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A Tik Tok Ban

Seconds and Cents. This is Episode 14. Today we're going to talk about tech talk. We're going to talk about Tik Tok being banned in India. Tik Tok is an app I think a lot about primarily because they're owned by a Chinese company and kind of the dynamics that go on there, as well as how the data flows. What is the kind of information security that Tik Tok has, and we're going to talk about while Tik Tok being banned in India along with 50 other Chinese apps, I think 52 other Chinese apps, and what does that look like in the United States? Kind of who wins and then well, what are the next steps in the United States if Tick Tock does get banned in the United States so Tik Tok all the craze. It is just absolutely taking over. First, what is it first it is an it is not a social network. Tik Tok is not a social network. You do not follow people on Tick Tock as the primary means of accessing content. It does not really work with network effects like Facebook does. In order for you to be able to see what other people are posting on Facebook, you have to create a Facebook account. That's not the case. You can open tik tok today and start watching. start watching Tik Tok and second one. Right Tik Tok is owned by a company called bite dance bite dance as a Chinese own company. And the CEO of Tik Tok right now is Kevin Mayer. Kevin Mayer is a guy who just led the release of Disney Plus he was in he came in second place and becoming the next CEO of Disney. In the process. He decided that he was going to join tech talk and lead those efforts to primarily According to the reports, primarily when favor with regulators, when favor that Tech Talk is doing things the right way. That Tik Tok is not just kind of being a Chinese Trojan horse into the cell phones of the American public the cell phones of the general populace as a whole. The current kind of feeling is that Tik Tok is a Trojan horse. So why would Tik Tok be a Trojan horse? Well, under Chinese law, any company that operates in China must share its its data from China in with the Chinese government if requested. So under Chinese law, if I have a company that's operating in China, and China comes to me, they say, Hey, we want access to all of your data that pertains to your operations in China, then I have to, I have to give them the data. bytedance being a Chinese owned company, means Hey, the Chinese government can come in and they can request access to all of sec tox data. Now Tik Tok claims, hey, our data is kept in the United States and it's kept in Singapore and so it technically does not fall under Chinese law. At the end of the day, if you read the privacy policy, they it can be the Tik Tok privacy policy states

that the data can be shared with its parent company as well as affiliates of its parent company. It can The government. So the rule on Chinese technology here is that data can be kind of subpoenaed, compelled to be given to the Chinese government whenever the government wants. Secondly, again, kind of recapping, it is not a social network. That's a really important point because of one of the big problems that we're seeing with with Tik Tok right now, which is the algorithm. So, of course, people think about the Facebook algorithm during the election during the upcoming election, the upcoming election. But ultimately, the algorithm here is really interesting because the algorithm can be controlled. So the Tik Tok algorithm has been tested. And it turns out that Pro Hong Kong type content has been censored. content that was kind of anti People's Republic of China has been censored. And that's happened over and over again, content relating to the NBA and China has been censored before. And so it really kind of begs the question here, if the algorithm can play with content that goes against what the Communist Party of China, or the government of China would like to have people see, then Is this a tool for propaganda? Or is this a tool to change the minds of the general public? As we saw, Facebook is an incredibly useful tool to change the minds of the general public. It's an incredibly useful tool to sway the public opinion, just a little bit to the right or a little bit to the left or

