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China vs. the world

Image: cppkyle / Arthur Shlain / Protocol
China vs US

Good morning! This Wednesday, how to think about TikTok, the U.K. ditches Huawei, and Lego and Nintendo team up for a dose of nostalgia.

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People Are Talking

On Protocol: Contrary Capital founder Eric Tarczynski wants to pay students to take a gap year during COVID and build a company:

  • "We do believe pretty deeply in universities, but primarily when they are in person."

Google, Microsoft and others are working on a better method of cloud encryption. Vint Cerf loves it:

  • "Confidential Computing is one of those game changers that has the potential to transform the way organizations process data in the cloud, while significantly improving confidentiality and privacy."

On Protocol: If you're not thinking about moderation and harassment from day one, you're too late, said Tatiana Estévez:

  • "It is not something that you can push down the line because in a way it happens anyway: Culture will develop whether you want it to or not; tone will develop whether you want it to or not."

The Big Story

TikTok is a mystery, and that's the problem

Lee Hunter, the general manager of TikTok Australia, sent a letter to members of the country's Parliament yesterday. "Contrary to some claims," Hunter wrote, "it is critical you understand that we are independent, and not aligned with any Government, political party or ideology." He asked Australia to not treat TikTok as a "political football," and just let the company do its fun-video thing.

Some people have pointed out parallels between the current situation with TikTok and what happened several years ago with Facebook, when it became clear how much data the company had on its users but it still wasn't clear what it was all being used for beyond "making ads more better." Now we know that there's always more to do with data than simply target ads, that even harmless data can be used to do harm, and that there's often no way to know what's happening until it's too late.

But the TikTok situation is even more complicated than the Facebook one, because the stakes are so much higher. It's not just whether the data gets collected, it's how it gets used, and by whom. One thing that is clearly true: China is willing and able to use data to suppress dissent, distribute propaganda and harm people.

  • The Chinese government has used web-browsing data, among other things, to send huge numbers of Muslims to internment camps.
  • China's "Great Cannon" has been used to distribute malware to specific users and sites — the more it knows about users, the more it can target them.
  • Hongkongers have expressed worries about Beijing being able to find and punish those who planned and participated in protests.
  • As Ben Thompson points out, the Chinese government may see TikTok as less a data-collector and more an algorithmic tool to shape political thinking. The app has a long history of censoring and quietly promoting content the Chinese government has feelings about. Thompson calls it "an ideological war," and he's right.

TikTok has made itself blue in the face yelling that it doesn't and wouldn't share data with China, and there's no hard evidence that it has. But its privacy policy gives it the right to share data, without user permission, with just about anybody. And Chinese law says the government can get that data anyway, sometimes without even telling the business involved. There is just no way to know for sure what's really going on.

  • TikTok even takes steps to obfuscate how the app works, which the company told The Washington Post is meant to thwart hackers, but obviously could have other purposes. Even by watching the app's network requests, you can't get the whole picture.

So should you be worried about TikTok? Eva Galperin, the EFF's director of cybersecurity, said it's all about your threat model. But if "you are an executive at a Fortune 500 company," she said, then the answer could be yes.

  • Is some of the U.S. response to China's apps, companies, and policies pure chest-beating America-first politics? Absolutely. But is it smart to be overly cautious, even if there's only a small chance that the worst could happen — or already be happening? Maybe.

Would this all be solved by Apple buying TikTok from ByteDance in some valiant white-knight privacy move? Also maybe. But ultimately, this isn't even just about China, Galperin told me. "The question is, how much do you trust TikTok, versus how much do you trust Facebook, versus how much do you trust Google?" American companies have no obligation to tell the truth in transparency reports, or to keep data away from the Chinese government. Unless we throw our phones in the ocean and move to the woods, we all eventually have to trust somebody.

What do you think? Is this TikTok mess xenophobia, rational concern, or something in between? I'd love to hear your thoughts: david@protocol.com.

More China

The US got Britain to ban Huawei

Protocol's Shakeel Hashim writes: The U.K. finally announced yesterday that Huawei equipment will be banned from the country's 5G network — a big shift from its earlier policy. Back in January, the U.K. put limits on Huawei products, but stopped short of a ban. That decision "disappointed" the Trump administration, which claims the company is a security threat.

Some have speculated that American annoyance was part of the reason for the U.K. changing its mind — especially given that a post-Brexit Britain desperately needs a U.S. trade deal. But U.K. Trade Commissioner for North America Antony Philipson, who is responsible for negotiating the deal, recently told me that he'd played no part in discussions about banning Huawei.

Still, the U.K. admitted that the U.S. was responsible for the change — just in a slightly roundabout way. In May, the Trump administration started requiring all chipmakers using U.S. equipment or software to obtain a license before they could supply Huawei-designed chips, effectively cutting the company off from basically all its suppliers.

  • According to Ian Levy, technical director of Britain's National Cyber Security Centre, the U.S. rule has made Huawei's products riskier. In a blog post, Levy explains that Huawei faces a "massive engineering challenge," which will likely result in it using new chip-making processes or non-Huawei-designed chips in its products. That is "highly likely to introduce security and reliability problems," Levy writes, and will make it much harder for the NCSC to evaluate those products' security.
  • The NCSC's decision shows just how much influence the U.S. has over global tech. Even if it can't ban other countries from using a company, it can hurt a company so badly that other countries have no choice but to ditch it.

