Trump administration’s TikTok ban has been delayed, court rules

A U.S. federal court has said a ban on TikTok will not go into effect on Monday as scheduled.

The move to delay the anticipated ban will allow Americans to continue using the app while the court considers the ban’s legality and whether the app poses a risk to national security as the Trump administration claims.

For weeks since President Donald Trump signed two executive orders in early August, the government has threatened to shut down the viral video sharing app over fears that its parent company ByteDance, headquartered in Beijing, could be forced to turn over user data to the Chinese government. TikTok, which has 100 million users in the United States alone, has long rejected the claims.

TikTok first filed a lawsuit against the administration on September 18, and on Thursday this week filed a last minute injunction in an effort to stop the ban going into effect Sunday night. On Friday, the government asked the court to reject the injunction in a sealed motion, which the government later refiled as a public motion with some redactions. A public hearing on the injunction was set for Sunday morning. The case is being heard in DC District Court presided by judge Carl J. Nichols.

In its ruling on Sunday, the court gave just its decision, with the formal opinion handed over privately to just the two opposing parties. Due to sensitive material included in the government’s motion, the parties have until Monday to ask for any redactions before the final opinion will be published.

The decision is just the latest episode in the continuing saga of the sprawling fight over the future of the fastest-growing social app in America. A deal reached between ByteDance and the U.S. government last weekend was believed to have resolved the standoff between the two parties, but the deal has frayed over disputed details between buyer Oracle and ByteDance.

The administration first launched an action against TikTok on August 6, with President Trump arguing in an executive order that the app posed an unreasonable national security risk for American citizens. That order mirrored a similar one published the same day that put restrictions on the popular Mandarin-language messenger app WeChat, which is owned by China-based Tencent.

Last weekend, a federal magistrate judge in San Francisco put in place an injunction on the Commerce Department’s ban on WeChat, pending further court deliberations. TikTok, whose arguments mirror those in the WeChat lawsuit, was hoping for a similar outcome in its own legal proceedings.

One difference between the two lawsuits is the plaintiffs. In WeChat’s case, a group of WeChat users filed a lawsuit arguing that a ban would hurt their expression of speech. TikTok is representing itself in its own fight with the government.

The court case is TikTok Inc. et al v. Trump et al (1:2020-cv-02658).

NASA commissions report to show its economic impact: $64B and 312K jobs

Perhaps anticipating budget pushback from the federal government, NASA has released its first ever agency-wide economic report, documenting the agency’s impact on the nation’s jobs and cash flow. Everyone knew NASA was impactful, but now we know exactly how impactful it is, some $64 billion and over 300,000 jobs worth in FY2019.

It seems clear that the 2,670-page report is meant to show just how valuable the agency is to the country, and how it’s very much an investment in the economy and not, as some suggest, a hole we throw money into and pull science out of. The major points it makes are these:

  • NASA itself employs more than 18,000 civil servants, but 17 additional jobs in the economy are “supported” (of this later) for every full-timer at the agency, for a total of around 312,000 total jobs.
  • NASA supports almost $24 billion in labor income yearly, as well as a total economic output of $64.3 billion.
  • $6.9 billion in additional tax revenues can be attributed to the agency’s work.
  • About 22 percent of this overall effect is due to the “Moon to Mars” program, the current 10-ish year plan to return to those locations.
  • Moon to Mars programs within NASA account for only 2.4 percent of the overall employment impact, but related procurement makes up almost 20 percent of it. (In other words, the “M2M” programs are hugely weighted towards contractors.)

“Support” is interpreted broadly, though not necessarily overly so. Essentially, NASA’s direct payroll and procurement budgets are one thing, but they may lead to increased demand for goods and services in general, and increased spending by companies, consumers, and local governments. So a NASA contractor doing $5M worth of composites work also produces demand in the city it’s based in for logistics work, business services, food and other everyday needs — perhaps to the tune of twice the money actually spent by NASA.

