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Trump says he plans to bar TikTok from operating in the U.S.

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Earlier Friday, Trump was considering signing an order forcing China’s ByteDance to sell off the U.S. portion of TikTok over national security concerns, according to people familiar with the talks, who spoke on the condition of anonymity because they were not authorized to discuss them publicly. One of the individuals confirmed Microsoft was in the lead to acquire the popular platform’s U.S. service.

While the order was expected to be signed Friday, people had warned that it could fall through since the president was also considering other approaches, including designating TikTok under an executive order that allows the president to exclude national security threats from U.S. networks.

Late Friday, the president told reporters he was not in favor of a deal to let a U.S. company buy TikTok’s U.S. operations. Trump said he could use emergency economic powers or an executive order to ban TikTok.

“Well, I have that authority. I can do it with an executive order or that,” he said, referring to emergency economic powers.

The order that would force a sale, which stems from a national security investigation, is fairly rare but has been used by Trump as recently as March, when the president ordered a Chinese company to sell its stake in a U.S. hotel-software company. Last year, the Trump administration used it to demand the Chinese owners of gay dating app Grindr give up control of the company.

If Microsoft did acquire TikTok, it would make it a major rival to Facebook, Google’s YouTube and other tech giants overnight, dramatically reshaping the U.S. social media landscape.

The prospect of a forced sale came amid growing concern among U.S. officials that the Chinese government could access users’ private data, something that prompted Secretary of State Mike Pompeo to say earlier this month that the United States is “certainly looking at” banning TikTok.

Branches of the U.S. military, including the Army and Navy, have banned the app from government-issued phones. The Pentagon urged its employees last year to uninstall the app due to security concerns.

On Friday, Trump reiterated that option. “We may be banning TikTok,” Trump told reporters before leaving for Florida. “We may be doing some other things. There are a couple of options. But a lot of things are happening, so we’ll see what happens. But we are looking at a lot of alternatives with respect to TikTok.”

TikTok spokesperson Hilary McQuaide declined to comment on the expected order, but she said they are “confident in the long-term success of TikTok.” Microsoft spokesman Frank Shaw declined to comment. Bloomberg News first reported the news on the divestiture.

If Trump uses the “full force” of the remedies under the executive order, said Stewart Baker, a former National Security Agency general counsel, “No American could work for them. The app store couldn’t make them available. American advertisers couldn’t pay them for ads. It would be economically devastating for them.”

TikTok has continually insisted that it does not hand over information to the Chinese government. “We have never provided user data to the Chinese government, nor would we do so if asked,” McQuaide said earlier this month.

The Committee on Foreign Investment in the United States, an interagency body whose powers were strengthened by 2018 legislation, recommends to the president whether certain proposed takeovers should be rejected, and whether completed takeovers should be reversed, on national security grounds. CFIUS began investigating an acquisition by Beijing-based ByteDance after lawmakers asked the government to step in over national security concerns.

ByteDance bought karaoke app Musical.ly in 2017 and merged it with TikTok, launching the app to mass popularity in the United States.

James Andrew Lewis, vice president of the Center for Strategic and International Studies, said foreign companies usually take the hint when they think a demand from the U.S. government will be coming.

“Usually everyone gets the message and takes action without waiting for formal government action,” he said.

Buying TikTok could reshape the Big Tech landscape, giving Microsoft a strong foothold in the U.S. consumer market with one of the world’s fastest growing social media platforms. Unlike many of its competitors, Microsoft does not have a creative social media company to sow brand recognition with younger users, though the Redmond, Wash.-based company does own professional networking site LinkedIn.

While the acquisition could raise some antitrust eyebrows, regulators haven’t typically blocked acquisitions of business lines that are dissimilar from what a company already does. Microsoft also has deep ties with the U.S. government, most recently winning the Pentagon’s JEDI cloud computing contract. Microsoft as a buyer could help quell administration security concerns about TikTok data.

Facebook CEO Mark Zuckerberg called out TikTok as a rival during a congressional antitrust hearing earlier this week, at which Microsoft was noticeably absent.

TikTok has tried in recent months to convince U.S. users and regulators of its strong ties to the country. It emphasizes that it has hundreds of employees in the United States and even hired former Disney executive Kevin Mayer to be its new chief executive in May.

On Wednesday, Mayer pledged the company will allow U.S. regulators and privacy experts to take a closer look under its digital hood, offering them the ability to “examine” its underlying software code in response to claims it is handing off data to the Chinese government.

The app, which lets users create and post short videos with music and other effects, has surged in popularity even more during the coronavirus pandemic as people search for at-home activities and distractions. Teens are especially active on TikTok, creating videos showcasing their dancing, pranks and cooking skills.

