President Donald Trump signed an executive order on Thursday banning transactions with ByteDance, the parent company of popular app TikTok . The White House also announced that he signed a similar order banning transactions with WeChat, the messaging app owned by Tencent that is ubiquitous in China, but has a much smaller presence than TikTok in the United States, where it is used mainly by members of the Chinese diaspora.
Both orders will take effect in 45 days, but (and this is a key point) the executive orders are vague and confusing because they say Secretary of Commerce Wilbur Ross will not identify what transactions are covered until then. It’s also still uncertain how the executive orders will affect the apps’ operations in the U.S. or Tencent’s other holdings.
Though the order was not phrased to ban the two apps directly, the government may have other means to restrict them. Just yesterday, the Trump administration announced its plans to purge “untrusted” Chinese tech services, which could reasonably include WeChat and TikTok, under the Clean Network program.
— Andrew Feinberg (@AndrewFeinberg) August 7, 2020
A Tencent spokesperson said the company is reviewing the executive order to get a full understanding.
TikTok hit back saying that the executive order was “issued without any due process” and would risk “undermining global businesses’ trust in the United States’ commitment to the rule of law.”
The orders cite the International Emergency Economic Powers Act and the National Emergencies Act. It is important to note that naming the apps’ operations in the United States as a national emergency is a highly unprecedented act and the legality of the orders will likely be challenged. ByteDance is currently pushing back against the Indian government’s July decision to ban TikTok along with 59 other apps; like the U.S., India also cited national security concerns around user data collection.
Microsoft announced over the weekend that it is in negotiations to buy TikTok from ByteDance, naming September 15 as a deadline for negotiations. The order would take effect shortly after the deadline set by Microsoft for the deal. ByteDance reportedly agreed to give up its entire ownership in the app even though it had previously wanted to maintain a minority stake.
Trump’s executive order on ByteDance said that “the spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China…continues to threaten the national security, foreign policy, and economy of the United States. At this time, action must be taken to address the threat posed by one mobile application in particular, TikTok.”
In 45 days, transactions by any person or property subject to U.S. jurisdiction with ByteDance or any of its subsidiaries will be prohibited “to the extent that they are permitted under applicable law.” The order claims that TikTok’s access to user data, including location, browsing and search histories, “threatens to allow the Chinese Communist Party access to American’s personal and proprietary information–potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.”
Trump announced at the end of last month that he planned to ban TikTok through the use of an executive order. The president and government officials, including Secretary of State Michael Pompeo, have made escalating comments over the past few weeks alleging that TikTok is a threat to national security. While TikTok is owned by ByteDance, the Beijing-based company (which also operates a Chinese version of the app called Douyin) has taken steps to distance TikTok from its Chinese operations, and claims that its data is stored outside of China.
Trump’s executive order on WeChat was less expected, but not a complete surprise because Pompeo named the messaging app earlier this week when he said Trump was planning to take action “shortly” on TikTok and other Chinese companies. Like ByteDance, Trump claims WeChat’s data collection is a national security threat and may give the Chinese Communist Party access to user information. The order also cites WeChat’s censorship of material deemed politically sensitive by the Chinese government.
The scope of the order appears to reach beyond WeChat, restricting U.S. companies from conducting transactions with Tencent Holding as well as its subsidiaries.
The big mystery is how the Secretary of Commerce will define “transaction” in 45 days. Trump might have just inadvertently dealt a blow to some of the biggest tech and entertainment companies in the U.S. backed by Tencent. The Chinese giant is often compared to SoftBank for its extensive investment footprint. What kinds of financial agreements are there in the majority stake cases? Dividends? Bonuses payable to board members?
Over the years, Tencent has taken stakes in Spotify, Snap, Reddit, Tesla, Warner Music, Universal Music and lucrative games makers in the U.S., including Fortnite maker Epic Games and Riot Games, the studio behind League of Legends.
(The Los Angeles Times reports a White House official clarified that the WeChat executive order only applies to transactions related to WeChat, not ones related to other Tencent holdings. But that is unclear from the language of the order).
Microsoft declined to comment. TechCrunch has also contacted the White House.
The story was updated on August 7, 2020 to correct the title of Wilbur Ross.
Few could ever forget back in 2015 when security researchers Charlie Miller and Chris Valasek remotely killed a Jeep’s engine on a highway with a Wired reporter at the wheel.
Since then, the car hacking world has bustled with security researchers looking to find new bugs — and ways to exploit them — in a new wave of internet-connected cars that have only existed the past decade.
This year’s Black Hat security conference — albeit virtual, thanks to the coronavirus pandemic — is no different.
Security researchers at the Sky-Go Team, the car hacking unit at Qihoo 360, found more than a dozen vulnerabilities in a Mercedes-Benz E-Class car that allowed them to remotely open its doors and start the engine.
Most modern cars are equipped with an internet connection, giving passengers access to in-car entertainment, navigation and directions, and more radio stations than you can choose from. But hooking up a car to the internet puts it at greater risk of remote attacks — precisely how Miller and Valasek hijacked that Jeep, which ended up in a ditch.
Although vehicle security has gotten better over the past half-decade, Sky-Go’s researchers showed that not even one of the most recent Mercedes-Benz models are impervious to attacks.
In a talk this week, Minrui Yan, head of Sky-Go’s security research team, said the 19 security vulnerabilities were now fixed, but could have affected as many as two million Mercedes-Benz connected cars in China.
Katharina Becker, a spokesperson for Mercedes’ parent company Daimler, pointed to a company statement published late last year after it patched the security issues. The spokesperson said Daimler could not corroborate the estimated number of affected vehicles.
“We addressed all findings and fixed all vulnerabilities that could be exploited before any vehicle in the market was affected,” said the spokesperson.
After more than a year of research, the end result was a series of vulnerabilities that formed an attack chain that could remotely control the vehicle.
To start, the researchers built a testbench to reverse-engineer the car’s components to look for vulnerabilities, dumping the car’s software and analyzing the car’s internals for vulnerabilities.
The researchers then obtained a Series-E car to verify their findings.
At the heart of the research is the E-Series’ telematics control unit, or TCU, which Yan said is the “most crucial” component of the car, as it allows the vehicle to communicate with the internet.
By tampering with the TCU’s file system, the researchers got access to a root shell — a way to run commands with the highest level of access to the vehicle’s internals. With root shell access, the researchers could remotely open the car’s doors.
The TCU file system also stores the car’s secrets, like passwords and certificates, which protect the vehicle from being accessed or modified without proper authorization. But the researchers were able to extract the passwords of several certificates for several different regions, including Europe and China. By obtaining the vehicle’s certificates and their passwords, the researchers could gain deep access to the vehicle’s internal network. The car’s certificate for the China region had a weak password, Yan said, making it easier to hijack a vulnerable car in the country.
Yan said the goal was to get access to the car’s back end, the core of the vehicle’s internal network. As long as the car’s back-end services can be accessed externally, the car is at risk of attacks, the researchers said.
The way the researchers did this was by tearing down the vehicle’s embedded SIM card, which allows the car to talk to the cell networks. A security feature meant the researchers couldn’t plug the SIM into a router without freezing access to the cell network. The researchers modified their router to spoof the vehicle, effectively making the cell network think it was the car.
With the vehicle’s firmware dumped, the networking protocols understood and its certificates obtained and cracked, the researchers say they could remotely control an affected vehicle.
The researchers said the car’s security design was tough and able to withstand a number of attacks, but it was not impervious.
“Making every back-end component secure all the time is hard,” the researchers said. “No company can make this perfect.”
