:10:27,720 --> 00:10:30,800 Speaker 1: It's also important if you want to avoid situations such 166 00:10:30,800 --> 00:10:34,640 Speaker 1: as monopolies, where a single company or really a small 167 00:10:34,640 --> 00:10:38,040 Speaker 1: group of companies dominates an industry to a point that 168 00:10:38,120 --> 00:10:42,880 Speaker 1: it hurts citizens and it discourages competition. The Act expressly 169 00:10:42,880 --> 00:10:46,520 Speaker 1: gives the President authority to quote take such action for 170 00:10:46,559 --> 00:10:50,680 Speaker 1: such time as the President considers appropriate, to suspend or 171 00:10:50,720 --> 00:10:54,960 Speaker 1: prohibit any covered transaction that threatens to impair the national 172 00:10:55,000 --> 00:10:59,520 Speaker 1: security of the United States end quote. Covered transaction just 173 00:10:59,800 --> 00:11:04,880 Speaker 1: means that certain types of transactions like mergers and acquisitions 174 00:11:04,920 --> 00:11:08,920 Speaker 1: are specifically covered by the section. The big, big time stuff. 175 00:11:08,960 --> 00:11:13,160 Speaker 1: Not like this company has gone into a limited partnership 176 00:11:13,160 --> 00:11:15,200 Speaker 1: with this other company for the purposes of this one 177 00:11:15,240 --> 00:11:19,679 Speaker 1: and only thing that would probably fall outside of covered transactions. 178 00:11:20,000 --> 00:11:24,319 Speaker 1: So the US President may halt any covered company transaction 179 00:11:24,400 --> 00:11:27,199 Speaker 1: that could stand as a threat to US security. Now 180 00:11:27,200 --> 00:11:29,920 Speaker 1: there's a lot more nuanced to this, but there's not 181 00:11:30,040 --> 00:11:33,239 Speaker 1: much point in going through it all in this podcast. 182 00:11:33,280 --> 00:11:37,120 Speaker 1: It would get bogged down super fast. Ford's executive order 183 00:11:37,400 --> 00:11:42,040 Speaker 1: officially established the Committee on Foreign investment, which was first 184 00:11:42,040 --> 00:11:45,640 Speaker 1: outlined in that nineteen fifty Act and the original Acts 185 00:11:45,640 --> 00:11:49,160 Speaker 1: stated that the membership of this committee would include the 186 00:11:49,200 --> 00:11:54,920 Speaker 1: following US officials Secretary of the Treasury, Secretary of Homeland Security, 187 00:11:55,280 --> 00:12:00,320 Speaker 1: Secretary of Commerce, Secretary of Defense, Secretary of State, the 188 00:12:00,360 --> 00:12:04,280 Speaker 1: Attorney General of the United States, the Secretary of Energy. 189 00:12:04,480 --> 00:12:08,480 Speaker 1: And then there were two non voting members of the committee, 190 00:12:08,720 --> 00:12:12,480 Speaker 1: the Secretary of Labor and the Director of National Intelligence. 191 00:12:13,000 --> 00:12:18,200 Speaker 1: Now these are mostly appointed offices, meaning the President appoints 192 00:12:18,240 --> 00:12:22,200 Speaker 1: those officers. Some of them require confirmation from the Senate 193 00:12:22,280 --> 00:12:25,199 Speaker 1: before that can happen. But you could argue that this 194 00:12:25,320 --> 00:12:28,720 Speaker 1: deck is kind of stacked in the favor of the 195 00:12:28,760 --> 00:12:33,280 Speaker 1: executive branch because the President is the one who's appointing 196 00:12:33,320 --> 00:12:38,600 Speaker 1: all these individuals. Ford's Executive Order in nineteen added two 197 00:12:38,840 --> 00:12:41,320 Speaker 1: new members to this committee, and that would be the 198 00:12:41,400 --> 00:12:45,520 Speaker 1: United States Trade Representative and the Director of the Office 199 00:12:45,600 --> 00:12:49,840 Speaker 1: of Science and Technology Policy. Plus both the nineteen fifty 200 00:12:49,840 --> 00:12:53,599 Speaker 1: Act and the nineteen seventy Executive Order made allowances for 201 00:12:53,640 --> 00:12:56,720 Speaker 1: the President to appoint any other heads of agencies or 202 00:12:56,760 --> 00:13:00,360 Speaker 1: offices to the committee on a case by case basis. 203 00:13:00,679 --> 00:13:04,199 Speaker 1: The U s Secretary of the Treasury acts as chairperson 204 00:13:04,320 --> 00:13:07,640 Speaker 1: for this committee, and the rules by which the Committee 205 00:13:07,720 --> 00:13:12,160 Speaker 1: may review transactions gets fairly complex and they're often open 206 00:13:12,240 --> 00:13:16,480 Speaker 1: to interpretation. Not all transactions fall under the purview of 207 00:13:16,480 --> 00:13:19,559 Speaker 1: this group, as I mentioned, and moreover, deciding which proposed 208 00:13:19,559 --> 00:13:24,880 Speaker 1: transactions could impact national security isn't really cut and dried either, 209 00:13:25,280 --> 00:13:28,119 Speaker 1: So in some respects you could say that the Committee 210 00:13:28,160 --> 00:13:31,559 Speaker 1: defines whether or not an individual case is a potential 211 00:13:31,720 --> 00:13:38,760 Speaker 1: national security matter, case by case. So it's frustrating because 212 00:13:38,800 --> 00:13:41,559 Speaker 1: there's not like a clear and dry set of rules 213 00:13:41,600 --> 00:13:43,600 Speaker 1: that you could look at and say, all right, well 214 00:13:43,640 --> 00:13:46,760 Speaker 1: this falls outside of that, so everything's okay or no, 215 00:13:47,120 --> 00:13:50,760 Speaker 1: that rule covers this particular case, so we've gotta adjust things. 216 00:13:51,280 --> 00:13:55,080 Speaker 1: It's a little more free form than that. Back in 217 00:13:56,200 --> 00:13:59,560 Speaker 1: when Ford really got the Committee into action, much of 218 00:13:59,600 --> 00:14:03,679 Speaker 1: the needs that were under scrutiny fell into the energy sector. 219 00:14:04,000 --> 00:14:07,440 Speaker 1: The world was going through an oil crisis, more countries 220 00:14:07,440 --> 00:14:11,360 Speaker 1: were industrializing, and their need for resources was on the rise. 221 00:14:12,040 --> 00:14:17,920 Speaker 1: Industrialized countries got industrialized er, which isn't a word, but 222 00:14:18,000 --> 00:14:20,960 Speaker 1: by that I mean they grew more complex and their 223 00:14:21,000 --> 00:14:25,760 Speaker 1: need for energy resources was growing as well. Moreover, here 224 00:14:25,800 --> 00:14:29,160 Speaker 1: in the US, we were depending heavily on oil from 225 00:14:29,200 --> 00:14:32,840 Speaker 1: foreign countries. We weren't producing enough domestically to meet all 226 00:14:32,840 --> 00:14:37,040 Speaker 1: our needs. So this was truly a matter of national security. 227 00:14:37,080 --> 00:14:40,360 Speaker 1: As the oil crisis taught us, is that if that 228 00:14:40,520 --> 00:14:44,640 Speaker 1: supply gets cut off, then we find ourselves in trouble 229 00:14:44,680 --> 00:14:49,560 Speaker 1: pretty quickly. So energy power and national security are very 230 00:14:49,600 --> 00:14:55,240 Speaker 1: clearly tied together, pretty tightly. The tech sector, on the 231 00:14:55,240 --> 00:14:59,480 Speaker 1: other hand, was generally ignored at this time. Now their 232 00:14:59,520 --> 00:15:02,840 Speaker 1: works options. There was the time where the US government 233 00:15:02,840 --> 00:15:06,840 Speaker 1: accused a group of Japanese companies of colluding to sell 234 00:15:06,880 --> 00:15:11,200 Speaker 1: electronics here in the US at below market prices, all 235 00:15:11,200 --> 00:15:14,840 Speaker 1: in an effort to undermine the tech industry in the 236 00:15:14,920 --> 00:15:18,240 Speaker 1: United States and to undermine American companies. And that was 237 00:15:18,280 --> 00:15:22,360 Speaker 1: totally happening, and moreover, ultimately the US failed to really 238 00:15:22,400 --> 00:15:26,320 Speaker 1: do anything about it, but tech companies largely fell outside 239 00:15:26,360 --> 00:15:31,360 Speaker 1: the scope of this committee. However, tech has changed significantly 240 00:15:31,480 --> 00:15:35,280 Speaker 1: over the past forty years. Major tech companies are now 241 00:15:35,400 --> 00:15:39,960 Speaker 1: global entities. The shift to cloud services means that data 242 00:15:40,080 --> 00:15:44,320 Speaker 1: isn't just stored in one data center on domestic territory. 