But this isn't just about security. The NCSC told the government that Huawei 5G equipment already present in U.K. networks could continue to be used safely, but the government demanded network operators remove it. It's hard to see the security justification for that — giving this otherwise security-focused decision a bit of a trade war tinge.

A MESSAGE FROM PHILIPS

Philips

In the face of COVID-19, many healthcare providers turned to remote patient monitoring and virtual visits to continue caring for vulnerable patients while minimizing risk of virus transmissions and reducing the strain on scarce hospital resources. At Philips, we're pioneering stronger care networks with technologies we've spent decade innovating - and we believe our homes are destined to play a central role in the healthcare system of the future.

Read more.

Even More China

First Huawei, then TikTok. Who's next?

"There is absolutely no way the United States is going to ban TikTok, because of the first amendment," Galperin also told me. "Code is speech. TikTok is code." The government's only real move would be to pressure Google and Apple to yank it from their app stores, but that doesn't seem likely either.

More likely, the administration will just decide to focus on other things, and TikTok will keep on TikToking. But what if, instead, the government decided to broaden its scope?

  • Huawei and TikTok are two huge players, but according to SensorTower, 24 of the top 500 apps in the U.S. come from companies based in either China or Hong Kong. The Shein shopping app is the #45 app in America, TikTok knockoff Zynn is #78, and Likee, another video app, is #97.
  • Shopping, social, and photo/video apps dominate the list, though there are also a couple of surprises. Like two Bible apps?
  • In all, these 24 apps were downloaded 113 million times in the first six months of this year, SensorTower's Randy Nelson found.

Point is, there are plenty of fights left to pick with plenty of other companies that are potential security threats. If the U.S. decides that it really wants to get China off of American smartphones, it's going to take a lot more than simply shutting out TikTok.

Making Moves

Sanjiv Sanghavi is the new CPO at Arcadia, a renewable energy company. He's coming from ClassPass, which he co-founded, and told TechCrunch he'll be helping his new employer expand and grow.

Cindy Otis is the new VP of analysis at Alethea Group. She's a former CIA analyst, and was previously at cybersecurity company Nisos Group.

John Gibbons is the new CEO of Pocket Casts, the public-media-owned podcast app. He's previously worked at Atom Tickets and Amazon, and advised other podcast companies as well.

In Other News

  • That rumored Google-Jio deal has been confirmed: Mukesh Ambani announced that Google's bought a 7.7% stake in Jio Platforms for around $4.5 billion. As we charted yesterday, that brings Jio's total fundraising to $20 billion.
  • Apple won its tax fight with the EU over its $14.9 billion bill. The EU's top court said Apple's tax arrangements with Ireland weren't illegal, overruling the European Commission.
  • Mark Zuckerberg's family office investigated alleged racist conduct by Liam Booth, Zuck's former head of personal security, last year, and said there was no evidence to support the claims. But sworn testimonies from colleagues say that he used the "n-word" and called a Black worker a "ghetto hoodrat."
  • From Protocol: Trump's visa restrictions, paired with the rise in remote work, could lead to a huge boom in tech offshoring. In fact, Issie Lapowsky found that's already started.
  • Texas really wants a Tesla factory: It approved a 70% property tax rebate for the first $1.1 billion that the company invests in the state.
  • Amazon made a shopping cart. It's got a touchscreen and a bunch of cameras, so it can track what you're buying — seemingly a cheaper alternative to Amazon's Just Walk Out tech. They'll first be used at Amazon's forthcoming LA grocery store.
  • Airbnb asked guests if they'd like to donate to hosts. People were not impressed.
  • Would you like to see an Evan Spiegel and Miranda Kerr fashion shoot? Probably not, but I bet you're going to click this link out of curiosity anyway.
  • Sony has increased PlayStation 5 production by 50%, according to the Nikkei Asian Review. That seems like a depressing bet on a stay-at-home winter — but at least we'll have Spider-Man to entertain us.

One More Thing

Lego + Nintendo = nostalgia explosion

Is it just me, or is the new Lego Nintendo Entertainment System like one small step away from just actually being a Nintendo? Once you've built the thing, you can plug in a Lego controller, pop in a Lego cartridge, and play a Lego Mario game that's only slightly lower-def than the original game. I admit, I've been a sucker for Nintendo's whole mini-retro-console thing over the last few years, but this one's my favorite yet — and an amazing collector's item. I guarantee it's going to be in every startup office's lobby, whenever those open up again.

A MESSAGE FROM PHILIPS

Philips

In the face of COVID-19, many healthcare providers turned to remote patient monitoring and virtual visits to continue caring for vulnerable patients while minimizing risk of virus transmissions and reducing the strain on scarce hospital resources. At Philips, we're pioneering stronger care networks with technologies we've spent decade innovating - and we believe our homes are destined to play a central role in the healthcare system of the future.

Read more.

Today's Source Code was written by David Pierce, with help from Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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