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Politics

TikTok chief says Trump’s threats are crushing the app — before a ban even begins

In a new legal filing, Vanessa Pappas, TikTok's interim head, lays out exactly how the threat of a ban is hurting the company's advertising, its workforce and its bottom line.

TikTok chief says Trump’s threats are crushing the app — before a ban even begins

TikTok is already feeling the pain from the Trump administration's ongoing threats.

Image: Nikolas Kokovlis/NurPhoto via Getty Images

TikTok may not be banned from the United States yet, but it says the Trump administration's continued threats have already had a devastating impact on the company's ability to land advertisers, hire new talent and hold on to content creators.

In a new court filing, TikTok's interim head, Vanessa Pappas, shared concrete data about the losses TikTok has experienced over the last few months, hoping to persuade the court to issue an injunction against the Commerce Department's forthcoming ban, which is set to take effect on Sept. 27.

According to Pappas, when Secretary of State Mike Pompeo first announced that President Trump was considering banning TikTok in the United States, the app's user base fell by 500,000 daily active users. In the month of August, after President Trump issued his executive order barring transactions with TikTok's parent company, ByteDance, TikTok lost $10 million in revenue, as a dozen brands canceled or delayed their advertising plans. That includes "some of the largest consumer goods companies in the United States," Pappas wrote.

The threats have also interrupted TikTok's hiring spree, according to Pappas. "Since July 1, 2020, 52 candidates have declined offers of employment with ByteDance and TikTok Inc. specifically due to the perceived uncertainty caused by the government's investigation of and threats against TikTok," Pappas wrote, not mentioning that TikTok's former CEO, Kevin Mayer, quit among the chaos and confusion after only a few months on the job.

TikTok has also watched its most popular creators get poached by other platforms. Pappas pointed specifically to TikTok's biggest star, Charli D'Amelio, who recently signed with Triller, a competing app. "Because of the halo effect associated with major personalities on the TikTok app, the departure of even one top creator can lead thousands of members of their fan base to the next platform as well," Pappas wrote.

According to Pappas, until July 1, TikTok was adding around 424,000 new daily U.S. users every day. Even a temporary ban could demolish that growth, according to TikTok's models, which estimate that 40% to 50% of TikTok's daily active users wouldn't return to the app even if the ban lasts only two months. "If the ban is in place for six months, 80 to 90% of daily active users will not return," Pappas wrote. Those estimates are based on what TikTok saw in India when the app was banned for two weeks in 2019.

And because U.S. content creators are so popular in other countries, Pappas argues that "banning TikTok in the United States will result in a massive decrease in content available globally, which will decrease business and impact both our new users and core user base worldwide."

For TikTok, the purpose of releasing these painful stats is to convince the court that it's suffering real harm as a result of the Trump administration's actions. Earlier this week, a district court blocked the Commerce Department's ban of WeChat. Now, TikTok is seeking the same.

Last weekend, the Commerce Department delayed its ban on new TikTok downloads from U.S. app stores, citing "recent positive developments" — namely, the fact that President Trump signaled his approval of a deal that would have given Oracle and Walmart minority stakes in the company and would have given Oracle control of U.S. user data.

But the president and the companies involved have since cast doubt on that deal. On Monday, during an interview with "Fox & Friends," the president claimed that Oracle and Walmart would control the new company, TikTok Global. "And if we find that they don't have total control, then we're not going to approve the deal," he said. Meanwhile, TikTok and Oracle have given their own mixed signals, contradicting each other's statements on the future company's ownership structure.

TikTok has until mid-November to work out the specifics of the deal before the Commerce Department cuts the company off from crucial services like internet hosting in the U.S. But Pappas' court filing makes clear that even if a deal is reached, whoever ends up owning TikTok in the end will be inheriting a once ascendant company that's already lost a lot.

TikTok vs Trump filing.pdf

The metaverse is coming, and Robinhood's IPO is here

Plus, what we learned from Big Tech's big quarter.