243 00:15:44,480 --> 00:15:47,480 Speaker 1: You've got data centers around the world, and that's a 244 00:15:47,560 --> 00:15:50,960 Speaker 1: necessary component if you want to provide a global service 245 00:15:51,040 --> 00:15:53,880 Speaker 1: and you know, not have terrible latency when people are 246 00:15:53,920 --> 00:15:57,840 Speaker 1: far from those domestic data centers. You've also got hardware 247 00:15:57,920 --> 00:16:02,400 Speaker 1: and software interacting with one another. They're exchanging information, creating 248 00:16:02,440 --> 00:16:05,960 Speaker 1: new ways for data to power various services. But that 249 00:16:06,040 --> 00:16:09,280 Speaker 1: also means that the data is passing through numerous hands. 250 00:16:09,800 --> 00:16:13,200 Speaker 1: Data is powerful stuff. I mean, it's really the currency 251 00:16:13,400 --> 00:16:16,560 Speaker 1: of the technological age. The more data you have at 252 00:16:16,560 --> 00:16:20,040 Speaker 1: your disposal, the more influence you've got, and the more 253 00:16:20,080 --> 00:16:23,800 Speaker 1: money you make, the more catastrophic an event you could cause, 254 00:16:23,840 --> 00:16:28,240 Speaker 1: either by accident or we're on purpose. By the twenty tens, 255 00:16:28,280 --> 00:16:32,800 Speaker 1: we started seeing the aggressive startup company culture that dominates 256 00:16:32,840 --> 00:16:36,560 Speaker 1: the tech world today, and founders would launch a company 257 00:16:36,600 --> 00:16:39,960 Speaker 1: typically around you know, like an app of some sort, 258 00:16:40,040 --> 00:16:43,520 Speaker 1: and then they would seek out investment. The ideas that 259 00:16:43,560 --> 00:16:46,800 Speaker 1: we're really compelling would get a ton of money behind them. 260 00:16:47,120 --> 00:16:51,080 Speaker 1: For a lot of tech company founders, the goal was 261 00:16:51,200 --> 00:16:55,800 Speaker 1: never necessarily to build a working, profitable app as a 262 00:16:56,040 --> 00:16:59,080 Speaker 1: sustainable business, but rather to create an idea that is 263 00:16:59,120 --> 00:17:04,080 Speaker 1: so interesting ing that some other more established entity, like 264 00:17:04,200 --> 00:17:09,040 Speaker 1: an enormous company on the scale of Google, would sweep 265 00:17:09,080 --> 00:17:11,720 Speaker 1: in and then purchase the whole ding ding during thing 266 00:17:11,800 --> 00:17:16,160 Speaker 1: for like a ridiculous amount of money. Then as a founder, 267 00:17:16,200 --> 00:17:19,560 Speaker 1: you could either go buy an island somewhere, or better yet, 268 00:17:19,640 --> 00:17:22,800 Speaker 1: you do the whole dance again, only with a new idea. 269 00:17:23,480 --> 00:17:27,240 Speaker 1: But investment can come from places other than US based 270 00:17:27,280 --> 00:17:30,440 Speaker 1: companies like Google. It can come from venture capital firms 271 00:17:30,560 --> 00:17:34,560 Speaker 1: or interested companies that might have their roots in other nations. 272 00:17:35,240 --> 00:17:38,400 Speaker 1: Some of those nations might not have the friendliest perspective 273 00:17:38,440 --> 00:17:41,840 Speaker 1: regarding the United States, and that was starting to look 274 00:17:41,880 --> 00:17:44,920 Speaker 1: like a problem. I'll explain a little bit more after 275 00:17:44,960 --> 00:17:55,480 Speaker 1: we take this short break. So there was a growing 276 00:17:55,520 --> 00:17:58,600 Speaker 1: realization towards the end of the twenty tens that, you know, 277 00:17:58,840 --> 00:18:02,080 Speaker 1: maybe data is impoor it. Well, I should say there 278 00:18:02,160 --> 00:18:06,440 Speaker 1: was a growing realization within the US government. The tech 279 00:18:06,480 --> 00:18:12,360 Speaker 1: world had long had a deep understanding about this. Google, Facebook, 280 00:18:12,400 --> 00:18:18,080 Speaker 1: and other companies didn't become multibillion dollar global corporations by chance. 281 00:18:18,640 --> 00:18:23,080 Speaker 1: They did it by realizing how valuable data is, including 282 00:18:23,280 --> 00:18:26,840 Speaker 1: but not limited to the personal data of their user 283 00:18:26,960 --> 00:18:31,320 Speaker 1: basis you know, you and me. People and companies will 284 00:18:31,440 --> 00:18:34,639 Speaker 1: pay for data, or for access to data, or for 285 00:18:34,680 --> 00:18:38,919 Speaker 1: ways to leverage data, but governments tend to be a 286 00:18:38,920 --> 00:18:42,560 Speaker 1: little more slow on the uptake, particularly when it comes 287 00:18:42,560 --> 00:18:46,119 Speaker 1: to technology. It's not uncommon for us in the United 288 00:18:46,160 --> 00:18:49,920 Speaker 1: States to see governments only address issues revolving around tech 289 00:18:50,480 --> 00:18:54,720 Speaker 1: after those issues have grown to become potential or actual threats. 290 00:18:55,400 --> 00:18:59,159 Speaker 1: Even in an era of data breaches, security leaks, and 291 00:18:59,240 --> 00:19:03,280 Speaker 1: predatory business practices, it takes a while for the government 292 00:19:03,320 --> 00:19:06,480 Speaker 1: to come up with a response beyond pulling a tech 293 00:19:06,600 --> 00:19:10,840 Speaker 1: leader into a special hearing in Congress and then, you know, 294 00:19:11,840 --> 00:19:15,040 Speaker 1: not really doing anything else about it. I mean, sometimes 295 00:19:15,359 --> 00:19:19,280 Speaker 1: they might impose a fine on these companies, and sometimes 296 00:19:19,320 --> 00:19:21,400 Speaker 1: that could be in the range of hundreds of millions 297 00:19:21,400 --> 00:19:24,040 Speaker 1: of dollars, which, don't get me wrong, that's a lot 298 00:19:24,040 --> 00:19:27,240 Speaker 1: of money. But the crazy thing is these companies deal 299 00:19:27,320 --> 00:19:31,399 Speaker 1: in the billions of dollars, and so a hundred million 300 00:19:31,440 --> 00:19:35,040 Speaker 1: dollars that's unimaginable to me. That's so much money, But 301 00:19:35,600 --> 00:19:38,040 Speaker 1: it would just show up as a relatively minor blip 302 00:19:38,400 --> 00:19:42,120 Speaker 1: on some of these companies ledgers. Moreover, I would say 303 00:19:42,200 --> 00:19:45,600 Speaker 1: that the guiding spirit of technological development in the Internet 304 00:19:45,640 --> 00:19:49,280 Speaker 1: age has been one of optimism, perhaps even to the 305 00:19:49,320 --> 00:19:52,520 Speaker 1: point of naivete. When you read up on how the 306 00:19:52,640 --> 00:19:55,680 Speaker 1: architects of the Internet and the Web viewed their work. 307 00:19:56,040 --> 00:19:59,359 Speaker 1: You tend to see ideas like how information wants to 308 00:19:59,400 --> 00:20:03,000 Speaker 1: be free, and that the ability to exchange ideas freely 309 00:20:03,320 --> 00:20:09,400 Speaker 1: leads to better outcomes and better communication. The ideals are admirable, 310 00:20:09,440 --> 00:20:13,639 Speaker 1: but because information has value, and because that means you 311 00:20:13,640 --> 00:20:18,080 Speaker 1: can use information