But at least in the case of Mercedes-Benz, its cars are a lot more secure than they were a year ago.
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TikTok, the Chinese video sharing app that’s found itself at the center of a geopolitical power struggle which threatens to put hard limits on its global growth this year, said today it will build its first data center in Europe.
The announcement of a TikTok data center in the EU also follows a landmark ruling by Europe’s top court last month that put international data transfers in the spotlight, dialling up the legal risk around processing data outside the bloc.
TikTok said the forthcoming data center, which will be located in Ireland, will store the data of its European users once it’s up and running (which is expected by early 2022) — with a slated investment into the country of around €420M (~$497M), according to a blog post penned by global CISO, Roland Cloutier.
“This investment in Ireland… will create hundreds of new jobs and play a key role in further strengthening the safeguarding and protection of TikTok user data, with a state of the art physical and network security defense system planned around this new operation,” Cloutier wrote, adding that the regional data centre will have the added boon for European users of faster load times, improving the overall experience of using the app.
The social media app does not break out regional users — but a leaked ad deck suggested it had 17M+ MAUs in Europe at the start of last year.
The flipside of TikTok’s rise to hot social media app beloved of teens everywhere has been earning itself the ire of US president Trump — who earlier this month threatened to use executive powers to ban TikTok in the US unless it sells its US business to an American company. (Microsoft is in the frame as a buyer.)
Whether Trump has the power to block TikTok’s app is debatable. Tech savvy teenagers will surely deploy all their smarts to get around any geoblocks. But operational disruption looks inevitable — and that has been forcing TikTok to make a series of strategic tweaks in a bid to limit damage and/or avoid the very worst outcomes.
Since taking office the US president has shown himself willing to make international business extremely difficult for Chinese tech firms. In the case of mobile device and network kit maker, Huawei, Trump has limited domestic use of its tech and leant on allies to lock it out of their 5G networks (with some success) — citing national security concerns from links to the Chinese Communist Party.
TikTok has been taking steps to try to insulate its international business from US-fuelled security concerns — and also provide some incentives to Trump for not quashing it — hiring Disney executive Kevin Mayer on as CEO of TikTok and COO of ByteDance in May, and promising to create 10,000 jobs in the U.S., as well as claiming US user data is stored in the US.
In parallel it’s been reconfiguring how it operates in Europe, setting up an EMEA Trust and Safety Hub in Dublin, Ireland at the start of this year and building out its team on the ground. In June it also updated its regional terms of service — naming its Irish subsidiary as the local data controller alongside its UK entity, meaning European users’ data no longer falls under its US entity, TikTok Inc.
This reflects distinct rules around personal data which apply across the European Union and European Economic Area. So while European political leaders have not been actively attacking TikTok in the same way as Trump, the company still faces increased legal risk in the region.
Last month CJEU judges made it clear that data transfers to third countries can only be legal if EU users’ data is not being put at risk by problematic surveillance laws and practices. The CJEU ruling (aka ‘Schrems II’) means data processing in countries such as China and India — and, indeed, the US — are now firmly in the risk frame where EU data protection law is concerned.
One way of avoiding this risk is to process European users’ data locally. So TikTok opening a data center in Ireland may also be a response to Schrems II — in that it will offer a way for it to ensure it can comply with requirements flowing from the ruling.
Privacy commentators have suggested the CJEU decision may accelerate data localization efforts — a trend that’s also being seen in countries such as China and Russia (and, under Trump, the US too it seems).
EU data watchdogs have also warned there will be no grace period following the CJEU invalidating the US-EU Privacy Shield data transfer mechanism. While those using other still valid tools for international transfers are bound to carry out an assessment — and either suspend data flows if they identify risks or inform a supervisor that the data is still flowing (which could in turn trigger an investigation).
The EU’s data protection framework, GDPR, bakes in stiff penalties for violations — with fines that can hit 4% of a company’s global annual turnover. So the business risk around EU data protection is no longer small, even as wider geopolitical risks are upping the uncertainty for global Internet players.
“Protecting our community’s privacy and data is and will continue to be our priority,” TikTok’s CISO writes, adding: “Today’s announcement is just the latest part of our ongoing work to enhance our global capability and efforts to protect our users and the TikTok community.”
Over a third of the world’s smartphone sales come from Chinese vendors Huawei, Xiaomi and Oppo. These manufacturers have thrived not only because they offer value-for-money handsets thanks to China’s supply chains, but they also enjoy a relatively open mobile ecosystem, in which consumers in most countries can freely access the likes of Google, Instagram and WhatsApp.
That openness is under attack as the great U.S.-China tech divide inches closer to reality, which can cause harm on both sides.
The Trump Administration’s five-pronged Clean Network initiative aims to strip away Chinese phone makers’ ability to pre-install and download U.S. apps. Under U.S. sanctions, Huawei already lost access to key Google services, which has dealt a blow to its overseas phone sales. Oppo, Vivo, Xiaomi, and other Chinese phone makers could suffer the same setback as Huawei, should the Clean Network applies to them.
For years, China has maintained a closed-up internet with the Great Firewall restricting a bevy of Western services, often without explicitly presenting the reasons for censorship. Now the U.S. has a plan that could potentially keep Chinese apps off the American internet.
The Clean Network program was first announced in April as part of the Trump Administration’s efforts in “guarding our citizens’ privacy and our companies’ most sensitive information from aggressive intrusions by malign actors, such as the Chinese Communist Party.”
Beijing said Thursday it’s firmly opposed to U.S. restrictions on Chinese tech firms and blasted that the U.S. uses such actions to preserve its technology hegemony.
Many on Chinese social media compare Trump’s Clean Network proposal to routine cyberspace crackdowns in China, which regulators say are to purge pornography, violence, gambling, and other ‘illegal’ activities. Others that espouse a free internet lament its looming demise.
(1/2) A long, long time ago
I can still remember how that internet used to make me smile
But August makes me shiver
With every app I’d have delivered
Bad news on state dot government
I couldn’t reach Pompeo’s statement
— 一天世界 (@yitianshijieipn) August 6, 2020
It’s unclear when the rules would be implemented and how they would be enforced. The program also aims to remove ‘untrusted’ Chinese apps from US app stores. A TikTok ban is looking less likely as Microsoft nears a buyout, but other Chinese apps also have a big presence in the U.S. Many, like WeChat and Weibo, target the diaspora community, while players like Likee and Zynn, owned by Chinese firms, are making waves among local users.
Chinese firms are already hedging. Some like TikTok have set up overseas data centers. Others register their entities abroad and maintain U.S. offices, while still resorting to China for cheaper engineering talents. It’s simply impractical to investigate — and hard to determine — every app’s Chinese origin.
Under the program, carriers like China Mobile are not allowed to connect with U.S. telecoms networks, which could prevent these services from offering U.S. roaming to Chinese travelers.
The initiative also tells U.S. companies not to store information on Chinese cloud services like Alibaba, Tencent, and Baidu. Chinese cloud providers don’t find many clients in the U.S., perhaps except when they are hosting data for their own services, such as Tencent games serving American users.
Lastly, the framework wants to ensure U.S. undersea cables connecting to the world “are not subverted for intelligence gathering by the PRC at hyper-scale.”
Such sweeping restrictions, if carried out, will almost certainly trigger retaliation from China. But what bargaining chips are left for Beijing? Apple and Tesla are the few American tech behemoths with significant business interest in China.