This is the latest in a string of moves by the Trump administration to counter Chinese tech giants.

Tension has already come to a head over Chinese telecom giant Huawei, the world’s largest provider of mobile network gear — a field from which U.S. companies are largely absent. The United States calls Huawei a security risk, which the company denies, and has undertaken an international lobbying campaign to persuade other countries not to buy from Huawei.

The Trump administration has also targeted other Chinese companies, restricting trade with more than a dozen it accuses of supplying surveillance gear in the western province of Xinjiang, where U.S. officials and human rights groups say China’s ruling Communist Party is holding Muslims in mass detention camps.

The Trump administration has also previously used CFIUS to scrutinize, block or reverse Chinese acquisitions.

In March, Trump ordered a Chinese company to divest all ownership of a U.S. hotel-software company, saying the Beijing investor could harm U.S. national security. A written order from the president’s office suggested the administration was concerned about Chinese access to StayNTouch’s hotel-guest data.

The order, which followed a CFIUS review, instructed the Chinese company to immediately to refrain from accessing any of StayNTouch’s hotel-guest data.

The Chinese company, Beijing Shiji Information Technology, acquired StayNTouch in 2018, saying the U.S. company’s software was used in connection with 90,000 hotel rooms globally.

After the order was issued, Beijing Shiji said it was “not a threat to U.S. security in any way.”

“We offered a range of significant proposals to mitigate any concerns the U.S. government might have, including further restricting access to guest data and appointing an independent monitor to ensure these protections. Unfortunately, those offers were rebuffed,” the company said at the time.

In 2018, after a CFIUS review, Trump ordered Singapore-based Broadcom to abandon its $117 billion bid for the U.S. semiconductor company Qualcomm, blocking what would have been one of the biggest technology deals in history.

A full presidential order isn’t always required to block or reverse a deal. Lawyers familiar with CFIUS reviews say the national security committee can tell a foreign company: sell the asset or the president will issue an order.

That appears to be what happened last year, when the Trump administration forced a Chinese company to sell its majority stake in a U.S. health-care-data company, PatientsLikeMe.

“I really hope that this will not happen,” one user said in a video. “All the videos, all the memories of you. This can’t be true.”

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Microsoft-TikTok acquisition inches closer to reality

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A possible Microsoft TikTok acquisition is causing plenty of drama, we review Google’s new budget Pixel and SpaceX’s Crew Dragon returns to Earth. Here’s your Daily Crunch for August 3, 2020.

Microsoft-TikTok acquisition inches closer to reality

This weekend, Microsoft confirmed reports that it’s in talks to acquire TikTok, the popular mobile video app currently owned by Chinese company ByteDance. It sounds like the outcome of those talks may ultimately have less to do with Microsoft and more with President Donald Trump.

“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States,” the company said in a statement. “Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

And indeed, Trump said today that he’s not opposed to an acquisition, but that “a very substantial portion of that price is going to have to come into the Treasury of the United States.” Meanwhile, Chinese internet users are calling ByteDance’s CEO a traitor.

The tech giants

Google’s budget Pixel 4a addresses its premium predecessor’s biggest problem — Brian Heater reviews the new $349 handset.

Facebook launches commerce and connectivity-focused accelerator programs — Facebook’s Commerce Accelerator will select 60 startups from the EMEA and LATAM regions, while Connectivity will feature 30 startups from LATAM and North America.

Adobe’s plans for an online content attribution standard could have big implications for misinformation — The project was first announced last November, and now the team has a whitepaper going into the nuts and bolts about how its system would work.

Startups, funding and venture capital

YC-backed Artifact looks to make podcasts more personal — Using professionally contracted interviewers, Artifact conducts short interviews with a person’s closest friends or family and turns them into a personal podcast.

Founded by a lifelong house-flipper, Inspectify is a marketplace for home inspections and repairs — Through the platform, buyers can instantly book inspections and receive repair estimates.

Mobile banking startup Varo is becoming a real bank — The company announced that it has been granted a national bank charter from the Office of the Comptroller of the Currency and secured regulatory approvals from the FDIC and Federal Reserve to open Varo Bank, N.A.

Advice and analysis from Extra Crunch

The essential revenue software stack — Tim Porter and Elise La Cava of Madrona Ventures outline the set of services used by sales, marketing and growth teams across their portfolio to identify and manage their prospects and revenue.

Is the 2020 SPAC boom an echo of the 2017 ICO craze? — Alex Wilhelm looks at two new pieces of SPAC news.

