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TikTok and WeChat: What They Tell Us About the Global Internet

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On Sunday, millions of phones across the United States buzzed with a peculiar notification: “TikTok is here to stay!”

The alert led to a video post by TikTok’s interim global head, Vanessa Pappas. Without directly mentioning the Trump administration’s proposed ban, which was expected to go into effect that day, she thanked users for their support. Without naming Oracle or Walmart, she said the company was “thrilled to share” that it was working with “a U.S. tech partner” to continue operating with “no change to our users here in the U.S.”

The video’s careful omissions called to mind a hostage film; still, many of the more than 200,000 comments on the post were grateful for any proof of life. “IM NOT JOBLESS,” wrote one user, itsnotjakefuller, who has more than 1 million followers on the platform. “Bruh, I? quit my job two weeks ago. This is good news,” wrote dadlifejason, who just passed 3 million. The response from the user fatraco0n was among the most popular: “You make me feel safe Vanessa.”

For people who spend a lot of time on TikTok, the last few months have been surreal: a president with no presence on the platform has been agitating to ban it on the basis of national security. (TikTok is owned by ByteDance, a Chinese company.)

In contrast to mounting political criticisms of, say, Facebook and Twitter, platforms where the president is extremely active and invested, the government’s public case against TikTok has been largely speculative, citing theoretical dangers and hardly trying to appeal to the app’s users directly. It’s no surprise that the vague message from Ms. Pappas gave some users comfort, given how little this process has addressed them.

TikTok’s users are experiencing for the first time something long familiar to much of the world outside the United States: a flourishing online social space existentially threatened by diplomatic and political fights between states and corporations, with little input from those affected by their decisions. Likewise for WeChat, the Chinese messaging app used by millions in the U.S. to keep in touch with friends, families and colleagues abroad, which was set to be banned on Sunday until a federal court intervened.

To the limited extent that the plights of TikTok and WeChat have familiar precedents, they’re mostly overseas: China’s broad bans on foreign platforms including Facebook and Google; Russia’s “data localization” laws, which require foreign firms to store certain types of data locally; the occasional national shutdowns of Twitter, Facebook or YouTube during periods of political unrest in many countries around the world, including Egypt, Vietnam, Bangladesh, Sri Lanka, Turkey and others; or the Indian ban on TikTok and other Chinese internet services earlier this year.

“It is not surprising that American institutions rarely thought about what might happen to popular discourse if entertainment or information emanating from other shores is supplied on platforms and servers which might be based outside the country, with potential for data harvesting and exploitation for surveillance, spying or commercial gains,” said Daya K. Thussu, a professor at Hong Kong Baptist University and a co-author of “China’s Media Go Global.”

Worrying about a foreign government’s influence or access to data — or about whether imported competitors might hurt domestic firms — has been a burden for practically every country in the world except the United States, where many of the global internet’s most popular services were started. For a large majority of their users, Facebook, Twitter and Google are foreign firms.

TikTok users skew young, but older people following the company’s story on other social media, or in the press, have been similarly bewildered. Can the President just ban a social media app? How?

By September, such questions were superseded by events. There was an announcement by the Department of Commerce outlining its plan to disable the apps and remove them from app stores by Sept. 20. This was followed by a confusing, Trump-endorsed deal in which Walmart would take a stake in the company alongside Oracle, the enterprise software company, which claimed in a subsequent news release that TikTok “picked” the company as a partner because of its “faster, more reliable, and more secure” cloud.

Through TikTok, many social media users in America are getting a taste of what it’s like to socialize, work and live in an imported environment.

It’s an experience defined less by the platform’s features or particular traits — which, in this case, represent an evolution of, rather than a departure from, market-style American social media — than by the precarious conditions of its existence. It’s a personalized, intimate and largely domestic social environment that is also subject to the harsh and undemocratic forms of regulation that tend to arise when borders are involved. And its continued existence is contingent on a patchwork of cross-border threats, forcefully extracted concessions and political gamesmanship.

“The U.S. has dominated the digital platform market over the past two decades,” said Dal Yong Jin, the director of the Centre for Policy Research on Science and Technology at Simon Fraser University in British Columbia. It’s clear, he said, that the government sees the growth of Chinese platforms “as a threat to America’s global dominance.”

Geopolitically speaking, this is neither novel nor particularly shocking, according to Mr. Jin. “It is not unusual to witness this form of government intervention,” he said. “In fact, the current TikTok and WeChat affairs are not unusual in other countries.”

“I am certain that this kind of digital platform war will continue,” he added. “This is only the starting point.”

A decade ago, such platform wars were being waged abroad by American companies eager to expand. It was a period of corporate and mainstream political optimism, during which setbacks to expansion were treated as brief delays in an inevitable process — the next stage of American-led globalization, driven by Google, Facebook and Twitter.

Mark Zuckerberg, humbled by years of trying and failing to establish a foothold in China, has since changed his tune, testifying in front of Congress this year that his company is “proudly American” and warning that “China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries.” In August, Instagram, which is owned by Facebook, introduced a feature called Reels, which bears a striking resemblance to TikTok.

In the last 10 years, social media users in the United States — of almost every political persuasion — have adjusted to the idea that, despite being full of friends, family, colleagues and peers, social platforms might not have their users’ interests at heart. They’ve heard stories of social platforms being used to drive countries apart, suppress particular views, enable campaigns of violence and undermine democratic processes.

They’ve been confronted with the possibility that a social platform doesn’t necessarily serve the voiceless and can in fact be beholden to those who are in power and used against those who are not. More directly, they’ve become accustomed to living their online lives in spaces ruled by aloof, distant figures whose motivations and loyalties are a subject of dark speculation. These aren’t lessons they learned from foreign firms, however, or even from how American firms operate overseas. These are lessons they learned at home.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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