😱📲 TikTok Has Serious Data Privacy Concerns
Happy Wednesday all,
In today’s edition, we break down the possible TikTok ban and how last week’s congressional hearing went down. There’s also some interesting data on the housing market, as some parts of the nation are cooling, while some cities like Miami have seen their housing prices increase this year.
In High Yield Savings News, I was trying to find a Savings account for the past few weeks with a generous sign-up bonus to share with you guys. In talking to SoFi, they let me know that they currently offer between a $50-$250 bonus just for signing up and setting up a direct deposit - and you’ll also get up to 4.00% APY on their HYSA. There are no account fees, and terms do apply. Here’s the link if you’re interested.
Other high-yield savings accounts offer between 3.75% - 4.30%, so while some places do offer a higher yield, even the ‘smaller’ $50 bonus should offset the APY difference on balances up to $16.67k in a single year. Either way, wherever you put your savings, just make sure you are getting an appropriate yield on it as well as it’s a bank with FDIC Insurance.
If you haven’t seen my latest YouTube video, The Chinese Secret to Saving Money Revealed, make sure to watch that one! It’ll be linked at the end of this newsletter - I’m super proud of it and we are going to continue to push the quality of our long-form videos.
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
Tweet of the Week
The Weekly Brief
U.S. Backstops Silicon Valley Bank Sale to First Citizens (Reuters)
U.S. regulators said they would backstop a deal for First Citizens to acquire SVB, triggering an estimated $20B hit to a government-run insurance fund that is replenished by a levy on FDIC member banks instead of taxpayer money. The North Carolina-based lender has completed 21 government-assisted deals, including 14 since 2009. First Citizens shares jumped 50%.
Why Does it Matter?
This brings stability to the SVB situation, showing the U.S. government's urgency to contain the collapse. This doesn't do much to solve the larger issue at hand, however, of deposits leaving smaller banks for larger banks.
Housing Market in Tech Hubs Cooling Faster than Other Parts of U.S. (Reuters)
Following a wave of layoffs in the tech sector and elevated mortgage rates, housing markets in known tech hubs such as Seattle, San Jose, Austin, and Phoenix are cooling more rapidly than in other parts of America. Layoffs in tech have led to some buyers canceling contracts or backing out of the market. Banking instability could also dampen home buying in areas such as New York as finance workers begin to worry about their industry.
Why Does it Matter?
While the west is a seeing decline in housing, markets in the east are thriving even as mortgage rates continue to shoot upwards. Many economists expect home prices to fall further this spring or summer with western markets continuing to slide and some eastern markets starting to post year-over-year declines.
Apple Launches ‘Buy Now, Pay Later’ Service in the U.S. (Reuters)
Apple launched its own BNPL service on Tuesday, entering a market where Affirm and Klarna have dominated. The service allows users to split purchases into four payments spread over six weeks with no interest or fees. Users can get loans between $50 and $1,000 for purchases made on iPhones and iPads with merchants that accept Apple Pay. Affirm’s shares fell 7% after the announcement.
Why Does it Matter?
BNPL services entice consumers to purchase more because they do not have to bear the full burden of consumption in the moment while being able to walk away with a new product. In a recession, where people begin to get laid off, this concept is a way for corporations to get you to continue to spend money. This announcement by Apple brings the concept to the forefront by making it so accessible.
Hump Days Scoop
Last week, TikTok CEO Shou Chew sat in front of the House of Representatives Energy and Commerce Committee for more than five hours and fielded a range of questions about its use of user data and its ties to the Chinese Communist Party (CCP). Some of the questions were legitimate while some demonstrated a clear lack of preparedness like whether TikTok can access your home WiFi.
Today we dive into what all the fuss was about and whether the U.S. government is warranted in its push to outright ban the social media platform.
Why was TikTok’s CEO testifying before Congress?
In the last few years, TikTok has seen a meteoric rise, quickly becoming the social media platform of choice for the youngest generation. Given how quickly TikTok gained the confidence of the masses, information about its ownership lagged behind. As we learned more about the social media platform, more and more questions were raised.