The report goes into remarkably fine detail on the thousands of industries it supports in direct and indirect ways. For instance, on page 138 of the appendix (page 493 overall), we find that NASA supports 66 jobs in the sheet metal manufacturing world, worth about $4M in labor, adding nearly $6M in value itself, and producing a total positive economic impact of about $14M. Then there’s the 91 jobs in fabricated metal structures, the 13 in heavy gauge metal tank manufacturing, 7 in cutlery, utensil, pot and pan manufacturing… and so on, for many pages.

Sometimes these connections seem a bit tenuous. How does NASA support small arms manufacturing and produce a $4M economic impact, or support the tortilla industry to a similar degree? No doubt there’s a perfectly good explanation, but I’ve asked NASA for a bit more context on how some these numbers might be arrived at.

The final picture is simple enough, however: NASA is a huge force in our economy and one that repays its investment several times over even when you don’t account for the “value” of exploring and understanding our universe.

It’s also broken down by state, a convenient way for members of Congress to justify NASA’s budget to their constituents, should they need convincing. When some of those billions could be spent on PPE and pandemic response rather than what some may perceive as research and programs with no immediate practical benefit, it’s important to be able to show how the agency is more than just an expense.

TikTok files for injunction against pending Trump app ban

TikTok’s fight with the Trump administration doesn’t yet appear to be over, regardless of what the deal that was signed between its parent company ByteDance and Oracle says.

Earlier today, the company filed a motion to stop the Commerce Department from enforcing a ban against the popular social app. That ban was supposed to come into place on Sunday, but after the signing of the ByteDance/Oracle deal, it was delayed by a week, with additional delays expected as the deal closes in the coming weeks.

Now though, the company seems to be taking more aggressive action to stop the government. It’s perhaps looking at the plight of another app, WeChat, whose users successfully argued for an injunction in San Francisco federal court this weekend that blocked the app from being banned on Sunday by the Commerce Department. Unlike in WeChat’s case, where the lawsuit was brought by American citizens rather than its owner Tencent, TikTok itself filed its lawsuit against President Trump and the government, originally filing its lawsuit on September 18th, according to court records.

In its filing for an injunction, the company says that it has “made extraordinary efforts to try to satisfy the government’s ever-shifting demands and purported national security concerns, including through changes in the ownership and structure of [its] business, and [we] are continuing to do so.”

In particular, the company noted that the damage of the ban could be significant, arguing that “hundreds of millions of Americans who have not yet downloaded TikTok will be shut out … six weeks before a national election.” The company argues that President Trump and the Commerce Department exceeded its authority under existing legislation to enforce a ban, which mirror arguments made in the WeChat case this weekend.

It’s just the latest challenge in a sprawling situation that changes by the hour. Overnight, my colleague Rita Liao noted that China itself may not even approve the ByteDance/Oracle deal, calling it “extortion” and putting in doubt the whole framework for TikTok moving forward.

China says it won’t approve TikTok sale, calls it ‘extortion’

The September 20 deadline for a purported TikTok sale has already passed, but the parties involved have yet to settle terms on the deal. ByteDance and TikTok’s bidders Oracle and Walmart presented conflicting messages on the future ownership of the app, confusing investors and users. Meanwhile, Beijing’s discontent with the TikTok sale is increasingly obvious.

China has no reason to approve the “dirty” and “unfair” deal that allows Oracle and Walmart to effectively take over TikTok based on “bullying and extortion,” slammed an editorial published Wednesday in China Daily, an official English-language newspaper of the Chinese Communist Party.

The editorial argued that TikTok’s success — a projected revenue of about a billion dollars by the end of 2020 — “has apparently made Washington feel uneasy” and prompted the U.S. to use “national security as the pretext to ban the short video sharing app.”

The official message might stir mixed feelings within ByteDance, which has along the way tried to prove its disassociation from the Chinese authority, a precondition for the companies’ products to operate freely in Western countries.

