Did Biden drop the ball on TikTok and China?
An explosive report from BuzzFeed raises more questions about whether the Chinese-owned video app TikTok exposes Americans’ personal information to Beijing. It also puts President Biden’s China policy under a new spotlight as China’s economic power continues to grow, and the Biden administration continues to take a decidedly softer approach than his predecessor. (The New York Times has not independently verified BuzzFeed’s reporting.)
Here’s a quick rundown of TikTok. During Donald Trump’s presidency, the US Committee on Foreign Investment, which reviews foreign investments with national security in mind, opened an investigation into TikTok. Trump used his results to issue an executive order forcing ByteDance, TikTok’s Chinese parent, to sell the company. That’s what led to TikTok reaching a deal to sell to Oracle and Walmart. But when Biden took office, he didn’t enforce the divestment order, and ByteDance didn’t sell. However, concerns remained about China’s access to personal information stored by TikTok. Earlier this year, TikTok was working on a deal to store its data on Oracle servers to please regulators, and the BuzzFeed article says that deal is still in the works.
Chinese engineers had access to data on Americans as recently as this year, BuzzFeed reports. “Everything is seen in China,” a member of TikTok’s trust and safety department said at a meeting last September, with US employees having to ask their Chinese colleagues to explain how US user data flowed. The article also cites experts’ concerns that whatever measures ByteDance implements, China could still force it to hand over data. It has not hesitated to boost technology companies in recent years.
The Oracle deal is supposed to be the solution. Shortly before BuzzFeed published its article, TikTok announced that it was moving all of its US user data through servers controlled by Oracle. But he also said that he would still store his own backups of that information. And TikTok itself has acknowledged the risk that data stored in the US could be accessed by employees in China. TikTok said in a blog post on Friday that it was “working closely with Oracle to develop data management protocols.” data that Oracle will audit and manage for even more peace of mind.” He also outlined other operational changes, including a new department to manage US data only.
The article raises questions about Biden’s approach to TikTok and the Chinese deal. “Not complying with the TikTok ban was a huge mistake” by the US, he said lucky palm tree, the founder of Oculus. More broadly, US regulatory scrutiny appears to have helped downplay further Chinese investment in the country, but despite warnings that regulators could review a score of past investments, they have taken little apparent action. And while Congress is threatening to crack down on investments by US companies in China, it’s not certain that a bill will pass. For Biden, the timing of BuzzFeed’s story is awkward, given that he’s also weighing a rollback from another holdover from Trump’s tough-on-China era: tariffs on Chinese goods. With the midterms ahead, will he risk shaking up the youth vote by taking another look at TikTok?
THIS IS WHAT IS HAPPENING
Thousands of flights are canceled or delayed. During the holiday weekend, which included the busiest day of the year, staff shortages led to widespread flight disruptions. And the pilot shortage has prompted American Airlines to stop flying to Toledo, Ohio, and Ithaca and Islip, New York, in September.
President Biden says he can take action to pause the federal gas tax. The move would provide some relief to Americans struggling with gas prices hovering around $5 a gallon. The White House is grappling with how to deal with record inflation.
The Ernst & Young breakup plan would generate multi-million dollar payouts for the partners. The proposal to split its audit and consulting businesses, which is based on optimistic growth forecasts, could be implemented by the end of this year and would mean the consulting business would go public, The Wall Street Journal reported.
A stock bet for Bitcoin skeptics
As cryptocurrency holders watch the market tank, skeptics can start betting against Bitcoin on the New York Stock Exchange today. The SEC greenlit a new exchange-traded fund late last week from investment manager ProShares that rises in value when the price of Bitcoin crashes, as it has recently. Over the weekend, the price of Bitcoin dipped below $20,000 for the first time since 2020, even dipping below $18,000 at one point before rising back above $21,000 today.
The new fund, the ProShares Short Bitcoin Strategy ETF, does not buy or sell Bitcoin directly. Instead, you place bets on futures contracts on the Chicago Mercantile Exchange that pay off when the price of Bitcoin falls. The company also launched the first Bitcoin futures ETF last fall, which is betting prices will rise, and amid the market struggles, ProShares CEO Michael Sapir says the time seems right to this most pessimistic company. “There’s probably no better environment for it,” Sapir told DealBook.
The fund is launched when the price of Bitcoin has crashed. It is down 70 percent from its November high. And the total value of all cryptocurrencies has fallen to around $1 trillion, from around $3 trillion in November. Much of the recent selling has been fueled by crashes in so-called stablecoins, cryptocurrencies that were supposed to hold a fixed value. But if those crashes don’t lead to broader problems in the crypto market, the price of Bitcoin could rebound.
Some are still waiting for an ETF containing real cryptocurrencies. Bitcoin enthusiasts have long wanted to offer a fund that buys and holds the crypto itself, to no avail so far. SEC Chairman Gary Gensler argues that the barely regulated, always-on global Bitcoin market is too wild and unreliable, setting it apart from Chicago-based futures funds, which are highly regulated and serves registered professional traders. In particular, Grayscale Bitcoin Trust, a crypto fund for accredited investors, currently trading at a deep discount, ran an ad and letter campaign to bolster its application to become an ETF this year, and Grayscale has threatened litigation if denies. A decision is expected in early July. But now that crypto markets are showing all the vulnerabilities most feared by regulators, a former top SEC official tells DealBook that those crypto fund dreams likely won’t come true any time soon.
“I no longer live with or wish to be related to my biological father in any way, shape or form.”
— Elon Musk’s transgender daughter, in a petition to change your name to align with her gender identity that she introduced in April.
Sell cars the Tesla way
In 2019, Tesla received criticism for its decision to only sell cars online. Auto industry experts argued that whatever bad feelings people had about dealerships, they were essential to business.
The online strategy, championed by Tesla boss Elon Musk, appears to be proving naysayers wrong. By combining direct sales with a limited number of stores and service centers, Tesla dominates the fast-growing electric car market, even as other manufacturers struggle to sell cars due to computer chip shortages, writes Paul Stenquist of The Times. .
The approach could have major ramifications for the auto industry. Most car manufacturers and dealers are doing well right now because the shortage has pushed up prices for new and used cars. But they may eventually have to adopt some of the changes Tesla has introduced.
Why the industry may need to change the way it works:
Online car buying is popular — and not just with people buying electric cars, said Michelle Krebs, senior analyst at Cox Automotive. “Our data shows that consumers want to do more of the process online, but most don’t want to eliminate the dealership visit altogether,” Krebs said.
It also reduces costs. Ford’s advertising and distribution costs per car are about $2,000 higher than Tesla’s., Ford Motor CEO Jim Farley said at an investor conference this month. Farley said Ford wanted to sell electric cars only online at non-negotiable prices, without having many of them in dealerships.
But there are obstacles to shifting online sales:
State laws can make it difficult or impossible for automakers to deal directly with customers and often require established automakers to sell through franchised dealerships. Some states, like Texas, offer rebates for the purchase of electric vehicles, but only to those who buy from franchised dealers.
Some Tesla owners complain that repairing or fixing problems with their cars can be a test. It has far fewer service centers in the US than most established automakers. And while Tesla technicians make house calls for minor repairs, only service centers can handle some major issues.
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