to create an advantage, either economically or 312 00:20:18,119 --> 00:20:22,119 Speaker 1: strategically or in some other way, it just hasn't really 313 00:20:22,240 --> 00:20:27,600 Speaker 1: panned out to be a data utopia. You probably you 314 00:20:27,680 --> 00:20:32,439 Speaker 1: probably have noticed this yourself. So while the design of 315 00:20:32,480 --> 00:20:36,359 Speaker 1: the web and the Internet mostly orbited this general point 316 00:20:36,400 --> 00:20:39,600 Speaker 1: of view that data should be able to move effortlessly 317 00:20:39,680 --> 00:20:44,280 Speaker 1: across networks, that doesn't line up with how entities like 318 00:20:44,880 --> 00:20:50,400 Speaker 1: governments tend to view information. To a government, information can 319 00:20:50,440 --> 00:20:54,520 Speaker 1: be an asset, something that could give the respective country 320 00:20:54,600 --> 00:20:58,280 Speaker 1: a leg up on other countries. Governments typically are not 321 00:20:58,359 --> 00:21:03,719 Speaker 1: in favor of giving advantages. Certainly the US government is 322 00:21:03,760 --> 00:21:07,359 Speaker 1: not keen on that idea. So when you start viewing 323 00:21:07,440 --> 00:21:11,720 Speaker 1: data as another national asset, it becomes imperative that you 324 00:21:11,760 --> 00:21:15,160 Speaker 1: figure out ways to protect that asset. You don't want 325 00:21:15,200 --> 00:21:19,639 Speaker 1: it to flow freely. And there's one major component I 326 00:21:19,720 --> 00:21:23,120 Speaker 1: haven't really talked about yet when it comes to this 327 00:21:23,200 --> 00:21:28,320 Speaker 1: whole situation, and that's the specific role of China, not 328 00:21:28,440 --> 00:21:32,680 Speaker 1: just a foreign country in general, but China in particular. 329 00:21:33,160 --> 00:21:37,120 Speaker 1: Over the past decade, Chinese companies have become far more 330 00:21:37,160 --> 00:21:41,840 Speaker 1: active in the tech space, making significant investments in numerous 331 00:21:41,920 --> 00:21:47,480 Speaker 1: tech companies. This ranges from social media platforms to game companies, 332 00:21:47,480 --> 00:21:51,239 Speaker 1: to communications companies and everything in between, and that has 333 00:21:51,359 --> 00:21:56,040 Speaker 1: raised concerns in some other nations, particularly in the United States. 334 00:21:56,480 --> 00:21:59,359 Speaker 1: A big reason for this is that China and the 335 00:21:59,480 --> 00:22:05,000 Speaker 1: US frequently find themselves on unfriendly terms. It's not quite 336 00:22:05,080 --> 00:22:09,040 Speaker 1: a full on Cold War status like the United States 337 00:22:09,040 --> 00:22:11,359 Speaker 1: had with a good old U. S. S R. But 338 00:22:11,440 --> 00:22:15,280 Speaker 1: it's not buddy buddy. The US and China depend heavily 339 00:22:15,440 --> 00:22:19,560 Speaker 1: on one another economically, and that makes things particularly tricky. 340 00:22:19,920 --> 00:22:22,879 Speaker 1: At times. One country will attempt to put leverage on 341 00:22:22,920 --> 00:22:27,280 Speaker 1: the other through various trade restrictions or sanctions or levies 342 00:22:27,440 --> 00:22:30,320 Speaker 1: or whatever. We've seen that quite a few times over 343 00:22:30,359 --> 00:22:33,720 Speaker 1: the last couple of years. But there's a concern in 344 00:22:33,760 --> 00:22:36,840 Speaker 1: the US that if China gets much more influential, it 345 00:22:36,880 --> 00:22:40,800 Speaker 1: will become the leading world power and possibly extend its 346 00:22:40,840 --> 00:22:46,640 Speaker 1: influence beyond its own borders and beyond economic influence. China's 347 00:22:46,640 --> 00:22:50,880 Speaker 1: government is very different from the United States. The country 348 00:22:50,920 --> 00:22:54,160 Speaker 1: has a lot of state backed companies, meaning the Chinese 349 00:22:54,160 --> 00:22:58,000 Speaker 1: government will actively support certain companies and give them a 350 00:22:58,160 --> 00:23:02,320 Speaker 1: huge boost in capability or limit any competition that they 351 00:23:02,359 --> 00:23:05,840 Speaker 1: might face from foreign competitors. By the way, there's a 352 00:23:05,840 --> 00:23:09,080 Speaker 1: whole discussion we can have about how in the United 353 00:23:09,080 --> 00:23:12,600 Speaker 1: States companies can sometimes get similar benefits, but that's a 354 00:23:12,640 --> 00:23:15,480 Speaker 1: topic for another show. And a huge issue for the 355 00:23:15,520 --> 00:23:19,160 Speaker 1: United States is that the Chinese government is effectively dominated 356 00:23:19,200 --> 00:23:23,800 Speaker 1: by the Chinese Communist Party. This party is involved, sometimes 357 00:23:23,880 --> 00:23:27,919 Speaker 1: at very intrinsic levels, in pretty much every aspect of 358 00:23:27,960 --> 00:23:33,080 Speaker 1: life in China, including business. The government requires companies operating 359 00:23:33,080 --> 00:23:35,960 Speaker 1: in China to reserve a spot in their committees for 360 00:23:36,160 --> 00:23:40,480 Speaker 1: representatives of the Communist Party. This pretty much fundamentally goes 361 00:23:40,520 --> 00:23:44,119 Speaker 1: against the economic philosophy of the United States, which typically 362 00:23:44,280 --> 00:23:48,240 Speaker 1: condemns the government getting involved in any sort of decision 363 00:23:48,440 --> 00:23:53,679 Speaker 1: making capacity for an individual company. Another big kicker is 364 00:23:53,720 --> 00:23:57,760 Speaker 1: that back on June two thousand and seventeen, the Chinese 365 00:23:57,840 --> 00:24:01,040 Speaker 1: government passed a law which the world at large generally 366 00:24:01,160 --> 00:24:06,120 Speaker 1: refers to as China's National Intelligence Law. The law created 367 00:24:06,240 --> 00:24:11,120 Speaker 1: obligations for Chinese companies and citizens and to certain foreign 368 00:24:11,280 --> 00:24:16,320 Speaker 1: individuals operating within China. As Murray Scott Tanner, writing for 369 00:24:16,520 --> 00:24:20,960 Speaker 1: the website lawfare blog dot com puts it, the law 370 00:24:21,080 --> 00:24:27,800 Speaker 1: quote repeatedly obliges individuals, organizations, and institutions to assist public 371 00:24:27,840 --> 00:24:31,639 Speaker 1: security and state security officials in carrying out a wide 372 00:24:31,760 --> 00:24:36,840 Speaker 1: array of intelligence work end quote. This blog, which I 373 00:24:36,960 --> 00:24:40,720 Speaker 1: highly recommend, by the way, breaks this down into segments. 