Beijing has already modified a set of export rules to complicate the potential TikTok deal, restricting the sale of certain AI-technologies to foreign companies. Both ByteDance and China’s state media have said the agreement won’t involve technological transfers.

The Trump Administration said it would ban downloads of TikTok, which boasts 100 million users in the country, if an acceptable deal was not reached. It also planned to shut down Tencent’s WeChat, a decision just got blocked by a district court in San Francisco.

TikTok has collected nearly 198 million App Store and Google Play installs in the U.S. while WeChat has been installed by nearly 22 million users in the U.S. since 2014, according to market research firm Sensor Tower. Unlike TikTok, which has a far-reaching user base in the U.S., WeChat is mainly used by Chinese-speaking communities or those with connections in China, where the messenger is the dominant chat app and most Western alternatives are blocked.

Right before the proposed September 20 deadline for the app bans, China’s Commerce Ministry called on the U.S. to “give up its bullying acts” towards the video app and messenger or face Beijing’s countermeasures to “safeguard the legitimate rights and interests of Chinese companies.”

After the U.S. announced a series of detrimental curbs on telecoms equipment giant Huawei last year, China vowed to publish an “unreliable entity list” targeting foreign companies and individuals that “do not comply with market rules” and “seriously damage the legitimate rights and interests of Chinese enterprises,” but it has yet to reveal the list.

Tech must radically rethink how it treats independent contractors

Despite a surging stock market and many major tech players having record quarters, we’re still seeing layoffs throughout tech and the rest of corporate America. Salesforce recorded a huge quarter, passing $5 billion in revenue, only to lay off around 1000 people. LinkedIn is laying off 960 people one day after reporting a 10% increase in revenue.

These layoffs may seem like a contraction in size for these huge enterprises, but it’s actually the beginning of something I call The Great Unbundling of Corporate America. They still need to grow, they still need to innovate, they still need to get work done and they’re not simply canceling projects and giving up on contracts.

Just as COVID-19 has accelerated the move to remote work, our current crisis has accelerated the trend toward hiring independent contractors. Back in 2019 a New York Times report found that Google had a shadow workforce of 121,000 temporary workers and contractors, overshadowing their 102,000 full-timers. ZipRecruiter reported in 2018 that tech, along with its record employment growth, was showing an increasing share of listings for independent contractors.

A study from the Bureau of Labor Statistics found that between 6.9% and 9.6% of all workers are now independent contractors, and according to Upwork, that may be as high as 35%. Mark my words — companies are using this time as an opportunity to swing the pendulum toward independent contractors and trimming the fat, justifying it with a vague gesture toward “an unprecedented time.”

That’s why, in my opinion, you’re seeing the NASDAQ hitting record highs despite everyone’s turmoil — depressingly, investors can see that large companies are tightening up and cleaning up waste, while finding an affordable workforce at will. As they have unbundled themselves from our physical offices, large enterprises are going to unbundle themselves from having to have a set number of employees.

When Square allowed its entire workforce to work remotely permanently. It wasn’t just because they wanted them to feel more creative and productive, but was likely a move away from having quite as much expensive, needless office space.

Similarly, if there is work that a full-time employee does that could be done by a flexible, independent contractor, why not make that change too? And it’ll be a lot easier to make without as many people at the office.

The argument I’m making is not anti-contractor, though.

I can’t think of any point in history where it’s been better to create a freelance business — the startup costs are significantly lower, and as companies move toward remote work, you can theoretically take business nationally (or internationally) like never before. Companies’ moves toward replacing W-2 workers with contractors is an opportunity for people to create their own miniature freelance empires, unbundling themselves from corporate America’s required hours, and potentially creating a way to weather future storms by taking away any single company’s leverage on their income.

The rush to remote work is also likely to push more workers into the freelance economy too. By having to create a remote office, with a remote presence in meetings and having to manage and organize our days, the average worker has all but adjusted to the life of a freelancer.

Where some might have gone to an office and had things simply happen to them, the remote world requires an attention to your calendar and active outreach to colleagues that, well, models how one might run a freelance business. Those with core skillsets that can be marketed and sold to multiple clients should be thinking about whether being a wage slave is necessary anymore, and with good reason.