As uncertainty swirls around TikTok’s future in the U.S., the company this morning announced new Community Guidelines focused on helping to keep misleading and deceptive content off its platform. The new rules aim to better clarify what’s allowed and not allowed on TikTok, broaden the app’s fact-checking partnerships ahead of the U.S. election and ban the use of “deepfakes” (manipulated content) designed to deceive. In addition, TikTok has added an in-app reporting option for election misinformation. It also claims to have worked with experts, including the Countering Foreign Influence Task Force (CFITF), run by the U.S. Department of Homeland Security (DHS), to help counter the threat of foreign influence on elections.
That latter item is a particularly clever spin on TikTok’s current situation, given that it’s the foreign interference of TikTok itself that the Trump administration is concerned about, along with the potential security risk that comes from the possibility of China’s authoritarian government collecting massive amounts of data on TikTok’s American users.
TikTok, however, says it has worked with CFITF and other experts to help stop the dangers of foreign influence on U.S. elections. The task force shares insight about possible disinformation campaigns across the industry and connects local election officials with online platforms and law enforcement. TikTok didn’t clarify the extent of its work in this area, but CFITF has only existed since 2018, so these would be fairly recent efforts.
The company also says it’s expanding its relationships with PolitiFact and Lead Stories to fact-check potential misinformation related to the 2020 U.S. election. The organizations were previously focused on other fact-checks, like those related to COVID-19 and climate change.
However, fact-check organizations’ ability to actually find and fact-check misleading content can be difficult, as much of this content is framed by users as “just my opinion.” A quick search on TikTok this morning for “climate change hoax,” for example, pulled up videos with dissenting user opinions on the topic with no fact-check applied. This isn’t a problem unique to TikTok, of course. Social media platforms in general struggle with the line between free speech and misinformation, especially when content goes viral that shares a viewpoint not held by a majority of the scientific or academic community.
TikTok also says today it will roll out an election misinformation option to its in-app reporting feature in the “coming weeks.” But it didn’t offer a clear launch date, despite elections now being months away.
The company says it’s clarifying its policy to ban the use of “synthetic or manipulated content,” too. This will now include deepfakes meant to deceive or distort the truth. The policy continues to be questionably enforced. For example, TikTok easily pulled up the recent viral video that claims to show House Speaker Nancy Pelosi drunk — a video that has been manipulated from the original where she speaks normally. Facebook, by comparison, labeled the video “partly false,” given the digital slowing down of the original video.
None of these problems around fake content or attempts to deceive are unique to TikTok, of course. U.S. companies don’t have things under control, either.
Its policy around “coordinated inauthentic behavior” has also been restated to be clearer, TikTok says.
The new policy reads:
Do not engage in coordinated inauthentic activities (such as the creation of accounts) to exert influence and sway public opinion while misleading individuals, our community or the larger public about the account’s identity, location or purpose
The Trump administration has put the TikTok ban on hold for at least 45 days for now, ostensibly so TikTok could work out a deal with Microsoft. The U.S. government wants the company to spin out its U.S. operations to distance itself from China.
TikTok users, naturally, have their own theories about why Trump is coming down so hard on their preferred social app. Some number of TikTok teens pranked the Trump campaign over the rally in Tulsa, for starters. Other TikTok users pointed out that Trump’s real concern is that TikTok doesn’t allow political ads — and microtargeting voters on Facebook helped Trump win the last election.
These theories are interesting to debate (and may not be entirely wrong!), but the reality is that the concerns over TikTok’s connection to China have some bipartisan support.
Triller, the short video app backed by a Hollywood mogul and music celebrities, is rapidly ballooning in both user size and valuation. It’s now seeking a new funding round of $250 million that will push its valuation to over $1 billion, according to a source with knowledge of the matter.
The app has emerged as what many see as a TikTok replacement, but it has been around since 2015, two years before TikTok’s debut, and has its own “identity and ecosystem,” the founder insisted.
According to Lu, Triller was already recording “significant growth” even before the Trump administration began mulling a ban or a forced sale of TikTok, although he also admitted the app is getting a boost from the TikTok backlash. 35 million new active users joined Triller just within the last few days. The app has so far collected 250 million downloads worldwide.
The Los Angeles-based startup still has a long way to catch up with TikTok, which crossed 2 billion downloads in April. The rivals both tout their capability to let users match videos with music, a defining feature for their success. In fact, Triller recently filed a lawsuit accusing its Chinese rival for infringing its patent for “creating music videos synchronized with an audio track.”
Triller attributed part of its achievement to majority investor Proxima Media, the Hollywood studio founded by Ryan Kavanaugh. Lu said his company has spent zero in marketing to reach its size, something that “has never happened in technology history.” But Ryan, the film producer and financier behind hits like The Fast and the Furious and The Social Network, has no doubt brought unmatched media exposure, celebrity connections, and naturally, their fans who convert to Triller users.
— Ryan Kavanaugh (@RyanKavanaugh) May 10, 2020
Triller has also secured deals with major record labels, clearing the way for users to make music-centered videos. Its roster of angel investors include Snoop Dogg, The Weekend, Marshmellow, Lil Wayne, among other big names.
“Ryan is second to none in Hollywood, entertainment and media,” said Lu. “I give [Proxima Media] a ton of credit for helping us get to this stage, this massive growth. I don’t think we could have done it without them.”
Celebrity-quality content is one thing that sets Triller apart from TikTok, said Anis Uzzaman, general partner of Pegasus Tech Ventures, which invested in Triller in a strategic round.
“TikTok tries to grow its own celebrities. Triller already has all the big celebrities,” the investor said, refering to videos shared by Alicia Keys, Cardi B, Marshmellow, and Eminem via Triller, which is now a popular place for releasing songs. TikTok has also become a testing ground for artists to test new works.
Meanwhile, the app strives to keep its ordinary users engaged, one thing TikTok has done very well. For example, it boasts of AI-powered editing features that enable users to make professionally looking music videos. It’s also lanched a Billboard chart that ranks the biggest Triller songs, leveling the playing field between emerging creators and celebrities.
“It gives the young people a feeling that they are close to celebrities,” observed Uzzaman.
The investor also believes there’s room for multiple players in the short video space, akin to how Uber and Lyft co-exist. Indeed, China has seen TikTok’s Chinese version Douyin going head to head with Kuaishou in recent years.
For Lu, Triller’s identity is anchored in music, especially hip hop music in the early days, with a demographic of 18-25.
Triller’s App Store images.
TikTok, in comparison, can be everything from light-hearted dance videos to goofy skits. One gets a hint of their differences from the visuals they picked for their App Store pages.
TikTok’s App Store images.
The fate of TikTok could still change dramatically in the coming weeks, although so far, there’s a decent chance that Microsoft may scoop up the Chinese-owned app. Some startups are betting that their US identity will help them win over users from TikTok, but a survey done by California-based Creative Digital Agency suggests that may not be the case.
65% of the hundreds of TikTok users it asked said they won’t feel more comfortable with their data policies even if TikTok were an American company, and 84.6% believe the proposed ban is motivated by political concerns.
“The vast majority believe that all American social media platforms are doing exactly the same thing in mining personal data, which is the big privacy concern,” the agency’s managing director Kevin Almeida suggested.
That said, TikTok’s growth has slowed down recently, as some creators hedge the risk of losing followers in the case of a ban. The app’s installs in the US last week were down 7% compared to the four-week average, shows data from analytics firm Sensor Tower. Its total downloads in the US are close to 190 million.
Triller is hardly the only US startup thriving against the backdrop of TikTok’s uncertain future. At least three other micro-video apps have seen new downloads in the hundreds of thousands in the US over the past week, according to Sensor Tower, and two are rooted in China.