a little bit one direction or a little bit another direction, and then they can continue to sway it with very small increments. And so really here, what's the problem? The problem is well, the algorithm with tic toc is being controlled to show some things and not others. It is being controlled to change mines or to not allow mines to be changed. Right. The other thing is Tik Tok was just found to have saved everything. But the phone was copying to the clipboard. So the clipboard that's if I copy something if I copy a paragraph on a webpage, and I'm saving it into a note on my phone that saves to my clipboard, then tik tok was actually uploading that entire paragraph of the webpage up until up to their database servers. So that doesn't seem like it's that problematic until maybe I was copying my bank information. And now Tik Tok has uploaded my bank information to their servers, right and then that data is getting up getting transferred over into the Chinese government. Now all of a sudden we start to have some problems. The other thing here is Tik Tok does ask relocation so technically they could be updating your location. If you have enabled in the background. They could be updating your they could be uploading your location at all times. They ask for your contacts so that you can invite other friends to tick tock if you upload your if you approve contacts they could have uploaded their your contacts to the database. They also asked for access to your photos and video They could be, they could be uploading all of your photos and all of your videos to the database. We don't know. I'm not sure I'm just saying that's what's possible here. And India, who historically does not like China, as like two countries in two governments, they just banned 5253 Chinese apps, including WeChat, one of the most popular apps in all of China, qq. Another app owned by WeChat are owned by Tencent, and they ban Tik Tok, they've been Tik Tok now at an IP level, which means that you have to have a virtual private network

a VPN in order to be able to access Tik Tok, and it looks like the United States could possibly ban Tik Tok. Now we'll see if that actually ends up going through. But Secretary Pompeo has said that listen, we're reviewing a possible ban of Tik Tok here in the United States. That would not mean that you cannot no longer download Tik Tok that would mean that Apple and Google and these other apps and these other Kind of phones, or these other providers would be able to stop your use of tech talk effective immediately, you would no longer be able to open the app on your phone, no matter what, what platform you're on. So there are really two options for Tik Tok right now. At least that I see. I see the first option being they sell to a non Chinese owned company. or second, they are forced to leave certain markets. Right now. I think the general consensus around Chinese data security, the general consensus around Well, how are the Chinese handling the data are they doing? what we would consider in the west to be the moral and ethical ethical thing with the data is a fairly low I think it's a fairly negative consensus. And so they either could force bite dance, the parent company of Tik Tok to divest Tech Talk to sell tech talk to a non Chinese company, or you know, it might just be bad. So let's guess let's hypothetical. kind of have a hypothetic For a second and assume that it gets banned in the United States. It gets banned in the European Union. It gets banned in a lot of their emerging markets and a lot of the larger markets here where Tik Tok has absolutely taken off. Well what happens next? So what happens next? In the social media space, what happens next in the user generated content space, what happens next and the format that Tik Tok has created and tick tock and musically created a new type of format people think it's a vine it's not a vine. It operates kind of similar to a vine but you could also say a boomerang on Instagram Stories operates a little bit similar to a vine and so this new type of format, this short, ultra short form video, primarily having to do with music, primarily having to do with shared audio, with kind of the meaning of video the meaning of audio. So what what's the replacement for Tik Tok because the format clearly works, even if the execute Doesn't so if tik tok gets banned? Well, my guess is that it's probably Instagram reels. So Instagram launched in Brazil, Instagram launched its real product in Brazil inside of the Instagram app last November, November 2019. And it effectively operates the same way as Tik Tok. It feels an awful lot to me like when Instagram launched stories. So an Instagram launch stories. The reason they launched stories was because they didn't necessarily want to create a dominant ad unit. Although they did do that. It was because they didn't want Snapchat to take the Instagram user base. And they didn't want people to even have a reason to try Snapchat. So if everybody was going to Snapchat because they wanted to be able to post their Snapchat story, then there was a possibility that Instagrams monthly active users or daily active users were going to dip because hey, you know, so stories is the most fun thing that we have right now. And so Instagram copied it, they copied it to keep that market way from Snapchat, that's been very well documented. But the Instagram reels product is really interesting because they silently launched this product effectively silently launched this product in Brazil. So how would Instagram deploy a Rails product in my opinion, in my opinion, they deploy a Rails product by putting it into the feed. So the most popular reels kind of get put into your Instagram feed, even though you don't follow the individual and now I don't know what the setting would look like maybe if it's turned on seeing reels in your feed or used to turn on seeing other people's reels but right now one of the challenges with Instagram is you don't see other people's content if you don't follow them. Well, let's go back and and kind of reiterate that Tik Tok is not a social network. I log it are I open the app and I'm seeing the for you page of a bunch of people. I have absolutely no idea who they are, but they have great tiktoks that are going viral right now. So if Instagram puts their reels into the for you or into the feed, that would be the effective equivalent of kind of a half Instagram feed half for you page now Instagram put it could put it on the search page that could operate as for you page. That seems like it's the second most likely scenario, I don't know what it does to the Instagram ad unit. I don't know what it does to Instagram ad prices. That's probably how Instagrams gonna end up making the decision. But Instagram could create two different pages in the app where people are kind of getting sucked in, they're staying there so that Instagram can show them 3040 5060 ads in a day. Then people could go to Instagram to check in with their friends, and then they could hit the search tab, and they could go check in with all the most most viral reels. That would be a really interesting way for Instagram to launch them to really integrate the real product in there. I do think however, that the reels are going to continue to be hard for Instagram. The reason why is because I'm not necessarily sure that it's going to be easy to find it. Right now, I don't even I didn't check to that. But I have absolutely no idea if you can even find reels in the United States.