That said — corporate America, and especially tech, has to treat this essential workforce with a great deal more empathy and respect than they have thus far.

Uber and Lyft were ordered to treat drivers as employees in part due to the fact that they never treated their contractors like parts of the company. Other than the obvious lack of benefits (paid time off, health insurance, etc.), Uber, like many large enterprises, treats contractors as disposable rather than flexible, despite them being the literal driving force of the company. When Uber went public, they gave a nominal bonus for drivers that had completed 2500 to 40,000 trips, with a chance to buy up to $10,000 of stock — at the IPO price. These drivers, that had been the very reason that many people became millionaires and billionaires when Uber went public, were given the chance to maybe make money, if they sold the stock quickly enough.

It’s an abject lesson on how to not build loyalty with independent contractors. It’s also a lesson on what the next big company that wants to build themselves off the back of the 1099’er should do.

What I’m suggesting is a radical rethinking of freelance contracting. I want you to see independent contractors as a different kind of worker, not as a way of skirting getting a full-time employee. A freelancer, by definition, is someone that you don’t monopolize, and someone that you should actively give agency and, indeed, part of the network you’re building. One of the issues of corporate America’s approach to freelance work is an us-versus-them approach to employment — you’re either part of us or you’re simply a thing we pick up and put down. What I’m suggesting is treating your freelancers as an essential part of your strategy, and compensating them as such. Freelancers should own equity and should have skin in the game — they may be working with you on a number of projects and take literal ownership of vast successes throughout your history.

Contracted work has only become mercenary through the treatment of the freelance worker. Where tech has succeeded in creating hundreds of thousands of independent contractor positions, it also has to lead the way in reimagining how we may treat them and reward them for their work. And corporate America needs to take a step beyond simply seeing them as a cheaper, easier way to do business. They’re so much more.

Big tech has 2 elephants in the room: Privacy and competition

The question of how policymakers should respond to the power of big tech didn’t get a great deal of airtime at TechCrunch Disrupt last week, despite a number of investigations now underway in the United States (hi, Google).

It’s also clear that attention- and data-monopolizing platforms compel many startups to use their comparatively slender resources to find ways to compete with the giants — or hope to be acquired by them.

But there’s clearly a nervousness among even well-established tech firms to discuss this topic, given how much their profits rely on frictionless access to users of some of the gatekeepers in question.

Dropbox founder and CEO Drew Houston evinced this dilemma when TechCrunch Editor-in-Chief Matthew Panzarino asked him if Apple’s control of the iOS App Store should be “reexamined” by regulators or whether it’s just legit competition.

“I think it’s an important conversation on a bunch of dimensions,” said Houston, before offering a circular and scrupulously balanced reply in which he mentioned the “ton of opportunity” app stores have unlocked for third-party developers, checking off some of Apple’s preferred talking points like “being able to trust your device” and the distribution the App Store affords startups.

“They also are a huge competitive advantage,” Houston added. “And so I think the question of … how do we make sure that there’s still a level playing field and so that owning an app store isn’t too much of an advantage? I don’t know where it’s all going to end up. I do think it’s an important conversation to be had.”

Rep. Zoe Lofgren (D-CA) said the question of whether large tech companies are too powerful needs to be reframed.

“Big per se is not bad,” she told TC’s Zack Whittaker. “We need to focus on whether competitors and consumers are being harmed. And, if that’s the case, what are the remedies?”

In recent years, U.S. lawmakers have advanced their understanding of digital business models — making great strides since Facebook’s Mark Zuckerberg answered a question two years ago about how his platform makes money: “Senator, we sell ads.”

A House antitrust subcommittee hearing in July 2020 that saw the CEOs of Google, Facebook, Amazon and Apple answer awkward questions and achieved a higher dimension of detail than the big tech hearings of 2018.