374 00:24:41,000 --> 00:24:44,560 Speaker 1: It explains that the law includes language giving Chinese intelligence 375 00:24:44,560 --> 00:24:47,239 Speaker 1: agents the authority to go so far as to not 376 00:24:47,359 --> 00:24:51,399 Speaker 1: just demand cooperation from companies and citizens, but even go 377 00:24:51,920 --> 00:24:58,240 Speaker 1: to the limits of uh common deering the communications equipment, transportation, buildings, 378 00:24:58,240 --> 00:25:01,560 Speaker 1: and other facilities of individuals as well as organizations and 379 00:25:01,680 --> 00:25:05,840 Speaker 1: government organs. Now Tanner points out that the vague language 380 00:25:05,960 --> 00:25:08,840 Speaker 1: of the act means that Chinese officials can take a 381 00:25:08,920 --> 00:25:13,800 Speaker 1: fairly broad approach to interpreting and executing upon it, which 382 00:25:14,200 --> 00:25:17,600 Speaker 1: was probably by design. An earlier draft of the law 383 00:25:17,680 --> 00:25:22,119 Speaker 1: specifically mentioned enterprises and companies, but the government struck that 384 00:25:22,200 --> 00:25:25,040 Speaker 1: language from the law before they passed it and made 385 00:25:25,040 --> 00:25:29,160 Speaker 1: it more general, with words like organizations, which leaves room 386 00:25:29,200 --> 00:25:32,400 Speaker 1: for interpretation as to whether the government would assume authority 387 00:25:32,440 --> 00:25:36,720 Speaker 1: to compel a company to cooperate with intelligence demands. Could 388 00:25:36,720 --> 00:25:39,560 Speaker 1: this mean that a company operating in China would be 389 00:25:39,600 --> 00:25:43,000 Speaker 1: obligated to hand over data to the Chinese government if 390 00:25:43,000 --> 00:25:46,680 Speaker 1: intelligence agents demanded it. There are a lot of foreign 391 00:25:46,720 --> 00:25:52,159 Speaker 1: companies that are operating in China, Google, Apple, Disney, A 392 00:25:52,359 --> 00:25:56,960 Speaker 1: T and T, Blkan Sony. All of these have branches 393 00:25:57,119 --> 00:26:01,640 Speaker 1: in China, which makes sense. The Chinese population represents an 394 00:26:01,840 --> 00:26:05,639 Speaker 1: enormous market and expanding there is a no brainer from 395 00:26:05,680 --> 00:26:08,760 Speaker 1: a revenue standpoint. At some point you're going to find 396 00:26:08,760 --> 00:26:11,800 Speaker 1: it hard to continue to grow in a saturated market, 397 00:26:12,119 --> 00:26:17,119 Speaker 1: So getting into a relatively new market is incredibly valuable. 398 00:26:17,240 --> 00:26:20,040 Speaker 1: It's like discovering a new continent and going on a 399 00:26:20,160 --> 00:26:25,119 Speaker 1: land grab. Moreover, what about companies that aren't in China 400 00:26:25,520 --> 00:26:29,920 Speaker 1: but end up being acquired by Chinese companies or investors. 401 00:26:30,359 --> 00:26:34,600 Speaker 1: For example, the Chinese company ten Cent has spent billions 402 00:26:34,680 --> 00:26:38,160 Speaker 1: of dollars investing in numerous video game developer and publisher 403 00:26:38,200 --> 00:26:42,879 Speaker 1: companies around the world. Tencent outright owns the company Riot Games, 404 00:26:42,960 --> 00:26:46,480 Speaker 1: which produces the game League of Legends, Tencent has a 405 00:26:46,600 --> 00:26:50,359 Speaker 1: four d percent share of Epic Games, which makes Fortnite, 406 00:26:50,640 --> 00:26:53,800 Speaker 1: and not too long ago, Epic Games launched the Epic 407 00:26:53,880 --> 00:26:59,440 Speaker 1: Games Store, a competitor to Valve's Steam platform. Tincent also 408 00:26:59,480 --> 00:27:03,360 Speaker 1: owns five percent of Ubisoft, a company that has recently 409 00:27:03,400 --> 00:27:07,080 Speaker 1: been in the news for some pretty awful stuff. I 410 00:27:07,119 --> 00:27:09,119 Speaker 1: may have to do a full episode on that in 411 00:27:09,160 --> 00:27:12,119 Speaker 1: the future, though. I should point out that Tencent's stake 412 00:27:12,160 --> 00:27:16,120 Speaker 1: in Ubisoft came with certain conditions, among them that Tensent 413 00:27:16,200 --> 00:27:19,600 Speaker 1: wouldn't be allowed to purchase more ownership in the company 414 00:27:19,680 --> 00:27:22,920 Speaker 1: or more voting rights in the company. But since Tencent 415 00:27:23,200 --> 00:27:27,560 Speaker 1: is a Chinese company, does that mean that the obligations 416 00:27:27,600 --> 00:27:31,280 Speaker 1: Tencent has to the Chinese government extend to the properties 417 00:27:31,320 --> 00:27:35,560 Speaker 1: that aren't actually in China. If an intelligence agent from 418 00:27:35,600 --> 00:27:40,000 Speaker 1: the Chinese government went up to Tencent executives and said, hey, 419 00:27:40,040 --> 00:27:42,200 Speaker 1: you have to hand over all the data you have 420 00:27:42,480 --> 00:27:45,879 Speaker 1: on League of Legends players, would that mean that Riot 421 00:27:45,920 --> 00:27:50,040 Speaker 1: Games would be forced to do that. That's a troubling question, 422 00:27:50,200 --> 00:27:53,399 Speaker 1: and the US government felt that the country needed a 423 00:27:53,440 --> 00:27:57,760 Speaker 1: new approach to protect itself. The Committee for Foreign Investment 424 00:27:57,840 --> 00:28:01,480 Speaker 1: in the United States didn't really have resdiction over tech 425 00:28:01,600 --> 00:28:05,679 Speaker 1: company transactions. But this was a growing concern because of 426 00:28:05,720 --> 00:28:09,240 Speaker 1: foreign investment in those companies and the world's growing reliance 427 00:28:09,280 --> 00:28:12,639 Speaker 1: on tech companies in general, and so in ten, the 428 00:28:12,680 --> 00:28:18,280 Speaker 1: government passed the Foreign Risk Review Modernization Act or FIRMA 429 00:28:18,400 --> 00:28:21,680 Speaker 1: f i R r m A. This was, to use 430 00:28:21,760 --> 00:28:25,600 Speaker 1: a video game term, a power up for the Committee, 431 00:28:25,840 --> 00:28:29,480 Speaker 1: giving it more powers to investigate proposed tech company transactions 432 00:28:29,560 --> 00:28:33,399 Speaker 1: and potentially intervene in them. To quote a summary of 433 00:28:33,480 --> 00:28:37,800 Speaker 1: the act quote the Foreign Investment Risk Review Modernization Act 434 00:28:37,840 --> 00:28:42,440 Speaker 1: of eighteen FIRMA expands the jurisdiction of the Committee on 435 00:28:42,560 --> 00:28:46,600 Speaker 1: Foreign Investment in the United States to address growing national 436 00:28:46,680 --> 00:28:51,880 Speaker 1: security concerns over foreign exploitation of certain investment structures, which 437 00:28:51,960 --> 00:28:57,800 Speaker 1: traditionally have fallen outside of c f i U S jurisdiction. Additionally, 438 00:28:58,120 --> 00:29:02,680 Speaker 1: FIRMA modernizes cf I U S S processes to better 439 00:29:02,840 --> 00:29:07,560 Speaker 1: enable timely and effective reviews of covered transactions. End quote. 440 00:29:08,400 --> 00:29:12,080 Speaker 1: And again, the term covered transactions referred to typically really 441 00:29:12,120 --> 00:29:17,400 Speaker 1: big corporate moves like acquisitions and mergers, but firm expanded 442 00:29:17,440 --> 00:29:21,720 Speaker 1: that to some other categories, such as the quote purchase, lease, 443 00:29:21,880 --> 00:29:25,560 Speaker 1: or concession by or to a foreign person of real 444 00:29:25,720 --> 00:29:29,800 Speaker 1: estate located in proximity to sensitive government facilities end quote. 445 00:29:30,440 --> 00:29:33,760 Speaker 1: So if you had a startup company, tech or otherwise, 446 00:29:34,120 --> 00:29:36,800 Speaker 1: and it happened to be in an office campus that 447 00:29:36,920 --> 00:29:42,080 Speaker 1: also included, say, government office with sensitive files, your business 448 00:29:42,080 --> 00:29:45,600 Speaker 1: could potentially fall under this category, and any investment from 449 00:29:45,640 --> 00:29:48,440 Speaker 1: a foreign individual or a company could come under its scrutiny, 450 00:29:48,880 --> 00:29:53,760 Speaker 1: the idea being that maybe that investing party is really 451 00:29:53,800 --> 00:29:57,160 Speaker 1: more interested in getting close to those sensitive files and 452 00:29:57,240 --> 00:30:01,280 Speaker 1: doesn't really care about the company at all. It's more 453 00:30:01,320 --> 00:30:05,720 Speaker 1: about opportunity. Now. This also included any transaction that would 454 00:30:05,720 --> 00:30:11,080 Speaker 1: allow foreigners access to quote non public technical information end quote, 455 00:30:11,320 --> 00:30:14,280 Speaker 1: other than what is available to you know, any shareholder 456 00:30:14,400 --> 00:30:17,720 Speaker 1: who holds stake in the business. It also expanded the 457 00:30:17,760 --> 00:30:20,760 Speaker 1: parameters of the committee's powers to cover any change in 458 00:30:20,760 --> 00:30:23,880 Speaker 1: a company's structure that would result in foreign control of 459 00:30:23,920 --> 00:30:27,680 Speaker 1: a US business. FIRMA boosted the amount of time the 460 00:30:27,680 --> 00:30:32,479 Speaker 1: Committee has to investigate a proposed company transaction. Before FIRMA, 461 00:30:32,760 --> 00:30:36,200 Speaker 1: the committee had a deadline of thirty days, but now 462 00:30:36,320 --> 00:30:39,600 Speaker 1: it's forty five days, plus an option for a fifteen 463 00:30:39,720 --> 00:30:44,960 Speaker 1: day extension and quote extraordinary circumstances end quote. Now I'm 464 00:30:45,000 --> 00:30:50,800 Speaker 1: not certain what merits qualification as an extraordinary circumstance. The 465 00:30:50,880 --> 00:30:54,280 Speaker 1: Act doesn't really give any indication of what that means, 466 00:30:54,320 --> 00:30:58,520 Speaker 1: and I suspect that circumstances can get really extraordinary pretty 467 00:30:58,600 --> 00:31:02,560 Speaker 1: quickly due to allow pack of clarity around that isn't 468 00:31:02,680 --> 00:31:06,600 Speaker 1: the law fun See this is why I love covering tech. 469 00:31:07,160 --> 00:31:11,160 Speaker 1: Tech typically either works or it doesn't work. If it works, 470 00:31:11,480 --> 00:31:13,680 Speaker 1: you can get to the bottom of how and why 471 00:31:13,840 --> 00:31:17,160 Speaker 1: it works, and if it doesn't work, you can look 472 00:31:17,200 --> 00:31:19,520 Speaker 1: at it to see where the problem is, whether it's 473 00:31:19,600 --> 00:31:23,440 Speaker 1: a faulty part or a faulty process, or maybe the 474 00:31:23,440 --> 00:31:28,480 Speaker 1: whole technology is based on something fundamentally unsound from a 475 00:31:28,520 --> 00:31:36,160 Speaker 1: scientific perspective. Sarah nos. But law man, that stuff gets 476 00:31:36,160 --> 00:31:39,320 Speaker 1: all lucy goosey, and the specifics will only play out 477 00:31:39,400 --> 00:31:43,640 Speaker 1: after many years and typically many lawsuits to refine it 478 00:31:43,720 --> 00:31:46,200 Speaker 1: so that we have a better understanding of the laws, 479 00:31:46,320 --> 00:31:49,760 Speaker 1: scope and limitations. Now, when we come back, I'll talk 480 00:31:49,760 --> 00:31:52,520 Speaker 1: a bit more about the process. C f i U 481 00:31:52,720 --> 00:31:56,920 Speaker 1: S follows when it reviews these transactions, and will explore 482 00:31:57,000 --> 00:32:00,280 Speaker 1: the TikTok story a little bit more in detail. First, 483 00:32:00,360 --> 00:32:10,400 Speaker 1: let's take another quick break. I think it's pretty safe 484 00:32:10,400 --> 00:32:13,080 Speaker 1: to say that the major reason the U S Government 485 00:32:13,160 --> 00:32:17,600 Speaker 1: passed FIRMA was China's growing involvement in the US economy 486 00:32:17,920 --> 00:32:21,040 Speaker 1: and the tech sector in particular. Not that the laws 487 00:32:21,200 --> 00:32:24,240 Speaker 1: only cover Chinese involvement, but I'm pretty certain that was 488 00:32:24,280 --> 00:32:28,520 Speaker 1: the impetus to pass these laws. So what's the actual 489 00:32:28,600 --> 00:32:32,840 Speaker 1: process for the committee to get involved. Well, usually the 490 00:32:32,920 --> 00:32:35,440 Speaker 1: parties that are interested in having one of these covered 491 00:32:35,440 --> 00:32:39,120 Speaker 1: transactions will actually bring the case to see f I 492 00:32:39,360 --> 00:32:42,640 Speaker 1: U S for review. The purpose of this is to 493 00:32:42,720 --> 00:32:46,800 Speaker 1: identify any potential hurdles and address any concerns so that 494 00:32:46,880 --> 00:32:51,160 Speaker 1: the transaction can go through. Otherwise, the parties might get 495 00:32:51,240 --> 00:32:55,040 Speaker 1: deeply involved in a process that ultimately the US government 496 00:32:55,120 --> 00:32:58,760 Speaker 1: stops somewhere down the line or reverses, and that can 497 00:32:58,840 --> 00:33:02,840 Speaker 1: mean billions of dollars lost in the process. So, rather 498 00:33:02,880 --> 00:33:06,880 Speaker 1: than risk failure down the road, these companies will voluntarily 499 00:33:07,000 --> 00:33:12,400 Speaker 1: bring their proposed transactions to the committee for consideration and 500 00:33:12,960 --> 00:33:17,040 Speaker 1: best case scenario, the committee says, we have no response 501 00:33:17,080 --> 00:33:20,280 Speaker 1: to this, it's fine and everything can go through. But 502 00:33:20,320 --> 00:33:23,640 Speaker 1: the committee has forty five days without that fifteen day 503 00:33:23,680 --> 00:33:27,000 Speaker 1: extension that is to review the parameters of the deal, 504 00:33:27,320 --> 00:33:29,560 Speaker 1: and the committee looks at a really long list of 505 00:33:29,560 --> 00:33:33,959 Speaker 1: potential issues, including how much influence, if any, the foreign 506 00:33:34,040 --> 00:33:37,600 Speaker 1: entity will have over the business, operations, and assets of 507 00:33:37,640 --> 00:33:41,960 Speaker 1: the US based company. In some cases, like an acquisition 508 00:33:42,040 --> 00:33:46,040 Speaker 1: or merger, this could be pretty clear and the Committee 509 00:33:46,040 --> 00:33:49,440 Speaker 1: could come to a decision fairly quickly, But in other cases, 510 00:33:49,720 --> 00:33:53,720 Speaker 1: such as when Tencent took that five percent stake in Ubisoft, 511 00:33:54,000 --> 00:33:56,720 Speaker 1: it could be a little more fuzzy. The Committee can 512 00:33:56,760 --> 00:34:01,400 Speaker 1: still intervene if the investing entity isn't taking full control 513 00:34:01,680 --> 00:34:04,080 Speaker 1: of the U S company. If the Committee finds that 514 00:34:04,160 --> 00:34:07,520 Speaker 1: the investor would have significant influence on a company or 515 00:34:07,560 --> 00:34:10,440 Speaker 1: access to its assets, that could be enough for the 516 00:34:10,480 --> 00:34:13,359 Speaker 1: Committee to step in and start making demands. So if 517 00:34:13,360 --> 00:34:16,040 Speaker 1: the Committee chooses to act, or can do so in 518 00:34:16,239 --> 00:34:19,640 Speaker 1: one of many ways. Now. In the most extreme cases, 519 00:34:20,000 --> 00:34:23,719 Speaker 1: the Committee might simply prevent this transaction entirely, saying we're 520 00:34:23,719 --> 00:34:26,400 Speaker 1: not going to allow it. But in other cases, the 521 00:34:26,400 --> 00:34:30,120 Speaker 1: Committee could propose requirements that both parties have to agree 522 00:34:30,160 --> 00:34:33,280 Speaker 1: to before a transaction can take place. That can include 523 00:34:33,280 --> 00:34:36,120 Speaker 1: things like making certain the foreign entity doesn't have decision 524 00:34:36,160 --> 00:34:41,080 Speaker 1: making authority on the company or access to the company's assets, 525 00:34:41,600 --> 00:34:45,600 Speaker 1: particularly it's data and in those cases the arrangement would 526 00:34:45,600 --> 00:34:50,080 Speaker 1: be essentially purely financial. The foreign entity would benefit from 527 00:34:50,160 --> 00:34:54,080 Speaker 1: the transaction economically, but not be able to actually control stuff. 