Last week on Thursday, Mr. Chew appeared in front of Congress to answer some of those questions surrounding its potential Chinese influences, ties to the CCP, data security, and the damaging of children’s mental health.
Does the U.S. Government have any legitimate concerns?
Much of the discussion about child safety was, justifiably, out of touch. In fact, the hearing would have been much better served had it been solely on data security instead of adding in child safety which wound up being distracting to the real issues at hand. The issue of data security and foreign access to American user data, however, is a real, legitimate concern. Read further for a list of what we know to be true about TikTok and Chinese foreign affairs.
TikTok is owned by the Chinese I.T. company ByteDance which also owns its Chinese-specific counterpart Douyin.
Just two months ago, the U.S. caught China using a spy balloon for surveillance over the continental United States, demonstrating a willingness to gather intelligence in nefarious ways.
According to leaked audio from 80 internal TikTok meetings, U.S. user data has been repeatedly accessed from China. Even though Tiktok physically stores all data about U.S. users in the U.S., its China-based employees can still access that data.
ByteDance admitted to using TikTok to spy on reporters as part of an attempt to track down journalist sources, according to an internal email. They looked at the IP addresses of journalists who were using the TikTok app to see if they were in the same location as employees suspected of leaking confidential information.
By Chinese law, ByteDance is a resource of the Chinese state, which has a history of using companies for espionage, According to this 2019 study published by Christopher Balding from the Fulbright University Vietnam, there is strong evidence suggesting that Huawei personnel act at the direction of Chinese state intelligence. The study revealed that Chinese state intelligence operators were placed inside Huawei which directly contradicts Huawei’s public claims that they had no relationship.
As you can see, the concerns over TikTok and its ties to the CCP are legitimate.
Are there any ulterior motives for why the U.S. government would want to ban TikTok?
Much has been reported on the lobbying money spent by large American tech companies such as Meta and Alphabet, as well as many members of Congress holding significant stakes in Meta.
While we outlined clearly the concerns over data privacy, it would seem that monetary gain could also be clouding the judgment of those with the power to ban the social media app. In fact, Meta’s Instagram Reels, Snap’s Spotlight, and Google’s YouTube stand the most to gain with the $7B-$8B of projected 2023 U.S. revenue to be dispersed among the three major tech corporations.
Traditionally, money spent lobbying lawmakers has yielded a return of 22,000% meaning for every dollar spent on lobbying, companies got $220 in tax benefits. Clearly, Meta, Snap, and Google have reason to lobby for the ban of TikTok.
What’s most likely going to happen with TikTok?
Congress was not convinced that TikTok’s move to segregate data into a U.S.-based facility run by Oracle, dubbed “Project Texas,” would protect users. Prior to the meeting, TikTok either faced a ban or a forced sale to an American company. Following the hearing, the options remained the same, with a Chinese government spokesperson saying “China will firmly oppose” any forced sale of the app.
There is no clear road for TikTok’s future in America and no source has come out saying they definitively will or will not ban the app. However, Mr. Chew’s hearing did not do enough to prove TikTok’s lack of independence from ByteDance, and support to ban it in the U.S. is likely to grow among lawmakers.
In the event of a ban, the decision would likely be challenged in court, where if the ban is ruled to proceed, Apple and Google would remove TikTok from their app stores and turn off updates. Apple and Google could also push an update to their phones that would stop TikTok from working if needed.
Chart of the Week
The film industry is expected to see a rise in the number of wide releases this year, with Apple and Amazon planning to spend $1 billion each on their respective theatrical release lineups. This could be good news for theaters, which have been struggling in recent years.
According to data from Box Office Mojo, US theaters made $563 million in March, contributing to a total of $1.65 billion grossed in 2023 so far. While this is lower than the figures for the same period between 2005-2019, which never fell below $2 billion, it is still an improvement compared to 2022 when the domestic box office takings were $1.34 billion.
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