Nonetheless, there still seems to be a lack of consensus among lawmakers over how exactly to grapple with big tech, even though the issue elicits bipartisan support, as was in plain view during a Senate Judiciary Committee interrogation of Google’s ad business earlier this month.

On stage, Lofgren demonstrated some of this tension by discouraging what she called “bulky” and “lengthy” antitrust investigations, making a general statement in favor of “innovation” and suggesting a harder push for overarching privacy legislation. She also advocated at length for inalienable rights for U.S. citizens so platform manipulators can’t circumvent rules with their own big data holdings and some dark pattern design.

TikTok says it removed 104M videos in H1 2020, proposes harmful content coalition with other social apps

As the future of ByteDance’s TikTok ownership continues to get hammered out between tech leviathans, investors and government officials in meeting rooms, the video app today published its latest transparency report. In all, over 104.5 million videos were taken down; it had nearly 1,800 legal requests; and received 10,600 copyright takedown notices for the first half of this year.

Alongside that, and possibly to offset the high numbers of illicit videos and to also coincide with an appearance today in front of a parliamentary committee in the UK over harmful content, TikTok also announced a new initiative — potentially in partnership with other social apps — against harmful content.

The figures in the transparency report underscore an important aspect around the impact of the popular app. The government may want to shut down TikTok over national security concerns (unless ByteDance finds a new non-Chinese controlling structure that satisfies lawmakers).

But in reality, just like other social media apps, TikTok has another not-insignificant fire to fight: it is grappling with a lot of illegal and harmful content published and shared on its platform, and as it continues to grow in popularity (it now has more than 700 million users globally), that problem will also continue to grow.

That’s something TikTok sees will be an ongoing issue for the company, regardless of how its ownership unfolds outside of China. While one of the big issues around TikTok’s ownership has been related to its algorithms and whether these can or will be part of any deal, the company has tried to make other efforts to appear more open with regards to how it works. Earlier this year it opened a transparency center in the US that it said would help experts observe and vet how it moderates content.

TikTok said that the 104,543,719 total videos that TikTok removed globally for violating either community guidelines or its terms of service made up less than 1% of all videos uploaded on TikTok, which gives you some idea of the sheer scale of the service. 

The volume of videos that are getting taken down have more than doubled over the previous six months, a reflection of how the total volume of videos has also doubled.

In the second half of 2019, the company took down more than 49 million videos, according to the last transparency report published by the company (I don’t know why exactly, but it took a lot longer to publish that previous transparency report, which came out in July 2020.) The proportion of total videos taken down was roughly the same as in the previous six months (“less than 1%”).

TikTok said that 96.4% of the total number were removed before they were reported, with 90.3% removed before they received any views. It doesn’t specify if these were found via automated systems or by human moderators, or a mix of both, but it sounds like it made a switch to algorithm-based moderation at least in some markets:

“As a result of the coronavirus pandemic, we relied more heavily on technology to detect and automatically remove violating content in markets such as India, Brazil, and Pakistan,” it noted.

The company notes that the biggest category of removed videos was around adult nudity and sexual activities, at 30.9%, with minor safety at 22.3% and illegal activities at 19.6%. Other categories included suicide and self harm, violent content, hate speech and dangerous individuals. (And videos could count in more than one category, it noted.)

The biggest origination market for removed videos is the one in which TikTok has been banned (perhaps unsurprisingly): India took the lion’s share of videos at 37,682,924. The US, on the other hand, accounted for 9,822,996 (9.4%) of videos removed, making it the second-largest market.

Currently, it seems that misinformation and disinformation are not the main ways that TikTok is getting abused, but they are still significant numbers: some 41,820 videos (less than 0.5% of those removed in the US) violated TikTok’s misinformation and disinformation policies, the company said.

Some 321,786 videos (around 3.3% of US content removals) violated its hate speech policies.

Legal requests, it said, are on the rise, with 1,768 requests for user information from 42 countries/markets in the first six months of the year, with 290 (16.4%) coming from US law enforcement agencies, including 126 subpoenas, 90 search warrants and 6 court orders. In all, it had 135 requests from government agencies to restrict or remove content from 15 countries/markets.