528 00:34:54,800 --> 00:34:57,960 Speaker 1: In very rare cases, the committee can just send decisions 529 00:34:58,000 --> 00:35:00,239 Speaker 1: all the way up to the President for considering sation, 530 00:35:00,880 --> 00:35:04,240 Speaker 1: and that gives the President the potential to wield significant 531 00:35:04,320 --> 00:35:08,040 Speaker 1: power when it comes to corporate transactions, something that makes 532 00:35:08,200 --> 00:35:13,320 Speaker 1: some groups in the United States fairly uneasy. For example, 533 00:35:13,480 --> 00:35:17,480 Speaker 1: in twenty eighteen, President Trump blocked a proposed acquisition in 534 00:35:17,520 --> 00:35:21,360 Speaker 1: which a company called broad Calm would purchase the semiconductor 535 00:35:21,440 --> 00:35:27,359 Speaker 1: company qual Calm for one hundred seventeen billion dollars. Now 536 00:35:27,360 --> 00:35:30,480 Speaker 1: this particular story gets confusing because if you look up 537 00:35:30,520 --> 00:35:35,080 Speaker 1: broad Calm, you'll see it is apparently an American company, 538 00:35:35,320 --> 00:35:37,640 Speaker 1: and you look up qual Calm, and that's an American 539 00:35:37,680 --> 00:35:41,359 Speaker 1: company too. So if they're both domestic companies, why did 540 00:35:41,480 --> 00:35:44,040 Speaker 1: c f I U S get involved? That's all about 541 00:35:44,120 --> 00:35:50,000 Speaker 1: foreign investment. Well, the whole story is complicated, But operations 542 00:35:50,040 --> 00:35:54,600 Speaker 1: for broad Colm had moved to Singapore until two thousand seventeen, 543 00:35:55,000 --> 00:35:59,000 Speaker 1: and that's when the company legally relocated the home address 544 00:35:59,040 --> 00:36:03,840 Speaker 1: from Singapore to the US. Ironically, They did this specifically, 545 00:36:04,000 --> 00:36:07,400 Speaker 1: or at least largely, to avoid c f i U 546 00:36:07,640 --> 00:36:11,480 Speaker 1: S issues because they would become a domestic company. However, 547 00:36:11,920 --> 00:36:15,399 Speaker 1: ownership of the company is still rooted in Asia, so 548 00:36:15,520 --> 00:36:19,680 Speaker 1: while the company has a US address, that apparently was 549 00:36:19,719 --> 00:36:23,080 Speaker 1: not enough to satisfy c f i U S or Trump, 550 00:36:23,280 --> 00:36:27,160 Speaker 1: and so the proposed acquisition got the acts. The Committee 551 00:36:27,160 --> 00:36:31,239 Speaker 1: can also force companies to reverse transactions well after they've 552 00:36:31,280 --> 00:36:35,000 Speaker 1: already happened. C f i U S ordered Chinese investors 553 00:36:35,000 --> 00:36:39,520 Speaker 1: to divest from Patients Like Me, which was a healthcare startup. 554 00:36:39,760 --> 00:36:43,960 Speaker 1: The investors had already poured money into this startup venture, 555 00:36:44,840 --> 00:36:48,160 Speaker 1: and the same thing would happen with Grinder dating app 556 00:36:48,200 --> 00:36:51,400 Speaker 1: for the l g B t Q community. Chinese investors 557 00:36:51,400 --> 00:36:54,560 Speaker 1: board money into that too. So both startups deal with 558 00:36:54,600 --> 00:37:01,120 Speaker 1: a lot of very sensitive information healthcare information, location, data preferences, 559 00:37:01,200 --> 00:37:04,880 Speaker 1: all this kind of stuff that is really important to 560 00:37:05,000 --> 00:37:08,720 Speaker 1: individuals and could pose as a security threat in general. 561 00:37:09,200 --> 00:37:12,480 Speaker 1: And the Committee deemed that this post as a potential 562 00:37:12,520 --> 00:37:15,920 Speaker 1: threat not just a personal security but national security. And 563 00:37:15,960 --> 00:37:18,960 Speaker 1: you might wonder, how is that even possible. Well, if 564 00:37:18,960 --> 00:37:21,320 Speaker 1: you're someone who works for the government and you're using 565 00:37:21,320 --> 00:37:24,960 Speaker 1: one of these apps and your location is being tracked 566 00:37:25,280 --> 00:37:27,960 Speaker 1: through that app, that could potentially be a threat to 567 00:37:28,080 --> 00:37:33,200 Speaker 1: national security. So that was sort of the logistics behind it, 568 00:37:33,239 --> 00:37:36,839 Speaker 1: the reasoning behind it, And this brings us up to TikTok. Now, 569 00:37:36,880 --> 00:37:39,759 Speaker 1: if you listen to my previous episode about TikTok, you 570 00:37:39,840 --> 00:37:43,840 Speaker 1: know that one of the foundational components was an older 571 00:37:43,880 --> 00:37:49,440 Speaker 1: service called musical dot Lee l Y. That is, Musical 572 00:37:49,760 --> 00:37:53,720 Speaker 1: Lee launched in China and the United States and around 573 00:37:53,719 --> 00:37:56,560 Speaker 1: the same time. But while it got a fairly enthusiastic 574 00:37:56,560 --> 00:38:00,360 Speaker 1: reception in the US, it was largely ignored in China, 575 00:38:00,640 --> 00:38:04,360 Speaker 1: and that convinced the team of Musical Lee to focus 576 00:38:04,440 --> 00:38:08,000 Speaker 1: on the US market and it largely became essentially a 577 00:38:08,120 --> 00:38:13,080 Speaker 1: US company. Byte Dance, another Chinese company, had a competing 578 00:38:13,200 --> 00:38:17,279 Speaker 1: service that was similar to Musical Lee, and that one 579 00:38:17,400 --> 00:38:21,080 Speaker 1: was very strong in the Chinese market. So Bye Dance 580 00:38:21,200 --> 00:38:26,160 Speaker 1: then acquired Musical Lee in two thousand seventeen for an 581 00:38:26,239 --> 00:38:28,759 Speaker 1: undisclosed amount of money, but I'm sure it was a 582 00:38:28,800 --> 00:38:33,040 Speaker 1: lot of it. TikTok would grow out of this acquisition. 583 00:38:33,520 --> 00:38:36,560 Speaker 1: The competing service that Byte Dance operates is actually still 584 00:38:36,600 --> 00:38:40,400 Speaker 1: active in China, whereas TikTok is really not available in China, 585 00:38:40,560 --> 00:38:44,040 Speaker 1: oddly enough, though perhaps maybe it's not that odd because 586 00:38:44,320 --> 00:38:47,439 Speaker 1: access to TikTok would mean that Chinese citizens would get 587 00:38:47,480 --> 00:38:50,960 Speaker 1: access to information that isn't state approved, and that's not 588 00:38:51,000 --> 00:38:54,560 Speaker 1: really the way that China operates in general. But TikTok 589 00:38:54,640 --> 00:38:57,880 Speaker 1: started as a Chinese company no matter how you trace 590 00:38:57,960 --> 00:39:01,719 Speaker 1: its origins, whether it's to Bite It's or to Musical Lee, 591 00:39:02,040 --> 00:39:05,560 Speaker 1: and the popularity of the app has grown significantly over 592 00:39:05,560 --> 00:39:09,040 Speaker 1: the last couple of years, becoming a true phenomenon, particularly 593 00:39:09,080 --> 00:39:13,200 Speaker 1: among young people. Now, the fact that, like all social networks, 594 00:39:13,239 --> 00:39:16,680 Speaker 1: TikTok relies on user data to support its revenue model, 595 00:39:16,840 --> 00:39:20,080 Speaker 1: which again is centered around advertising, well that makes it 596 00:39:20,160 --> 00:39:24,280 Speaker 1: a concern for the US government. Military basis banned personnel 597 00:39:24,320 --> 00:39:27,080 Speaker 1: from downloading the app. Uh It's not supposed to go 598 00:39:27,120 --> 00:39:31,240 Speaker 1: on any government operated or owned phones, and the concern 599 00:39:31,320 --> 00:39:34,040 Speaker 1: is that the app could siphon away critical information and 600 00:39:34,120 --> 00:39:38,720 Speaker 1: send it on ultimately to a Chinese company. TikTok stated 601 00:39:38,960 --> 00:39:43,040 Speaker 1: that all US data is actually stored in the US itself. 