They are Byte, Dom Hofmann’s new app after Vine was shuttered by Twitter; Zynn, which is run by Kuaishou, TikTok’s Chinese homegrown rival; and Likee, operated by Bigo, a Singapore-based company acquired by China’s YY. These apps totaled downloads of 2.9 million, 6.4 million, and 16.3 million in the US, respectively.
Growth of TikTok’s old rival Dubsmash isn’t as remarkable but the app has the most US installs among the competitors, reaching 41.6 million recently.
In comparison, Triller has accumulated 23.8 million downloads in the US. The app has seen a surge in downloads in India following the country’s TikTok ban, but it has also ranked among the top photo and video apps across multiple European and African countries where TikTok remains accessible.
The company operates a global team of 350 employees, most of whom are in the US and work on content operation and engineering.
Today the president appeared to bless the budding Microsoft-TikTok deal, continuing his evolution on a possible transaction. After stating last Friday that he’d rather see TikTok banned than sold to a U.S.-based company, Trump changed his tune over the weekend. TikTok is owned by China-based company ByteDance, which owns a portfolio of apps and services.
A weekend phone call between Satya Nadella, the CEO of Microsoft, and the American premier appeared to change his mind, leading to the software company sharing publicly on Sunday that it was pursuing a deal.
Then today the president, endorsing a deal between an American company and ByteDance over TikTok, also said that he expects a chunk of the sale price to wind up in the accounts of the American government.
The American president has long struggled with basic economic concepts. For example, who pays tariffs. But to see Trump state that he expects to receive a chunk of a deal between two private companies that he is effectively forcing to the altar is surreal.
To fully grok his take, we’ve roughly transcribed the pertinent few minutes of his explanation from this morning, when asked about the weekend call with Microsoft’s Nadella. It’s worth a read (bold highlights are TechCrunch’s):
We had a great conversation, uh, he called me, to see whether or not, uh, how I felt about it. And I said look, it can’t be controlled, for security reasons, by China. Too big, too invasive. And it can’t be. And here’s the deal. I don’t mind if, whether it’s Microsoft or somebody else — a big company, a secure company, a very American company — buy it.
It’s probably easier to buy the whole thing than to buy 30% of it. ‘Cause I say how do you do 30%? Who’s going to get the name? The name is hot, the brand is hot. And who’s going to get the name? How do you do that if it’s owned by two different companies? So, my personal opinion was, you are probably better off buying the whole thing rather than buying 30% of it. I think buying 30% is complicated.
And, uh, I suggested that he can go ahead, he can try. We set a date, I set a date, of around September 15th, at which point it’s going to be out of business in the United States. But if somebody, whether it’s Microsoft or somebody else, buys it, that’ll be interesting.
I did say that if you buy it, whatever the price is, that goes to whoever owns it, because I guess it’s China, essentially, but more than anything else, I said a very substantial portion of that price is going to have to come into the Treasury of the United States. Because we’re making it possible for this deal to happen. Right now they don’t have any rights, unless we give it to ’em. So if we’re going to give them the rights, then it has to come into, it has to come into this country.
It’s a little bit like the landlord-tenant [relationship]. Uh, without a lease, the tenant has nothing. So they pay what is called “key money” or they pay something. But the United States should be reimbursed, or should be paid a substantial amount of money because without the United States they don’t have anything, at least having to do with the 30%.
So, uh, I told him that. I think we are going to have, uh, maybe a deal is going to be made, it’s a great asset, it’s a great asset. But it’s not a great asset in the United States unless they have the approval of the United States.
So it’ll close down on September 15th, unless Microsoft or somebody else is able to buy it, and work out a deal, an appropriate deal, so the Treasury of the — really the Treasury, I suppose you would say, of the United States, gets a lot of money. A lot of money.
Intel and Boeing, two of the pillars of American industry.
Intel makes some of the most impressive chips in the world and has for decades, driving high-performance computing to its limits while supporting a company with a market cap today of $200 billion and supporting more than 110,000 employees. Meanwhile, Boeing remains a global leader in aviation despite retiring the 747, with $66 billion in revenue backing a market cap of $90 billion and hosting more than 153,000 workers.
Like pillars of classic Rome though, they exist merely as a shell of their former function. They are weathered, tired and crumbling, and it doesn’t seem likely that they can hold up the American economy the way they have over the past generation, nor keep the country on the frontier of innovation any longer in their critical industries.
Deindustrialization has swept through the United States for decades of course. It started with the easy stuff — textiles, consumer widgets, appliances — but the sophistication of export-driven economies like Korea, Germany, Taiwan, China, Thailand, Turkey and others has pushed more and more of the manufacturing stack overseas.
Now, even the absolute finest pillars of American exceptionalism in industry are under deep threat. Intel is in the worst position between the two. The company’s bombshell announcement that it is delaying its next-generation 7nm node and would also begin outsourcing some of its manufacturing caused waves on Wall Street, with the stock down nearly 20% in just two weeks. Analysts increasingly believe that Taiwan contract fab TSMC is taking a multi-year lead over Intel’s technology.
Meanwhile, Boeing had and continues to have that whole 737 MAX debacle since the plane model’s first crash in October 2018. That was debilitating enough, but then you add coronavirus and the global collapse of travel on top of it, and the company’s very prospects are looking quite a bit more endangered than anyone could have anticipated two years ago.
For the United States, the first step in ameliorating these slow-motion train wrecks has been the classic policy crisis tool of the bailout. Intel is maybe the most prominent example of America’s death in semiconductors, but it is hardly alone. So Congress is targeting the industry for heavy incentives to try to bridge the gap. Two weeks ago, Senator John Cornyn (R-TX) got widespread bipartisan support for his amendment to this year’s defense budget bill that would appropriate billions of dollars of funding and incentives to propel American chipmaking.
Meanwhile, Boeing sought a $60 billion government bailout, before finding a debt consortium of private investors to fund operations. Yet, Boeing gets a different kind of support from the U.S. government, given that a third of its revenues are from defense sales, which is obviously heavily driven by the Pentagon. A government bailout for the manufacturer this year is still not out of the question.
Smothering dollars on these companies isn’t going to change the rot that is spreading within. Both companies have transformed engineering-focused cultures to profit-driven maximization, while facing keen global competition that has chipped away at their advantages. Boeing is again safer than Intel — Airbus hasn’t been much better when it comes to innovation and bad strategic decisions like the A380, and China’s airframe manufacturer Commercial Aircraft Corporation isn’t really ready for prime time, although it is certainly progressing.
It’s not that industrial policy fails, it’s that American industrial policy seems flagrantly incompetent.
Taiwan has made semiconductor excellence a critical aspect of its national economy. Korea has made cultural productions like K-pop and K-drama a top government priority, now a massive growing global industry. China has perhaps most notoriously made supporting flagship industries a key bedrock of its economic development, to much success over the past three decades. And the list continues.
What’s the difference? In one word: strategy. In each of these successful cases, governments spurred the creation of new industries through incentives and policy changes, while ensuring that these industries built up differentiated intellectual property that would pay back those incentives in spades.
The United States on the other hand always jumps in with the handouts at precisely the wrong time. Rather than incentivizing the creation of new industries, it runs to the industries in decline and sprays that cash fertilizer across the weeds and deadwood.
While Congress spends billions to try to salvage the chip industry, the Trump administration announced a $75 million quantum computing initiative aimed at spurring America to the frontiers of advanced computing. While China is investing billions in 5G wireless technologies, America is offering hundreds of thousands of dollars to start rural test beds.
As an economic superpower, the United States has lived in a world where it was simply, by default, the best at whatever it and its citizens wanted to be. Industries could be fragmented, government policy could be out-of-whack, schools and universities could be horrifically inefficient in training, but none of that mattered since few other countries could compete across such a breadth of industry.