TikTok said that the harmful content coalition is based on a proposal that Vanessa Pappas, the acting head of TikTok in the US, sent out to nine executives at other social media platforms. It doesn’t specify which, nor what the response was. We are asking and will update as we learn more.

Social media coalition proposal

Meanwhile, the letter, published in full by TikTok and reprinted below, underscores a response to current thinking around how proactive and successful social media platforms have been in trying to curtail some of the abuse of their platforms. It’s not the first effort of this kind — there have been several other attempts like this one where multiple companies, erstwhile competitors for consumer engagement, come together with a united front to tackle things like misinformation.

This one specifically is identifying non-political content and coming up with a “collaborative approach to early identification and notification amongst industry participants of extremely violent, graphic content, including suicide.” The MOU proposed by Pappas suggested that social media platforms communicate to keep each other notified of the content — a smart move, considering how much gets shared across multiple platforms, from other platforms.

The company’s efforts on the harmful content coalition is one more example of how social media companies are trying to take their own initiative and show that they are trying to be responsible, a key way of lobbying governments to stay out of regulating them. With Facebook, Twitter, YouTube and others continue to be in hot water over the content that is shared over their platforms — despite their attempts to curb abuse and manipulation — it’s unlikely that this will be the final word on any of this.

Full memo below:

Recently, social and content platforms have once again been challenged by the posting and cross-posting of explicit suicide content that has affected all of us – as well as our teams, users, and broader communities.

Like each of you, we worked diligently to mitigate its proliferation by removing the original content and its many variants, and curtailing it from being viewed or shared by others. However, we believe each of our individual efforts to safeguard our own users and the collective community would be boosted significantly through a formal, collaborative approach to early identification and notification amongst industry participants of extremely violent, graphic content, including suicide.

To this end, we would like to propose the cooperative development of a Memorandum of Understanding (MOU) that will allow us to quickly notify one another of such content.

Separately, we are conducting a thorough analysis of the events as they relate to the recent sharing of suicide content, but it’s clear that early identification allows platforms to more rapidly respond to suppress highly objectionable, violent material.

We are mindful of the need for any such negotiated arrangement to be clearly defined with respect to the types of content it could capture, and nimble enough to allow us each to move quickly to notify one another of what would be captured by the MOU. We also appreciate there may be regulatory constraints across regions that warrant further engagement and consideration.

To this end, we would like to convene a meeting of our respective Trust and Safety teams to further discuss such a mechanism, which we believe will help us all improve safety for our users.

We look forward to your positive response and working together to help protect our users and the wider community.

Sincerely,

Vanessa Pappas
Head of TikTok

More to come.

Senate’s encryption backdoor bill is ‘dangerous for Americans,’ says Rep. Lofgren

A Senate bill that would compel tech companies to build backdoors to allow law enforcement access to encrypted devices and data would be “very dangerous” for Americans, said a leading House Democrat.

Law enforcement frequently spars with tech companies over their use of strong encryption, which protects user data from hackers and theft, but the government says makes it harder to catch criminals accused of serious crime. Tech companies like Apple and Google have in recent years doubled down on their security efforts by securing data with encryption that even they cannot unlock.

Senate Republicans in June introduced their latest “lawful access” bill, renewing previous efforts to force tech companies to allow law enforcement access to a user’s data when presented with a court order.

“It’s dangerous for Americans, because it will be hacked, it will be utilized, and there’s no way to make it secure,” Rep. Zoe Lofgren, whose congressional seat covers much of Silicon Valley, told TechCrunch at Disrupt 2020. “If we eliminate encryption, we’re just opening ourselves up to massive hacking and disruption,” she said.

Lofgren’s comments echo those of critics and security experts, who have long criticized efforts to undermine encryption, arguing that there is no way to build a backdoor for law enforcement that could not also be exploited by hackers.