Image: Roblox

On this episode of the Source Code podcast: First, a few takeaways from another blockbuster quarter in the tech industry. Then, Janko Roettgers joins the show to discuss Big Tech's obsession with the metaverse and the platform war that seems inevitable. Finally, Ben Pimentel talks about Robinhood's IPO, and the company's crazy route to the public markets.

For more on the topics in this episode:

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

After a year and a half of living and working through a pandemic, it's no surprise that employees are sending out stress signals at record rates. According to a 2021 study by Indeed, 52% of employees today say they feel burnt out. Over half of employees report working longer hours, and a quarter say they're unable to unplug from work.

The continued swell of reported burnout is a concerning trend for employers everywhere. Not only does it harm mental health and well-being, but it can also impact absenteeism, employee retention and — between the drain on morale and high turnover — your company culture.

Crisis management is one thing, but how do you permanently lower the temperature so your teams can recover sustainably? Companies around the world are now taking larger steps to curb burnout, with industry leaders like LinkedIn, Hootsuite and Bumble shutting down their offices for a full week to allow all employees extra time off. The CEO of Okta, worried about burnout, asked all employees to email him their vacation plans in 2021.

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Stella Garber
Stella Garber is Trello's Head of Marketing. Stella has led Marketing at Trello for the last seven years from early stage startup all the way through its acquisition by Atlassian in 2017 and beyond. Stella was an early champion of remote work, having led remote teams for the last decade plus.

Facebook wants to be like Snapchat

Facebook is looking to make posts disappear, Google wants to make traffic reports more accurate, and more patents from Big Tech.

Facebook has ephemeral posts on its mind.

Image: Protocol

Welcome to another week of Big Tech patents. Google wants to make traffic reports more accurate, Amazon wants to make voice assistants more intelligent, Microsoft wants to make scheduling meetings more convenient, and a ton more.

As always, remember that the big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future

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Karyne Levy

Karyne Levy ( @karynelevy) is the West Coast editor at Protocol. Before joining Protocol, Karyne was a senior producer at Scribd, helping to create the original content program. Prior to that she was an assigning editor at NerdWallet, a senior tech editor at Business Insider, and the assistant managing editor at CNET, where she also hosted Rumor Has It for CNET TV. She lives outside San Francisco with her wife, son and lots of pets.

Protocol | China

China’s edtech crackdown isn’t what you think. Here’s why.

It's part of an attempt to fix education inequality and address a looming demographic crisis.

In the past decade, China's private tutoring market has expanded rapidly as it's been digitized and bolstered by capital.

Photo: Getty Images

Beijing's strike against the private tutoring and ed tech industry has rattled the market and led observers to try to answer one big question: What is Beijing trying to achieve?

Sweeping policy guidelines issued by the Central Committee of the Chinese Communist Party on July 24 and the State Council now mandate that existing private tutoring companies register as nonprofit organizations. Extracurricular tutoring companies will be banned from going public. Online tutoring agencies will be subject to regulatory approval.

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Shen Lu

Shen Lu is a reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

It’s soul-destroying and it uses DRM, therefore Peloton is tech

"I mean, the pedals go around if you turn off all the tech, but Peloton isn't selling a pedaling product."

Is this tech? Or is it just a bike with a screen?

Image: Peloton and Protocol

One of the breakout hits from the pandemic, besides Taylor Swift's "Folklore," has been Peloton. With upwards of 5.4 million members as of March and nearly $1.3 billion in revenue that quarter, a lot of people are turning in their gym memberships for a bike or a treadmill and a slick-looking app.

But here at Protocol, it's that slick-looking app, plus all the tech that goes into it, that matters. And that's where things got really heated during our chat this week. Is Peloton tech? Or is it just a bike with a giant tablet on it? Can all bikes be tech with a little elbow grease?

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Karyne Levy

Karyne Levy ( @karynelevy) is the West Coast editor at Protocol. Before joining Protocol, Karyne was a senior producer at Scribd, helping to create the original content program. Prior to that she was an assigning editor at NerdWallet, a senior tech editor at Business Insider, and the assistant managing editor at CNET, where she also hosted Rumor Has It for CNET TV. She lives outside San Francisco with her wife, son and lots of pets.

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