Today, plenty of countries can compete in manufacturing and cultural production. And not only can they compete, but they are willing to go all-in to ensure that they succeed in these endeavors. Taiwan is not great at semiconductors because of a random constellation of factors, it’s great because it pushed its entire economy, education system and government to prioritize its excellence on top of changes like the opening of the global economy and the rise of China.
Intel and Boeing still have a chance of course, they are still massive companies with cash and talent. Yet, one can’t help look at the history of every other collapsed manufacturing company in the U.S. and not feel a startling sense of déjà vu. We didn’t get it right those times — do we have it in us to do it right this time?
Trade tensions between China and the U.S. have not stopped Chinese companies from eyeing to list on American stock exchanges. Li Auto, a five-year-old Chinese electric vehicle startup, raised $1.1 billion through its debut on Nasdaq on Thursday.
The Beijing-based company is targeting a growing Chinese middle class who aspire to drive cleaner, smarter, and larger vehicles. Its first model, sold at a subsidized price of 328,000 yuan or $46,800, is a six-seat electric SUV that began shipping end of last year.
Li Auto priced its IPO north of its targeted range at $11.5 per share, giving it a fully diluted market value of $10 billion. It also raised an additional $380 million in a concurrent private placement of shares to existing investors.
The IPO arrived amid a surge of investor interest in EV makers. Tesla’s shares have skyrocketed in the last few quarters. Li Auto’s domestic rival Nio, which raised a similar amount in a $1 billion float in New York back in 2018, also saw its stock price rally in recent months.
Li Auto is one step ahead of its Chinese peer Xpeng in planning its first-time sale. The six-year-old competitor said last year it may consider an IPO. Last month, a source told South China Morning Post that Xpeng was getting ready for the listing.
Founders of China’s emergent EV startups are often shrewd internet veterans who are well-connected in the venture capital and marketing world, attracting investment dollars in the billions. Li Auto, for instance, counts China’s food delivery mogul Wang Xing, boss of Meituan Dianping, as its second-largest shareholder after its CEO Li Xiang. TikTok parent ByteDance shelled out $30 million in its Series C round.
Investors are in part emboldened by Beijing’s national push to electrify China’s auto industry. The question, then, is whether these startups have the right talent and resources to pull things off in an industry that traditionally demands a much longer development cycle.
Wallace Guo, a managing partner at Li Auto’s Series B investor Taihecap, admitted that “the nature of auto consumption, unlike internet products evolving through trial and error, manufacturing a car, is a strategic move with sophisticated system, very long value chain, requiring huge investment and resources and any error can be fatal.”
Mingming Huang, chief executive of Future Capital, said that “it was a no brainer in 2015 to be the first investor” in Li Auto. The venture capitalist said Li, who ran a popular car-buying online portal before getting into manufacturing, “has the rare combination of being a relentless talent as well as a top-notch product manager that excels in creating value for all stakeholders.”
Customers testing Li Auto’s SUV in China. Photo: Li Auto
Both investors believed Li Auto has picked the right path of zeroing in on extended-range electric vehicles. EREVs come with an auxiliary power unit, often a small combustion engine, that ensures cars can still operate even when a charging station is not immediately available, a shortage yet to be solved in China.
As my colleague Alex pointed out, Li Auto is on a trajectory similar to that of its peer Nio, going public after a short history of delivering to customers. The startup only began shipping its first model last December and delivered just over 10,000 units as of June, its prospectus showed.
The startup is still deep in the red, losing 2.44 billion yuan ($350 million) in 2019, up from a net loss of 1.53 billion yuan in 2018. It did finish the first quarter of 2020 with a gross profit of $9.6 million after it began monetization.
Its annual revenue — which comprised mostly of car sales and a small portion from services like charging stalls — stood at 284 million yuan ($40.4 million) in 2019, a tiny fraction of Nio’s $1.12 billion. But Nio also amassed a greater net loss of $1.62 billion in the same year. In contrast, Tesla has been profitable for four straight quarters.
Li Auto’s investors are clearly bullish that the Chinese startup can one day match Tesla’s commercial success.
“Xiang has a deep understanding of the preferences and pain points of car owners and drivers in China. Li Auto is the first in China, to successfully commercialize extended-range electric vehicles, solving the challenges of inadequate charging infrastructure and battery technologies constraints,” Huang asserted.
“The company is able to get positive gross margin when selling the first batch of vehicles and thus with its growth in sales volume, its gross margin was well above competitors and can live long enough to become a ten billion-dollar company with this healthy business model,” said Guo.
Tesla has been counting on China to maintain its sales momentum, and it seems to be on track with the plan.
In the three months ended June 30, the automaker’s revenue in China climbed 102.9% year-over-year to $1.4 billion, according to its latest SEC filing. That means China now makes up 23.3% of Tesla’s total revenues of $6 billion in the quarter, compared to just about 11% in the same period a year before.
To increase affordability for Chinese consumers, Tesla inked a 50-year lease from the Shanghai government to build a Gigafactory there, which keeps production costs down and allows it to reap local tax benefits and avoid tariffs. Under the terms of the agreement, the electric vehicle giant needs to pay 2.23 billion yuan ($320 million) in tax to China every year starting at the end of 2023. It must also sink 14.08 billion yuan in capital expenditure into the facility.
Tesla began shipping China-made Model 3 at the end of last year and is on course to add its Model Y, a mid-size electric SUV, to its production in the world’s biggest auto market, the filing shows. Earlier this month, it also started taking reservations in China for its futuristic Cybertruck, which won’t go into production until late 2022.
While shipment in China jumped in the second quarter, Tesla delivered 4.8% fewer vehicles overall in the period due to challenges prompted by COVID-19, including suspended production. The period marked the fourth straight quarter of profitability for the automaker.
The world’s hardware haven is taking a digital leap for pets. In May, China’s southern city Shenzhen announced that all dogs must be implanted with a chip, joining the rank of the U.K., Japan, Australia and a growing number of countries to make microchips mandatory for dogs.
This week, city regulators began to set up injection stations across their partnering pet clinics, according to social media posts from the Shenzhen Urban Management Bureau.
The chip, which is said to last for at least 15 years and comes in the size of a grain of rice, is implanted under the skin of a dog’s neck. Each chip, when scanned by authorized personnel, reveals a unique 15-digit number matching the dog’s name and breed, as well as its owner’s identity and contact information — which will help reduce strays. The microchip, a radio-frequency identification (RFID) chip, doesn’t track the dog’s location; nor does the authority store its owner’s personal information, according to a local media report.
While Shenzhen’s poster child of technology Huawei is striving to phase out foreign semiconductor parts amid U.S. trade sanctions, the city is procuring imported pet chips, including American and Sweden brands, said the same report.
The Shenzhen government is footing the bill for all the implants as it aims to seize more regulatory oversight over the city’s growing pet population. Those who don’t get their dogs microchipped by November will face a fine or have to turn their pets over to regulators. The city of over 20 million residents owned around 200,000 dogs and cats in 2019, according to official data. The total number of dogs and cats nationwide grew 8.4% year-over-year to nearly 1 billion in 2019, an industry white paper showed.
It’s been seven years since Tencent picked up a 36.5% stake in Sogou to fend off rival Baidu in the online search market. The social and gaming giant is now offering to buy out and take private its long-time ally.
NYSE-listed Sogou said this week it has received a preliminary non-binding proposal from Tencent to acquire its remaining shares for $9 each American depositary share (ADS) it doesn’t already own. That means Sohu, a leading web portal in the Chinese desktop era and the controlling shareholder in Sogou, will no longer hold an interest in the search firm.
