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Highlights:
- Legislative Landscape:
- Senate passed the 2023 omnibus spending bill last night and attached to that was a TikTok ban on government owned cell phones; headed to the House this morning
- First step with where we are headed with TikTok in DC
- Senator Marco Rubio and Raja Krishnamoorthi in the House introduced a bill to ban TikTok in the U.S.
- State bans on TikTok growing
- Regulatory Landscape:
- CFIUS is the interagency committee that looks at foreign investment for national security risks
- TikTok has been on their plate for a couple of year snow going back to the Trump administration
- Prominent FCC commissioner urging app stores to remove TikTok
- Members of Congress urging FTC to conduct investigations
- CFIUS is examining TikTok; choice whether to enter mitigation order
- No flat out guarantee from TikTok that no one in China would have access to U.S. user data
- Rumors that Treasury Department wants to cut some sort of a mitigation agreement and let TikTok operate subject to national security protocols and restrictions
- Given public outcry against TikTok, the debate going on in CFIUS could continue well into next year
- We lean towards the view that a mitigation order is probably the way to go
- A mitigation order would allow an app that has become incredibly popular to continue to be used
- An outright ban could run into some legal & political issues
- Could run into problems with banning a popular app
- Concerns around retaliation from China
- We think the path of mitigation is the path of least resistance
- Q: From an antitrust perspective, how does the government think about TikTok now and competition in the industry? What does this mean for Meta going forward?
- We don’t think it changes a lot; even though there is an antitrust suit going on right now with Facebook in California, antitrust is not the huge problem for Facebook
- There is competition and TikTok is an example of that
- Antitrust is huge with respect to Apple
- More regulatory hurdles for Facebook
- Q: Could any other apps be adversely affected by any legislation that comes from this?
- We’ll see what happens on the legislative front
- Biden administration is working on an executive order that would address how foreign controlled apps gather user data on Americans and potentially monetize it elsewhere
- Q: What’s your prediction if this snowballs on the legislative side?
- There already is a TikTok consent decree with respect to security of children’s data
- This could be expanded out
- Could see enforcement actions at the FTC
- FCC doesn’t have direct authority here
- Senator Warner has said he wants to see what CFIUS does
- Q: Is this TikTok issue truly bipartisan?
- It is a bipartisan issue
- Seems to be more Republican support around the ban right now
- There is Democratic support out there
- This legislation passed unanimously in the Senate which is tough to do
- Q: What comes out of the CFIUS process? Is it a formal report? Recommendation?
- We will get an order that lays out the national security findings
- Also, we will get conditions/mitigation requirements to address these concerns
- If CFIUS concludes that this works and the companies can agree to this, it doesn’t have to go to President Biden
- Q: Was CFIUS involved in the FCC ban on telecom devices with Huawei?
- There is legislation that restricts the ability to have Huawei and ZTE equipment in the networks
- FCC has implemented this legislation as well as pursued their own policy
- The U.S. has tried to pressure other allied nations to not use Huawei equipment
- Process for TikTok is a completely different process than Huawei