After Shopify’s huge quarter, BigCommerce raises its IPO price range — BigCommerce now intends to price its IPO between $21 and $23 per share.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

SpaceX and NASA successfully return Crew Dragon spacecraft to Earth with astronauts on board — SpaceX’s Crew Dragon appears to have performed exactly as intended throughout the mission, handling the launch, ISS docking, undocking, de-orbit and splashdown in a fully automated process that kept the astronauts safe and secure throughout.

Original Content podcast: Netflix’s ‘Say I Do’ offers a wedding-focused twist on the ‘Queer Eye’ formula — I’m not someone who cares about weddings, but this show made me cry. Multiple times!

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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Microsoft confirms plan to buy TikTok as Trump weighs options

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The president had also been weighing options over the past few days to force Beijing-based parent company ByteDance to divest in TikTok in the United States because of national security concerns, according to people familiar with the talks who spoke on the condition of anonymity because they were not authorized to discuss them publicly.

Microsoft confirmed it will “move quickly” on discussions with ByteDance and said it has given the U.S. government notice of a possible acquisition of the U.S. assets of TikTok.

This is the first time Microsoft has confirmed that the company is in talks for Microsoft to purchase TikTok operations in the United States, Canada, Australia and New Zealand.

“This new structure would build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections,” the tech giant said in its post.

TikTok and the White House did not immediately respond to requests for comment.

If it goes through, the acquisition could dramatically shift the Big Tech landscape, adding a legacy giant into the scramble for social media users’ attention. Microsoft, currently valued at $1.55 trillion, is one of the most valuable companies in the world and is one of the only ones positioned to take on such a purchase. Microsoft was conspicuously absent from a landmark antitrust hearing on Capitol Hill on Wednesday, when Facebook, Google, Apple and Amazon chief executives testified on their companies’ power.

Buying TikTok would put Microsoft in a powerful position to compete with Facebook and Google’s YouTube, which operate dominant social media sites. Microsoft has focused mainly on enterprise software for the past decade, though it does own professional networking site LinkedIn.

Its absence from the social media market could also make it more likely regulators will approve Microsoft buying TikTok.

If Microsoft buys TikTok, it would also solve an ongoing issue for Republicans and Trump, who has attacked TikTok as a prominent target in his crackdown against China amid the novel coronavirus pandemic.

The continuing discussions, which Microsoft said it expected to conclude by Sept. 15, hinged largely on buy-in from the Trump administration.

Trump told reporters Friday night that he planned to ban the app in the United States, and had earlier indicated he would do so in retaliation for what he saw as China’s role in spreading the coronavirus.

“As far as TikTok is concerned, we’re banning them from the United States,” Trump told reporters aboard Air Force One on Friday.

But Saturday morning, TikTok officials were still waging a public campaign to garner favor with officials and fans, and assured users in a TikTok video that the platform was “here for the long run.” Passionate TikTok users took to the app all weekend to express their dismay and encourage their followers to find them on other social media sites.

Late last week, Trump was considering two main options to change the ownership of TikTok. One was through a process led by the Committee on Foreign Investment in the United States (CFIUS), which began investigating an acquisition by ByteDance of Musical.ly in 2017. The president considered signing an order to divest the company on Friday, according to the people familiar with the talks.

Trump also considered using a 2019 executive order to designate TikTok a national security threat and bar American companies and workers from doing business with it, the people said Friday.

Trump and Secretary of State Mike Pompeo have previously been critical of TikTok’s Chinese ownership, saying it’s a threat to national security and threatening to ban it. That prompted ByteDance to start to explore a sale, although the company would prefer to retain TikTok if possible, another person familiar with the talks, who spoke on the condition of anonymity because they were not authorized to speak publicly, previously told The Washington Post.

Microsoft said it informed the CFIUS of its TikTok talks. The company also said it might bring in other American investors to take a minority stake in TikTok as part of the deal.

Microsoft said in its blog that it would “ensure that all private data of TikTok’s American users is transferred to and remains in the United States.” Ensuring American data privacy has been a main crux of lawmaker’s arguments against Chinese ownership of TikTok.

TikTok has continually insisted that it already keeps U.S. user data stored in the country and that it does not hand over data to the Chinese government.

TikTok, which has been downloaded more than 2 billion times according to research firm Sensor Tower, lets users make short videos that show them dancing, cooking, pulling pranks or taking political stances. It is especially popular with teenage users, who have used the platform to take aim at Trump.

That included earlier this summer, when teens encouraged each other to reserve tickets to Trump’s June rally in Tulsa, hoping to inflate the expected number of attendees even though they never planned to show up. The Trump campaign said that it had no impact on the event.

Correction: Microsoft is one of the most valuable companies in the world. This article previously said it was the third most valuable company in the world.

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AirPods vs. AirPods Pro: Should you spend the extra $100?