Sohu’s board of directors has not yet had an opportunity to review the proposal or determine whether or not to take the offer, the company stated. Sogou’s shares leaped 48% on the news to $8.51 on Monday, yet still far below its all-time high at $13.85 at the time of its initial public offering.
Founded in 2005, Sogou went public in late 2017 billing itself as a challenger to China’s biggest search service Baidu, though it has long been a distant second. The company also operates the top Chinese input software, which is used by 482 million people every day to type and convert voice to text, according to its Q1 earnings report.
Ever since the strategic partnership with Tencent kicked off, Sogou, which means “Search Dog” in Chinese, has been the default search engine for WeChat and benefited immensely from the giant’s traffic. WeChat does have its own search feature, which some speculated might end up replacing Sogou.
The potential buyout will allay concerns amongst Sogou investors. So far WeChat Search appears to be gleaning data mainly within the app’s enclave, from users’ news feed, user-generated articles, e-commerce stores, through to lite apps integrated into WeChat.
That’s a whole lot of content and services targeted at WeChat’s 1.2 billion active users. Many people need not look beyond the chat app to consumer news, order food, play games, or purchase groceries. But there remains information outside the enormous ecosystem, and that’s Sogou’s turf — to bring what’s available on the open web (of course, subject to government censorship like all Chinese services) to WeChat users.
The arrangement reflects an endemic practice on the Chinese internet — giants blocking each other or making it hard for rivals to access their content. The goal is to lock in traffic and user insights. For instance, articles published on WeChat can’t be searched on Baidu. Consumers can’t open Alibaba shopping links without leaving WeChat.
Sogou is hardly WeChat’s sole search ally. To capture a full range of information needs, the messenger has also struck deals to co-opt fellow microblogging platform Weibo, Quora-like Zhihu, and social commerce service Xiaohongshu into its search pool.
India, which banned 59 apps developed by Chinese firms late last month on the grounds that they pose a threat to nation’s security, today banned an additional 47 apps.
The nation’s Ministry of Electronics and IT’s new ban is aimed at those apps that were facilitating access to previously banned apps such as TikTok and Cam Scanner. The new apps to be banned includes Cam Scanner Advance.
The move today comes as the Indian government contemplates restricting access to several more Chinese apps and services. Indian daily The Economic Times reported on Monday that New Delhi was planning ot ban an additional 275 apps including ByteDance’s Resso music streaming service and popular game PUBG.
More to follow…
If your phone takes amazing photos, chances are its camera has been augmented by artificial intelligence embedded in the operating system. Now videos are getting the same treatment.
In recent years, smartphone makers have been gradually transforming their cameras into devices that capture data for AI processing beyond what the lens and sensor pick up in a single shot. That effectively turns a smartphone into a professional camera on auto mode and lowers the bar of capturing compelling images and videos.
In an era of TikTok and vlogging, there’s a huge demand to easily produce professional-looking videos on the go. Like still images, videos shot on smartphones rely not just on the lens and sensor but also on enhancement algorithms. To some extent, those lines of codes are more critical than the hardware, argued Andreas Lifvendahl, founder and chief executive of Swedish company Imint, whose software now enhances video production in roughly 250 million devices — most of which come from Chinese manufacturers.
“[Smartphone makers] source different kinds of camera solutions — motion sensors, gyroscopes, and so on. But the real differentiator, I would say, is more on the software side,” Lifvendahl told TechCrunch over the phone.
Imint started life in 2007 as a spin-off academic research team from Uppsala University in Sweden. It spent the first few years building software for aerial surveillance, just as many cutting-edge innovations that find their first clients in the defense market. In 2013, Lifvendahl saw the coming of widespread smartphone adaptation and a huge opportunity to bring the same technology used in defense drones into the handsets in people’s pockets.
“Smartphone companies were investing a lot in camera technology and that was a clever move,” he recalled. “It was very hard to find features with a direct relationship to consumers in daily use, and the camera was one of those because people wanted to document their life.”
“But they were missing the point by focusing on megapixels and still images. Consumers wanted to express themselves in a nice fashion of using videos,” the founder added.
Source: Imint’s video enhancement software, Vidhance
The next February, the Swedish founder attended Mobile World Congress in Barcelona to gauge vendor interest. Many exhibitors were, unsurprisingly, Chinese phone makers scouring the conference for partners. They were immediately intrigued by Imint’s solution, and Lifvendahl returned home to set about tweaking his software for smartphones.
“I’ve never met this sort of open attitude to have a look so quickly, a clear signal that something is happening here with smartphones and cameras, and especially videos,” Lifvendahl said.
Vidhance, Imint’s enhancement software suite mainly for Android, was soon released. These days, it can enhance precision, reduce motion, track moving objects, auto-correct horizon, reduce noise, and strengthen other aspects of a video in real-time — all through deep learning.
In search of growth capital, the founder took the startup public on the Stockholm Stock Exchange at the end of 2015. The next year, Imint landed its first major account with Huawei, the Chinese telecoms equipment giant that was playing aggressive catch-up on smartphones at the time.
“It was a turning point for us because once we could work with Huawei, all the other guys thought, ‘Okay, these guys know what they are doing,'” the founder recalled. “And from there, we just grew and grew.”
The hyper-competitive nature of Chinese phone makers means they are easily sold on new technology that can help them stand out. The flipside is the intensity that comes with competition. The Chinese tech industry is both well-respected — and notorious — for its fast pace. Slow movers can be crushed in a matter of a few months.
“In some aspects, it’s very U.S.-like. It’s very straight to the point and very opportunistic,” Lifvendahl reflected on his experience with Chinese clients. “You can get an offer even in the first or second meeting, like, ‘Okay, this is interesting, if you can show that this works in our next product launch, which is due in three months. Would you set up a contract now?'”
“That’s a good side,” he continued. “The drawback for a Swedish company is the demand they have on suppliers. They want us to go on-site and offer support, and that’s hard for a small Swedish company. So we need to be really efficient, making good tools and have good support systems.”
The fast pace also permeates into the phone makers’ development cycle, which is not always good for innovation, suggested Lifvendahl. They are reacting to market trends, not thinking ahead of the curve — what Apple excels in — or conducting adequate market research.
Despite all the scrambling inside, Lifvendahl said he was surprised that Chinese manufacturers could “get such high-quality phones out.”
“They can launch one flagship, maybe take a weekend break, and then next Monday they are rushing for the next project, which is going to be released in three months. So there’s really no time to plan or prepare. You just dive into a project, so there would be a lot of loose ends that need to be tied up in four or five weeks. You are trying to tie hundreds of different pieces together with fifty different suppliers.”
Imint is one of those companies that thrive by finding a tough-to-crack niche. Competition certainly exists, often coming from large Japanese and Chinese companies. But there’s always a market for a smaller player who focuses on one thing and does it very well. The founder compares his company to a “little niche boutique in the corner, the hi-fi store with expensive speakers.” His competitors, on the other hand, are the Walmarts with thick catalogs of imaging software.
About three-quarters of Imint’s revenues come from licensing its proprietary software that does these tricks. Some clients pay royalties on the number of devices shipped that use Vidhance, while others opt for a flat annual fee. The rest of the income comes from licensing its development tools or SDK, and maintenance fees.
Imint now supplies its software to 20 clients around the world, including the Chinese big-four of Huawei, Xiaomi, Oppo and Vivo as well as chip giants like Qualcomm and Mediatek. ByteDance also has a deal to bake Imint’s software into Smartisan, which sold its core technology to the TikTok parent last year. Imint is beginning to look beyond handsets into other devices that can benefit from high-quality footage, from action cameras, consumer drones, through to body cameras for law enforcement.