602 00:39:43,440 --> 00:39:47,160 Speaker 1: It does have a backup in Singapore, but according to TikTok, 603 00:39:47,600 --> 00:39:51,040 Speaker 1: the US based operations anyway, none of this data is 604 00:39:51,080 --> 00:39:54,920 Speaker 1: subject to the Chinese intelligence laws, but that hasn't really 605 00:39:55,040 --> 00:39:59,480 Speaker 1: quelled the criticism or a concern about TikTok. Now the 606 00:39:59,480 --> 00:40:04,520 Speaker 1: President assigned an executive order barring transactions with byte Dance, 607 00:40:05,040 --> 00:40:09,400 Speaker 1: essentially telling US companies that they can't do any business 608 00:40:09,719 --> 00:40:13,000 Speaker 1: with byte Dance and by extension, TikTok since TikTok is 609 00:40:13,040 --> 00:40:16,920 Speaker 1: owned by byte Dance. So that's why there's now pressure 610 00:40:16,960 --> 00:40:20,680 Speaker 1: to remove TikTok from app stores like Apple or Google. 611 00:40:20,880 --> 00:40:23,440 Speaker 1: And there's this discussion about the Committee stepping in to 612 00:40:23,560 --> 00:40:27,160 Speaker 1: force byte Dance to divest itself of TikTok if the 613 00:40:27,200 --> 00:40:30,120 Speaker 1: service is to operate in the United States. Thus the 614 00:40:30,160 --> 00:40:33,720 Speaker 1: possibility of Microsoft coming in to purchase TikTok from byte Dance. 615 00:40:34,280 --> 00:40:38,600 Speaker 1: Now there's still a lot of confusion around this situation. 616 00:40:38,840 --> 00:40:42,520 Speaker 1: If Microsoft were to only purchase TikTok servers that are 617 00:40:42,560 --> 00:40:46,640 Speaker 1: operating in the United States, Canada, Australia, and New Zealand, 618 00:40:46,920 --> 00:40:49,480 Speaker 1: these are all countries that are closely aligned with one 619 00:40:49,520 --> 00:40:53,080 Speaker 1: another on matters of intelligence, how would that affect the 620 00:40:53,120 --> 00:40:58,600 Speaker 1: overall service. Because TikTok operates around the world and servers 621 00:40:58,600 --> 00:41:03,640 Speaker 1: are located in different countries. So would this acquisition split 622 00:41:03,880 --> 00:41:08,080 Speaker 1: TikTok into two separate apps, one owned by Microsoft and 623 00:41:08,480 --> 00:41:12,680 Speaker 1: one that's not Would those two apps interoperate at all? 624 00:41:13,440 --> 00:41:16,399 Speaker 1: It seems unlikely because the whole stated reason for going 625 00:41:16,440 --> 00:41:19,120 Speaker 1: after TikTok in the first place is because the app 626 00:41:19,160 --> 00:41:22,520 Speaker 1: could potentially be sending personal data about U. S citizens 627 00:41:22,800 --> 00:41:26,840 Speaker 1: to a foreign countries government, So why would we allow 628 00:41:26,880 --> 00:41:29,799 Speaker 1: it to interoperate with another service that could still be 629 00:41:29,880 --> 00:41:32,400 Speaker 1: doing that. Now there have been a few other reports 630 00:41:32,440 --> 00:41:35,360 Speaker 1: saying that Microsoft is considering a purchase of the global 631 00:41:35,719 --> 00:41:39,600 Speaker 1: operations of TikTok, a report that Microsoft has disputed. The 632 00:41:39,719 --> 00:41:43,360 Speaker 1: value of the deal will fluctuate depending upon which version 633 00:41:43,400 --> 00:41:47,120 Speaker 1: of the deal you're looking at, but generally speaking, the 634 00:41:47,160 --> 00:41:50,759 Speaker 1: reports I've seen have valued it at between ten and 635 00:41:50,960 --> 00:41:56,719 Speaker 1: thirty billion dollars. It boggles my mind, but Microsoft, a 636 00:41:56,719 --> 00:42:01,120 Speaker 1: company that has not traditionally performed terribly well younger customers, 637 00:42:01,120 --> 00:42:05,719 Speaker 1: apart from maybe the Xbox division, I suppose, may want 638 00:42:05,760 --> 00:42:09,239 Speaker 1: to go after TikTok to help secure its future with 639 00:42:09,480 --> 00:42:12,359 Speaker 1: younger customers. Microsloft says, well, here's the way we get them. 640 00:42:12,800 --> 00:42:15,520 Speaker 1: We buy something they really like. Already, we have to 641 00:42:15,600 --> 00:42:18,920 Speaker 1: view this not just as an issue of national security, however, 642 00:42:19,040 --> 00:42:21,600 Speaker 1: and we have to take into account the broader situation 643 00:42:21,640 --> 00:42:25,520 Speaker 1: of global politics and trade agreements. One could look at 644 00:42:25,520 --> 00:42:28,560 Speaker 1: the success of TikTok and see it as a point 645 00:42:28,600 --> 00:42:31,719 Speaker 1: of power for a Chinese company and by extension, the 646 00:42:31,800 --> 00:42:36,319 Speaker 1: Chinese government. So resting control of that app, even if 647 00:42:36,320 --> 00:42:39,359 Speaker 1: it's just part of an app from China, would end 648 00:42:39,400 --> 00:42:42,080 Speaker 1: up being a political loss for China and a political 649 00:42:42,120 --> 00:42:47,320 Speaker 1: win for Trump. So complicating matters is that TikTok users, 650 00:42:47,560 --> 00:42:51,200 Speaker 1: most of them younger, have become extremely active over the 651 00:42:51,239 --> 00:42:54,960 Speaker 1: last several months during the global response to the COVID pandemic. 652 00:42:55,080 --> 00:42:57,400 Speaker 1: In other words, what else is there to do? You 653 00:42:57,480 --> 00:42:59,640 Speaker 1: might as well make a whole bunch of videos. But 654 00:42:59,719 --> 00:43:03,160 Speaker 1: some that activity is political in nature. People have been 655 00:43:03,239 --> 00:43:07,239 Speaker 1: using TikTok to kind of organize politically, and much of 656 00:43:07,320 --> 00:43:11,080 Speaker 1: this action has been critical of the US President and 657 00:43:11,120 --> 00:43:14,560 Speaker 1: the U s government's handling of the COVID nineteen crisis. 658 00:43:15,440 --> 00:43:18,560 Speaker 1: I totally get it. Anyway, it's hard to get away 659 00:43:18,920 --> 00:43:22,600 Speaker 1: from the feeling that some of the US government's response 660 00:43:22,640 --> 00:43:27,040 Speaker 1: to TikTok might be backlash against a user base that 661 00:43:27,080 --> 00:43:31,000 Speaker 1: has been outspoken about perceived failures in the US government, 662 00:43:31,000 --> 00:43:34,520 Speaker 1: whether it's from COVID or the Black Lives Matter movement 663 00:43:34,719 --> 00:43:38,360 Speaker 1: or many other social issues. So some say that maybe 664 00:43:38,400 --> 00:43:40,680 Speaker 1: this is a move to try and quite quiet a 665 00:43:40,800 --> 00:43:44,680 Speaker 1: voice that has been troublesome for the US government. Then 666 00:43:44,719 --> 00:43:48,160 Speaker 1: we have the competing services that have started to spring 667 00:43:48,320 --> 00:43:50,560 Speaker 1: up that are attempting to take advantage of this whole 668 00:43:50,560 --> 00:43:53,240 Speaker 1: situation and to try and get some of the success 669 00:43:53,280 --> 00:43:56,680 Speaker 1: that TikTok has enjoyed. The most famous of these, I 670 00:43:56,719 --> 00:44:01,400 Speaker 1: think is Facebook introducing the feature called reels are e 671 00:44:01,400 --> 00:44:06,000 Speaker 1: e l s on Instagram, And I don't think there's 672 00:44:06,040 --> 00:44:09,120 Speaker 1: any way you could argue it wasn't inspired by TikTok. 