Several previous efforts by lawmakers to weaken and undermine encryption have failed. Currently, law enforcement has to use existing tools and techniques to find weaknesses in phones and computers. The FBI claimed for years that it had thousands of devices that it couldn’t get into, but admitted in 2018 that it repeatedly overstated the number of encrypted devices it had and the number of investigations that were negatively impacted as a result.

Lofgren has served in Congress since 1995 during the first so-called “Crypto Wars,” during which the security community fought the federal government to limit access to strong encryption. In 2016, Lofgren was part of an encryption working group on the House Judiciary Committee. The group’s final report, bipartisan but not binding, found that any measures to undermine encryption “works against the national interest.”

Still, it’s a talking point that the government continues to push, even as recently as this year when U.S. Attorney General William Barr said that Americans should accept the security risks that encryption backdoors pose.

“You cannot eliminate encryption safely,” Lofgren told TechCrunch. “And if you do, you will create chaos in the country and for Americans, not to mention others around the world,” she said. “It’s just an unsafe thing to do, and we can’t permit it.”

Trump administration’s WeChat ban is blocked by U.S. district court

A few days ago, the U.S. Commerce Department published a series of rules that aimed to block the downloading of TikTok and WeChat by American users, following an executive order signed by President Trump back in August. TikTok got a last minute reprieve yesterday following its signing of an investment and cloud services deal with Oracle and Walmart, which delayed the implementation of its download ban at least for a week. However, WeChat was effectively going to be shut down today, with a ban on downloads and a ban on any services that powered the service.

Now, there is a new wrinkle in the battle over the future of the social app, which is widely used in Chinese-speaking communities and is owned by China-based Tencent. A district court judge in San Francisco has temporarily stayed the nationwide ban, following a lawsuit of WeChat users arguing that the ban undermined the free speech rights of American citizens. That court case, U.S. WeChat Users Alliance v. Trump, will be allowed to proceed.

In her short opinion published yesterday, United States magistrate judge Laurel Beeler, argued that the government’s case showed weaknesses on First Amendment grounds, its authority to act within existing legislation to allow the government to control industry, and its overall vagueness compared to the damage a ban would likely have on the Chinese-speaking community in the United States.

From her opinion:

Certainly the government’s overarching national-security interest is significant. But on this record — while the government has established that China’s activities raise significant national- security concerns — it has put in scant little evidence that its effective ban of WeChat for all U.S. users addresses those concerns. And, as the plaintiffs point out, there are obvious alternatives to a complete ban, such as barring WeChat from government devices, as Australia has done, or taking other steps to address data security.

Given the likelihood of a lawsuit proceeding and the immediate damage a ban would have if implemented, the judge initiated a nationwide injunction against implementation of the Commerce Department’s order to ban the app.

Commerce will have a chance to respond to this development, and whether it chooses to edit its order, pursue other avenues through the courts, or just rescind the order entirely, we will see in the coming days.

Gangster capitalism and the American theft of Chinese innovation

It used to be “easy” to tell the American and Chinese economies apart. One was innovative, one made clones. One was a free market while the other demanded payments to a political party and its leadership, a corrupt wealth generating scam that by some estimates has netted top leaders billions of dollars. One kept the talent borders porous acting as a magnet for the world’s top brains while the other interviewed you in a backroom at the airport before imprisoning you on sedition charges (okay, that might have been both).

The comparison was always facile yes, but it was easy and at least directionally accurate if failing on the specifics.

Now though, the country that exported exploding batteries is pioneering quantum computing, while the country that pioneered the internet now builds planes that fall out of the sky (and good news, we’ve identified even more planes that might fall out of the sky at an airport near you!)

TikTok’s success is many things, but it is quite frankly just an embarrassment for the United States. There are thousands of entrepreneurs and hundreds of venture capitalists swarming Silicon Valley and the other American innovation hubs looking for the next great social app or building it themselves. But the power law of user growth and investor returns happens to reside in Haidian, Beijing. ByteDance through its local apps in China and overseas apps like TikTok is the consumer investor return of the past decade (there’s a reason why all the IPOs this seasons are enterprise SaaS).