So far, the Swedish company has been immune from the U.S.-China trade tensions, but Lifvendahl worried as the two superpowers move towards technological self-reliance, outsiders like itself will have a harder time entering the two respective markets.
“We are in a small, neutral country but also are a small company, so we’re not a strategic threat to anyone. We come in and help solve a puzzle,” assured the founder.
One little-known home and retail automation startup might seem like an unlikely candidate to help combat the ongoing pandemic. But its founder says its technology can do just that, even if it wasn’t the company’s original plan.
Butlr, a spin-out of the MIT Media Lab, uses a mix of wireless, battery-powered hardware and artificial intelligence to track people’s movements indoors without violating their privacy. The startup uses ceiling-mounted sensors to detect individuals’ body heat to track where a person walks and where they might go next. The use-cases are near-endless. The sensors can turn on mood-lighting or air conditioning when it detects movement, help businesses understand how shoppers navigate their stores, determine the wait-time in the queues at the checkout, and even sound the alarm if it detects a person after-hours.
By using passive infrared sensors to detect only body heat, the sensors don’t know who you are — only where you are and where you’re heading. The tracking stops as soon as you leave the sensor’s range, like when you leave a store.
The technology is in high demand. Butlr says some 200,000 retail stores use its technology, not least because it’s far cheaper than the more privacy-invading — and expensive — alternatives, like surveillance cameras and facial recognition.
But when the pandemic hit, most of those stores closed — as effectively did entire cities and nations — to counter the ongoing threat from of COVID-19. But those stores would have to open again, and so Butlr got back to work.
Butlr’s privacy-friendly body heat sensors don’t know who you are — only where you are. Now the company is retooling its technology to help combat coronavirus. (Image: Butlr)
Butlr’s co-founder Honghao Deng told TechCrunch that it began retooling its technology to help support stores opening again.
The company quickly rolled out new software features — like maximum occupancy and queue management — to help stores with sensors already installed cope with the new but ever-changing laws and guidance that businesses had to comply with.
Deng said that the sensors can make sure no more than the allowed number of people can be in a store at once, and make sure that staff are protected from customers by helping to enforce social distancing rules. Customers can also see live queue data to help them pick a less-crowded time to shop, said Deng.
All these things before a pandemic might have sounded, frankly, a little dull. Fast forward to the middle of a pandemic and you’re probably thankful for all the help — and the technology — you can get.
Butlr tested its new features in China at the height of the pandemic’s rise in February, and later rolled out to its global customers, including in the United States. Deng said Butlr’s technology is already helping customers at furniture store Steelcase, supermarket chain 99 Ranch Market, and the Louvre Museum in Abu Dhabi to help them reopen while minimizing the risk to others.
It’s a pivot that’s paid off. Last month Butlr raised $1.2 million in seed funding, just as the pandemic was reaching its peak in the United States.
Nobody knew a pandemic was coming, not least Deng. And as the pandemic spread, businesses have suffered. If it wasn’t for quick thinking, Butlr might’ve been another startup that succumbed to the pandemic.
Instead, the startup is probably going to help save lives — and without compromising anyone’s privacy.
The U.S. Space Command has released details about an alleged anti-satellite weapons test it suspects Russian of conducting using an existing probe already on orbit, The Verge reports. The Russian satellite in question is the same one that made headlines back at the beginning of 2020 when it seemed to be tailing an existing orbital U.S. spy satellite. That same spacecraft appears to have deployed some kind of projectile according to Space Command, which monitors objects currently in orbit around Earth.
General John Raymond of U.S. Space Command told the Verge that this represents “further evidence of Russia’s continuing efforts to develop and test space-based systems,” and pursing a strategy that could put U.S. and allied in-space assets at risk.
The militarization of space isn’t new, and parties on all sides have been pursuing development of both offensive and defensive in-space weapons technologies. One of the biggest potential risks lies in weapons that, like this one in theory, could be deployed from satellites to destroy others — potentially disabling key ground communications, intelligence or observation space-based infrastructure that is used to support command and control operations on terrestrial battlegrounds and in the defense or observation of key military assets.
Russia isn’t the only global power unnerving the U.S. when it comes to the militarization of space: An April test by India saw that nation demonstrate a ground-to-orbit anti-satellite missile system, which NASA’s Administrator denied as being “not compatible with human spaceflight.” India is hardly the first country to demonstrate this kind of capability, however, as the U.S., China and Russian have all performed similar tests.
The growing risk of orbit-to-orbit offensive weapons has had a dramatic effect on how militaries, including that of the U.S., have changed priorities for in-space assets. For instance, the Department of Defense and other U.S. defense and intelligence agencies appear to be shifting focus away from the large, geosynchronous satellites that were massively costly and relatively unique upon which they used to rely, and toward smaller, more nimble satellites that might operate in low Earth orbit and consist of constellations with built-in redundancy. They’ve also been actively funding the development of commercial small-scale launcher startups, which can offer more responsive orbital launch services even than SpaceX and other existing providers.
While there are obviously many vocal detractors regarding the militarization of space, the fact remains that it’s an area where a number of global superpowers have spent billions, since the potential tactical advantage it provides is immense. Based on the increasing frequency and more public nature of tests like this one, it’s a segment where the U.S. in particular will be only too happy to look for support from the private sector, including technology startups, that can provide creative and advanced solutions.
TikTok today announced a $200 million fund, aimed at helping top creators in the U.S. supplement their earnings, and potentially coax the next Charli D’Amelio out of the woodwork.
Called the TikTok Creator Fund, the money is aimed at helping “eligible” creators on the platform earn a livelihood, it said. Eligible for now is defined as 18 years or older, meeting a certain (unspecified) baseline for followers, and consistently posting original content that is in line with TikTok’s community guidelines. The platform will begin accepting applications from U.S.-based creators starting next month and distribute the capital over the coming year.
The promise of payouts is coming at a key moment for the app and its Chinese parent ByteDance . TikTok has been facing mounting criticism in the US, its biggest market by revenues, over how it handles user data and its ties to China, with calls from the Trump administration to ban the popular app outright.
And in response to that, TikTok has been making moves to present a more friendly face to the US. It has pledged to add 10,000 more staff in the US, and this week rumors began to circulate that investors in the US are considering buying a majority stake in the TikTok business back from ByteDance to establish control of the company out of China’s hands.
(It’s not clear if the latter is testing the waters of sentiment, or just an outright rumour, but as an aside to that, these days, ByteDance and TikTok try to go to great lengths to show they are not connected, if you go by how they handle their PR: Chinese spokespeople will not answer TikTok questions and refer journalists to the US team.)
Vanessa Pappas, GM of TikTok’s U.S. business, said in a blog post that ByteDance is starting the Creator Fund at $200 million and plans to increase it over time. She did not disclose how TikTok would decide what sum would be paid to an individual creator, and whether there would be any additional conditions to getting a payout. (We have asked about this and how many followers creators might need to have to be eligible, and will update as we learn more.)
TikTok already helps its creators sign brand partnerships and sponsorship deals, and it provides monetization for live-streams. The platform also has a $50 million Creative Learning Fund to introduce teachers to the platform, which has been used by some 1,000 teachers in the U.S. already. And a Creator Marketplace connects brands to creators to collaborate on paid campaigns.
“Through the TikTok Creator Fund, our creators will be able to realize additional earnings that reflect the time, care, and dedication they put into creatively connecting with an audience that’s inspired by their ideas,” she said.