673 00:44:09,160 --> 00:44:11,200 Speaker 1: In fact, some people go so far as to say 674 00:44:11,200 --> 00:44:16,160 Speaker 1: it's essentially a copy of TikTok. So what options are 675 00:44:16,239 --> 00:44:19,520 Speaker 1: open right now? Where are we going to go next? Well, 676 00:44:19,560 --> 00:44:24,160 Speaker 1: TikTok could remain under Byte Dances ownership, and it could 677 00:44:24,200 --> 00:44:27,360 Speaker 1: even shift all operations back over to China or to 678 00:44:27,440 --> 00:44:30,440 Speaker 1: other countries, and it would be very hard for the 679 00:44:30,520 --> 00:44:33,319 Speaker 1: United States to block Americans from using an app. I mean, 680 00:44:33,400 --> 00:44:36,360 Speaker 1: apps tend to just be apps, right they They aren't 681 00:44:36,360 --> 00:44:41,160 Speaker 1: really you know, tied to a specific location. Generally speaking, now, 682 00:44:41,160 --> 00:44:44,960 Speaker 1: presumably the US government could order internet service providers to 683 00:44:45,040 --> 00:44:49,080 Speaker 1: block access to the app, to essentially say, don't allow 684 00:44:49,920 --> 00:44:53,200 Speaker 1: packets to go from those servers to anyone in the 685 00:44:53,280 --> 00:44:56,839 Speaker 1: United States. But as I am recording this, we don't 686 00:44:56,840 --> 00:45:00,520 Speaker 1: even know if Google and Apple will actually remove TikTok 687 00:45:00,719 --> 00:45:04,560 Speaker 1: from their online stores, and it seems likely that internet 688 00:45:04,600 --> 00:45:07,880 Speaker 1: service providers would resist blocking off access to a specific 689 00:45:07,920 --> 00:45:11,640 Speaker 1: service because it sets a dangerous precedent. It would mean 690 00:45:11,680 --> 00:45:16,120 Speaker 1: the US would ironically operate more like China does. China 691 00:45:16,239 --> 00:45:20,040 Speaker 1: has the Great Firewall, a barrier that effectively blocks most 692 00:45:20,080 --> 00:45:25,120 Speaker 1: Internet content from getting to Chinese citizens. Now, as for 693 00:45:25,160 --> 00:45:29,840 Speaker 1: what I think about all of this, um well, I mean, honestly, 694 00:45:29,880 --> 00:45:33,360 Speaker 1: I'm conflicted. On the one hand, I do have concern 695 00:45:33,520 --> 00:45:38,040 Speaker 1: about how private data can be gathered and then weaponized, 696 00:45:38,520 --> 00:45:42,719 Speaker 1: but that concern stretches beyond China. I'm concerned with what 697 00:45:42,840 --> 00:45:47,000 Speaker 1: Facebook does with our data, for example, or Twitter, or 698 00:45:47,000 --> 00:45:51,760 Speaker 1: really any online platform we rely upon heavily. TikTok sticks 699 00:45:51,800 --> 00:45:55,280 Speaker 1: out because of the possible connections to a foreign government 700 00:45:55,560 --> 00:45:59,600 Speaker 1: that has a rather acrimonious relationship with the US government. 701 00:46:00,280 --> 00:46:04,200 Speaker 1: China also has a terrible record with human rights violations, 702 00:46:04,239 --> 00:46:07,440 Speaker 1: though let's be fair, the United States is no stranger 703 00:46:07,520 --> 00:46:11,279 Speaker 1: to this either, so I think the TikTok case is 704 00:46:11,880 --> 00:46:16,160 Speaker 1: kind of emotionally charged. However, I don't think we should 705 00:46:16,200 --> 00:46:20,520 Speaker 1: consider it an outlier. Instead, we should really hold all 706 00:46:20,560 --> 00:46:24,320 Speaker 1: online services up to scrutiny and get our better understanding 707 00:46:24,360 --> 00:46:27,800 Speaker 1: of how are these services using the information we provide 708 00:46:27,800 --> 00:46:32,000 Speaker 1: to them. That includes services that might share information with 709 00:46:32,080 --> 00:46:36,720 Speaker 1: our own government, not just foreign governments. Data really is power, 710 00:46:37,040 --> 00:46:39,800 Speaker 1: and we have to be careful to whom we entrust 711 00:46:40,080 --> 00:46:44,120 Speaker 1: that power. For the last couple of decades, we haven't 712 00:46:44,120 --> 00:46:47,760 Speaker 1: been careful at all. We have been freely giving away 713 00:46:48,200 --> 00:46:53,040 Speaker 1: our location, our personal information, and giving links to other 714 00:46:53,160 --> 00:46:57,600 Speaker 1: people in our lives. So there are entities out there 715 00:46:57,640 --> 00:46:59,800 Speaker 1: that are gathering information about people who don't even you 716 00:47:00,080 --> 00:47:02,880 Speaker 1: is the services because they're just kind of lumped in 717 00:47:02,960 --> 00:47:06,759 Speaker 1: with the folks who are using them. So to me, 718 00:47:06,880 --> 00:47:10,000 Speaker 1: that says we need to be careful across the board. 719 00:47:10,320 --> 00:47:16,440 Speaker 1: TikTok is one example, but not the only one. Do 720 00:47:16,520 --> 00:47:18,719 Speaker 1: I think it's a good idea to remove TikTok from 721 00:47:18,800 --> 00:47:22,520 Speaker 1: Chinese hands? Well, I mean, I guess that really depends 722 00:47:22,560 --> 00:47:26,160 Speaker 1: on where it goes to and how the new owner 723 00:47:26,360 --> 00:47:29,600 Speaker 1: will handle the service, and whether the outcome is actually 724 00:47:29,600 --> 00:47:32,920 Speaker 1: better for users or not. I know that TikTok is 725 00:47:32,960 --> 00:47:37,120 Speaker 1: incredibly popular and that users are probably not just going 726 00:47:37,200 --> 00:47:40,920 Speaker 1: to jump from TikTok to a competing service like reels, 727 00:47:40,960 --> 00:47:43,799 Speaker 1: despite what Facebook would really like to see. I think 728 00:47:43,800 --> 00:47:46,880 Speaker 1: it's far more likely we would see users migrate to 729 00:47:46,920 --> 00:47:49,920 Speaker 1: an entirely new service rather than one that tries to 730 00:47:49,960 --> 00:47:54,120 Speaker 1: replicate what TikTok was already doing. And I think we 731 00:47:54,160 --> 00:47:57,080 Speaker 1: need to have some important conversations about stuff like what 732 00:47:57,280 --> 00:48:00,719 Speaker 1: actually constitutes a threat to national stick curity, what does 733 00:48:00,719 --> 00:48:04,359 Speaker 1: that really mean, what what is the real fear here? 734 00:48:04,840 --> 00:48:08,719 Speaker 1: And what actions actually help improve things? How do how 735 00:48:08,719 --> 00:48:11,759 Speaker 1: do we improve national security rather than just kind of 736 00:48:11,800 --> 00:48:15,400 Speaker 1: shift stuff around. I'm not entirely certain we're on the 737 00:48:15,520 --> 00:48:18,920 Speaker 1: right track as it stands right now, but that's a 738 00:48:18,920 --> 00:48:24,000 Speaker 1: conversation that is huge and honestly requires people far more 739 00:48:24,040 --> 00:48:28,719 Speaker 1: steeped in and policy than I am. I only know 740 00:48:28,920 --> 00:48:33,600 Speaker 1: that if we just reduce this too we don't want 741 00:48:33,640 --> 00:48:38,120 Speaker 1: that data going to China, we risk missing an important 742 00:48:38,160 --> 00:48:43,399 Speaker 1: component that has just as strong a role in our 743 00:48:43,440 --> 00:48:47,759 Speaker 1: lives as national security and that I think would be 744 00:48:47,800 --> 00:48:51,560 Speaker 1: a huge mistake. I'm curious what you guys think and 745 00:48:51,560 --> 00:48:54,680 Speaker 1: whether or not you have suggestions for future topics of 746 00:48:54,680 --> 00:48:57,160 Speaker 1: tech stuff. Actually, if you don't have suggestions for future 747 00:48:57,200 --> 00:48:59,360 Speaker 1: topics of tech stuff, you don't have to tell me that. 748 00:48:59,360 --> 00:49:02,399 Speaker 1: That's fine. But if you do have suggestions, reach out 749 00:49:02,440 --> 00:49:05,759 Speaker 1: to me. The Twitter address you should use to let 750 00:49:05,760 --> 00:49:08,600 Speaker 1: me know what's going on is text stuff H s 751 00:49:08,880 --> 00:49:17,600 Speaker 1: W and I'll talk to you again really soon. Text 752 00:49:17,600 --> 00:49:21,040 Speaker 1: Stuff is an i Heart Radio production. For more podcasts 753 00:49:21,080 --> 00:49:23,840 Speaker 1: from my Heart Radio, visit the i Heart Radio app, 754 00:49:23,960 --> 00:49:27,120 Speaker 1: Apple Podcasts, or wherever you listen to your favorite shows.