And so I think the search page is going to be a really interesting spot for it. But will it take off? Will people do Instagram reels instead of tech talk if Tik Tok gets banned? Possibly will it take off like it did on Tik Tok? I don't know. Maybe Instagram makes the real product operate a little bit more like the tick tock product where you can just open the app and you're right into reels. If you don't have an account, maybe they're gonna force you to create an account. Who knows? I think one of the best aspects of Tik Tok is the fact that you can alert the fact that you don't have to create an account in order to be able to access in order to be able to access the preview page. We'll find out and then one more hypothetical. So let's say that hypothetically, Instagram does successfully integrate the real estate product into the core Instagram product. What a tick tock ban and a successful rails integration make Facebook a bigger monopoly? I think the answer is yes. So Facebook right now the primary social media monopoly between Facebook and Instagram and on an international basis Whatsapp, Facebook should have never been able to a lot never been able to buy Instagram, Facebook buying Instagram for a billion dollars was the largest deal of the decade. It was the largest kind of antitrust level acquisition of the decade in my opinion, and would it make it a bigger monopoly? Absolutely. If Instagram was occupying even more of young people's eyeballs, those occupying even more of young people's time, and reels was a really successful integration,

then, I think it'd be you'd be hard pressed to find Mark Zuckerberg and to find Sheryl Sandberg in front of Congress saying that it's not a monopoly because nobody else has a product. That was the That, well, I don't see Facebook, the blue app, the newsfeed successfully integrating a Rails product because I don't necessarily think that that's why people are going to go to the blue app. And I don't see Twitter, successfully launching a Rails type of product, or Tik Tok type of product. So then that begs the question, why would Facebook be compelled to sell Instagram? Would the European Union find Facebook over and over and over again because of antitrust lawsuits? Would a startup be able to take Tik Tok's place? Who knows? So if Tik Tok it doesn't divest, or fight Dan doesn't

divest tik tok. And if Tech Talk does get banned, the United States would Facebook be forced to sell Instagram? I think there's a very high likelihood. And I think that the American public, I think that the global public would have a much more competitive environment at that point, in terms of what social media platform Do you want to use? How are you being tracked across the internet? What are the various ad units doing to you? What are the various political ads are topic based ads doing to your mindset, and how are we swaying the influence of the public to make different buying decisions. So it's going to be really interesting, but I think overall here, Instagram is the big winner and a tick tock ban. I think, if we see a tik tok ban in the United States, it will lead to Facebook stock absolutely soaring. And then I think it will lead to antitrust, it will lead to zox in front of Congress quite a bit. And to be honest with you, it reminds me quite a bit of Bill Gates being in front of Congress for antitrust being taken down when he was at Microsoft for his last several years at Microsoft

The above is an AI transcription of Evan’s Seconds and Cents podcast.

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