It’s a win that you can’t chalk up just to industrial policy. Unlike in semiconductors or other capital-intensive industries where Beijing can offer billions in incentives to spur development, ByteDance builds apps. It distributes them on app stores across the world. It has exactly the same tools available to it that every entrepreneur with an Apple Developer account has access to. There is no Made in China 2025 plan to build and popularize a consumer app like TikTok (you literally can’t plan for consumer success like that). Instead, it’s a well-executed product that’s addictive to hundreds of millions of people.

So much as China protected its industry from overseas competitors like Google and Amazon through market-entry barriers, America is now protecting its entrenched incumbents from overseas competitors like TikTok. We’re demanding joint ventures and local cloud data sovereignty just as the Communist Party has demanded for years.

Hell, we’re apparently demanding a $5 billion tax payment from ByteDance, which the president says will fund patriotic education for youth. The president says a lot of things of course, but at least the $5 billion price point has been confirmed by Oracle in its press release over night (what the tax revenue will actually be used for is anyone’s guess). If you followed the recent Hong Kong protests for a long time, you will remember that patriotic youth education was some of the original tinder for those demonstrations back in 2012. What comes around, goes around, I guess.

Development economists like to talk about “catch-up” strategies, tactics that countries can take to avoid the middle income trap and cut the gap between the West and the rest. But what we need now are developed economists to explain America’s “fall behind” strategy. Because we are falling behind, in pretty much everything.

As the TikTok process and the earlier Huawei imbroglio show, America is no longer on the leading edge of technology in many key strategic markets. Mainland Chinese companies are globally winning in areas as diverse as 5G and social networks, and without direct government intervention to kill that innovation, American and European tech purveyors would have lost those markets entirely (and even with those interventions, they may still lose them). In Taiwan, TSMC has come from behind Intel to take a year or two lead in the fabrication of the most advanced semiconductors.

I mean, we can’t even pilfer Chinese history and mythology and turn it into a decent god damn film these days.

And the fall-behind strategy continues. Immigration restrictions from an administration hell-bent on destroying the single greatest source of American innovation, coupled with the COVID-19 pandemic, have fused into the largest single drop in international student migration in American history.

Why does that matter? In the U.S. according to relatively recent data, 81% of electrical engineering grad students are international, 79% in computer science are, and in most engineering and technical fields, the number hovers above a majority.

It’s great to believe the fantasy that if only these international grad students would stay home, then “real” Americans would somehow take these slots. But what’s true of the strawberry pickers and food service workers is also true for EE grad students: proverbial “Americans” don’t want these jobs. They are hard jobs, thankless jobs, and require a ridiculous tenacity that American workers and students by and large don’t have. These industries have huge contingents of foreign workers precisely because no one domestic wants to take these roles.

So goes the talent, so goes the innovation. Without this wellspring of brainpower lodging itself in America’s top innovation hubs, where exactly do we think it will go? That former aspiring Stanford or MIT computer scientist with ideas in his or her brain isn’t just going to sit by the window gazing at the horizon waiting for the moment when they can enter the gilded halls of the U.S. of A. It’s the internet era, and they are just going to get started on their dreams wherever they are, using whatever tools and resources they have available to them.

All you have to do is look at the recent YC batches and realize that the future cohorts of great startups are going to increasingly come from outside the continental 48. Dozens of smart, brilliant entrepreneurs aren’t even trying to migrate, instead rightfully seeing their home markets as more open to innovation and technological progress than the vaunted superpower. The frontier is closed here, and it has moved elsewhere.

So what are we left with here in the U.S. and increasingly Europe? A narrow-minded policy of blocking external tech innovation to ensure that our sclerotic and entrenched incumbents don’t have to compete with the best in the world. If that isn’t a recipe for economic disaster, I don’t know what is.

But hey: at least the youth will be patriotic.