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Apple currently makes two true wireless earbud models: the second-gen AirPods (which list for $159, but are generally sold for closer to $139 in the US) come with optional wireless charging, and the $249 AirPods Pro, which feature active noise cancellation. I personally prefer the AirPods Pro and rated them higher than the standard AirPods in my review. But they cost around $110 more than the base AirPods without wireless charging and not everyone likes their noise-isolating design, which leaves you with a silicone ear tip pushed slightly into your ear canal. The looser fit of the AirPods has its advantages if you don’t want to spend $250 on earphones, especially ones that are easy to lose. 

AirPods vs. AirPods Pro Comparison

AirPods AirPods Pro
List price $159 $249
Active noise cancellation No Yes
Noise-isolating design No Yes
Battery life (between in-case charges) 4.5 hours 5 hours
Wireless charging In $199 model Yes

That, in a nutshell, is why some people aren’t sure about which AirPods to buy. And while there are plenty of excellent non-Apple true wireless earbuds out there — just peruse my list of the best true wireless earbuds of 2020 — you’re presumably here because you’re on the fence about the AirPods or AirPods Pro. Let’s see if we can help you make a decision.

Read more: Best cheap true-wireless earbuds of 2020

Sarah Tew/CNET

Simply put, the main reason to buy the standard AirPods is to save money. The model with the regular charging case currently sells for $139 while the model with the wireless charging case sells for $169 ($199 if you buy at the Apple Store). Occasionally, the prices dip to $130 and you can find “renewed” options for as low as $120. I personally think wireless charging is a bit overrated (when it comes to headphones, anyway), so I wouldn’t pay the extra money for it. If I was buying the standard AirPods, my goal would be to pay as little as possible for them.

As I said, some people don’t like having silicone buds stuck in their ears. That’s the reason why so many people like the original AirPods. They just sort of nestle in your ear — and when they fit right, they’re really comfortable. And a few folks at CNET have told me that even though the AirPods Pro sounded better, they still preferred the fit of the regular AirPods.

I’m among those who can’t get the standard AirPods to stay in my ears securely without using third-party stabilizing wings (and you have to take off the wings to get the AirPods back in their charging case, which is a nuisance). That’s the main reason I prefer the AirPods Pro. 

The biggest drawback of the standard AirPods’ “open” design is that it allows ambient sound to leak in. They sound decent in quieter environments — and their performance as a headset for making calls is almost as good as the AirPods Pro — but the listening experience deteriorates in noisy environments.

Read our Apple AirPods 2019 review.

Sarah Tew/CNET

The standard AirPods fit some people’s ears perfectly (some people have no trouble running with them), but plenty of people can’t get a secure fit. If you’re in the latter group, I highly recommend you spend the extra money on the AirPods Pro. The AirPods Pro design simply fits more ears than the original AirPods. I hesitate to call it a universal fit because there are always exceptions, but they’re close.

As noted, the only issue is that some people simply don’t like having silicone buds stuck in their ears, even if they’re as soft and pliant as these tips are. Also, some people are sensitive to the pressure sensation, albeit it slight, that’s a byproduct of active noise canceling.

The first thing you notice about the AirPods Pro is that they simply sound better than the standard AirPods because they have more bass. The reason they have more bass is largely due to their new noise-isolating design and new drivers that are tuned for that design. The standard AirPods sound decent enough in quiet places but due to their open design, they just don’t do well when confronted with external noise — the bass frequencies get drowned out. The AirPods’ noise cancellation, which is effective, also helps with external noise, and the combination of the seal of the tips and the ANC means they sound much better in noisier environments such as city streets.

The standard AirPods are quite good for making calls. With the release of the second-gen model last year — the ones discussed above — Apple improved their noise-reduction capabilities, particularly wind noise. The AirPods Pro have three microphones on each bud, one of which is a beamforming mic that’s designed to pick up your voice. They also have similar noise-reduction capabilities, plus a vent system that’s not only supposed to relieve some of the pressure that can build up in your ear from a noise-isolating design coupled with noise-canceling features, but can help cut down on wind noise a tad, an Apple rep told me. More importantly, you can simply hear callers better because of the Pros’ noise-isolating design.

The AirPods Pro will soon have another advantage. In June, Apple announced at its Worldwide Developers Conference that the AirPods Pro will get a big upgrade this fall with the release of iOS 14: a “spatial audio” feature that simulates surround sound. 

Both the AirPods and AirPods Pro will get automatic switching between Apple devices, another new feature in iOS 14, but only the AirPods Pro will get the virtual surround feature.

Read our Apple AirPods Pro review.

Read more: Apple’s new spatial audio feature should have Bose and Sony worried

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