TikTok currently employs about 1,400 people in the U.S. and recently crossed the milestone of 2 billion installs globally. Last year, it said it had 26 million users in the U.S.
Several lawmakers including Senators Chuck Schumer and Tom Cotton have expressed concerns in recent months that TikTok’s user data could end up with the Chinese government. China-headquartered ByteDance insists that it does not share any user’s data with the Chinese government, and that it stores its U.S.-based user data in the U.S. and Singapore. Earlier this week House lawmakers voted 336-71 to bar federal employees from using TikTok on government-issued devices.
For now, it seems that the programs that TikTok is launching are squarely aimed at fighting that fire in the US. It did not respond to a request for comment asking what it was doing to help creators in other markets supplement their earnings.
India, where TikTok has more than 200 million users and over 1 million creators, banned TikTok and 58 other apps developed by Chinese firms late last month over cybersecurity concerns. Its neighboring nation Pakistan issued a “final warning” to TikTok earlier this week over what it deemed “immoral, obscene, and vulgar content.”
China successfully launched a combination Mars orbiter and rover early this morning, using a Long March 5 rocket that took off from Wenchang Satellite Launch Center on Hainan Island at 12:41 AM EDT. The Tianwen-1 payload it carries represents China’s first full-scale Mars exploration mission, after a prior partial attempt with a orbital Mars satellite called Yinghuo-1 failed to leave Earth’s orbit in 2011.
This is a major effort not just for China, but also for extra-terrestrial planetary exploration in general, because it includes the combination effort of both the lander and rover in one combined mission, with the plan to deploy the rover on land and have it communicate with the orbiter as it makes its way around Mars all in one trip.
Tianwen-1 is the second Mars mission to take off this month, following a successful launch earlier this week by the UAE from Japan atop a Japanese MHI rocket. That mission, ‘Hope,’ carried an orbiter designed to take atmospheric readings of the Red Planet’s atmosphere.
China’s mission includes a planned 90-day excursion for the solar-powered rover it carries, which will employ various instruments on board to take samples and readings including multispectral photography, surface composition, weather readings and magnetic field information. The orbiter will also use its own cameras and instruments to gather info, including spectrometer readings, radar and photography, and will also act as a relay station to get data from the rover back to Earth.
There’s still one more mission to Mars yet to go before this year’s close approach (the time when Earth and Mars are closest to each other in their relative solar orbits) ends: NASA’s Perserverance Mars rover launch. That’s set to take off on July 30, weather and conditions permitting. Perseverance is the successor to NASA’s Curiosity rover, and includes a number of new scientific instruments to seek evidence of ancient life, and attempt to gather samples to actually return to Earth. It’ll also carry a small autonomous helicopter, which will hopefully become the first powered aircraft to take off from the surface of Mars when it reaches the red planet.
Tianwen-1 is expected to reach Mars next February, after a multi-month passage, which is the shortest trip possible between the two planets based on their relative orbits.
The COVID-19 lockdown around the world introduced online grocery to many shoppers for the first time, boosting an industry that had long drawn skepticism. In China particularly, the older generations often worry about buying perishable food without scrutinizing them in person.
Still, venture investors are bullish on the future of online grocery. One beneficiary is China’s Missfresh, which announced (in Chinese) Thursday a new funding round of $495 million led by a fund under state-backed China International Capital Corporation. Other backers were Tencent, Abu Dhabi Capital Group and Tiger Global.
By placing mini-warehouses closer to customers, the six-year-old startup is able to offer 30-minute delivery service to households in 16 cities.
Few players are able to compete in e-grocery, for the business requires early investment in large-scale cold chains and expensive user acquisition to make home deliveries profitable. Unsurprisingly, almost all forerunners in China’s online grocery are backed by or collaborate with an internet giant.
Missfresh is deeply integrated into Tencent’s WeChat messenger. Alibaba has its own in-house Freshhippo supermarket chain that comes with a delivery service. Restaurant delivery platform Meituan added grocery to its offering last year. Dingdong Maicai is a rare case without the backing of a major tech firm, seeking funds from venture capital institutions like Qiming Venture Partners and Gaorong Capital.
Some question how many new adaptors will stick to on-demand grocery shopping in post-lockdown life. Research suggests they may. China saw 11.6 million more daily active users of e-grocery in May compared to the same period a year before, according to research firm QuestMobile. Consumers may be hooked to the convenience, but those who see their corner stores shutter due to lost business during the lockdown don’t have a choice but to go digital.
Even the world’s second largest smartphone market isn’t immune to Covid-19.
Smartphone shipments in India fell 48% in the second quarter compared with the same period a year ago, the most drastic drop one of the rare growing markets has seen in a decade, research firm Canalys reported Friday evening.
About 17.3 million smartphone units shipped in Q2 2020, down from 33 million in Q2 2019, and 33.5 million in Q1 2020, the research firm said.
You can blame coronavirus for it.
New Delhi ordered a nationwide lockdown in late March to contain the spread of the virus that saw all shops across the country — save for some of those that sell grocery items and pharmacies — temporarily cease operation. Even e-commerce giants such as Amazon and Flipkart were prohibited from selling smartphones and other items classified as “non-essential” by the government.
The protracted lockdown lasted until mid-May after which the Indian government deemed that other stores and e-commerce deliveries could resume their services in much of country. New Delhi’s stringent measure explains why India’s smartphone market dipped so heavily.
China, the world’s largest smartphone market, in comparison saw only an 18% drop in shipments in the quarter that ended in March — the period when the country was most impacted by the virus. In Q1, when India was largely not impacted by the virus, smartphone shipments grew by 4% in the country. (Globally, smartphone shipments shrank by 13% in Q1 — a figure that is projected to only slightly improve to a 12% decline this year.)
“It’s been a rocky road to recovery for the smartphone market in India,” said Madhumita Chaudhary, an analyst at Canalys. “While vendors witnessed a crest in sales as soon as markets opened, production facilities struggled with staffing shortages on top of new regulations around manufacturing, resulting in lower production output.”
Smartphone shipment estimates for the Indian market through Q1 2019 to Q1 2020 (Canalys)
Despite the lockdown, Xiaomi maintained its dominance in India. The Chinese smartphone vendor, which has been the top smartphone vendor in India since late 2018, shipped 5.3 million smartphone units in the quarter that ended in June this year and commanded 30.9% of the local market, Canalys estimated.
With 3.7 million units shipment and 21.3% market share in India, Vivo retained the second spot. Samsung, which once ruled the Indian smartphone market and has made major investments in the country in recent months, settled for the third spot with 16.8% share.
Nearly every smartphone vendor has launched new handsets in India in recent weeks as they look to recover from the downtime and several more new smartphone launches are planned in the next one month.
But for some of these players the virus is not the only obstacle.
Anti-China sentiment has been gaining mindshare in India in recent months ever since more than 20 Indian soldiers were killed in a military clash in the Himalayas in June. “Boycott China” — and variations of it — has been trending on Twitter in India as a number of people posted videos destroying Chinese-made smartphones, TVs and other products. Late last month, India also banned 59 apps and services developed by Chinese firms.
Xiaomi, Vivo, Oppo, which now assumes the fourth spot in India, and other Chinese smartphone vendors command nearly 80% of the smartphone market in India.
Canalys’ Chaudhary, however, believes that these smartphone firms will be able to largely avoid the backlash as “alternatives by Samsung, Nokia, or even Apple are hardly price-competitive.”
Apple, which commands only 1% of the Indian smartphone market, was the least impacted among the top 10 vendors as iPhone shipments fell just 20% year-on-year to over 250,000 in Q2 2020, Canalys said.