Where Does the House Vote Lead TikTok?
PLUS: Apple Shanghai Store Debut; AI-generated Text in Scientific Journals
By: JINPENG LI
Happy Friday! Today, let’s talk about TikTok’s big trouble. Although the company spent four years walling off their U.S. user data as a voluntary initiative for Congress and even spent more than $20 million lobbying, last week, it was caught off guard by how quickly a bill to force TikTok to either cut ties with its Chinese parent company or face a U.S. ban was moving.
After seeing Senate Majority Leader Chuck Schumer remain noncommittal about the bill, Bloomberg reports that the DOJ also got involved, holding closed-door briefings in the Senate to push for TikTok divestiture.
This sounds familiar. Former Alstom senior executive Frédéric Pierucci, in ‘The American Trap’, tells a story of how the American government forced Alstom’s electric business to be sold to GE. The U.S. government, including the executive and legislative branches, along with the DOJ, collaborated to compel a foreign company’s divestiture, paving the way for its acquisition by U.S. investors or entities.
TikTok’s choices are running thin. Sadly.
The company could sue the U.S. Congress for unconstitutional actions, arguing that as a widely used platform for speech and news, restricting it would require a high level of legal scrutiny. However, the lengthy period needed for constitutional review and the DOJ’s imminent involvement make this path seem hopeless.
Regarding a sale, Wedbush Securities analyst Dan Ives values TikTok’s U.S. operations at $100 billion, but he notes this value could drop to $40 billion if the sale does not include the company’s addictive algorithm.
Last week, former Treasury Secretary Steven Mnuchin said he is assembling a group of investors to buy TikTok. Mnuchin was part of a 2020 effort to force a sale of TikTok or ban it during the Trump administration.
Kerry Flynn and Dan Primack of Axios believe that the most logical buyers for TikTok are ByteDance’s non-Chinese investors, including General Atlantic, Sequoia Capital, and Susquehanna International Group.
“That’s because they know the company best, have deep pockets, and can execute the simplest structure via a share swap with some new money sprinkled on top — possibly from an influence-thirsty billionaire.”
However, it seems the western media have forgotten that the Chinese government updated the Content of the Catalog of Prohibited or Restricted Technology Exports back in 2020, which lists recommendation algorithms as a technology banned from export. This means Bytedance will never allow the source code to be sold, especially the algorithm, unless the Chinese government agrees.
Moreover, completing the acquisition of a company as large as TikTok within six months is an impossibility in itself. Drew Harwell and Eva Dou at Washington Post:
To complete a deal of this size and complexity in half a year, including passing any regulatory review that might be required in countries around the world, would be “extraordinarily fast and aggressive,” he added. Any buyer would need to devote “huge amounts of management and strategic planning resources … with a high risk of failure.”
Thus, the only path left for TikTok might be a nationwide ban.
However, the bill could still be defeated. Even though Trump was its fiercest critic during his tenure, last week he expressed concerns that banning TikTok might only make Meta “bigger and stronger,” which he called an “enemy of the people.” According to Washington Post, this stance is partially due to a lobbying campaign linked to GOP megadonor and ByteDance investor Jeff Yass.
“The Republicans will just fall in line with Trump…TikTok has to act concerned and resolute since the optics of the bill passing the House are still terrible. But make no mistake, this ban attempt will fail just like all the others.”
As the world’s most popular app, with hundreds of millions of users, every step TikTok takes to survive in this whirlwind is worthy of being documented in business school casebooks. It embodies financial, technical, and geopolitical risks, with many people’s fates intertwined.
Regardless of whether Congress has genuine concerns about data security, or wherever TikTok’s fate leads, we still advocate for a more globalized culture, rather than stepping backward.
Asia Must Reads
Apple Shanghai Store Debut
Apple’s new Shanghai store is located in Shanghai’s busiest area, making it Apple’s second-largest flagship store after its Fifth Avenue outlet in New York City. Tim Cook arrived in Shanghai on Wednesday to open the store’s doors.
Why it matters: Cook’s trip comes at a challenging time for Apple in China. The company has seen declining iPhone sales in the country in recent months. Cook emphasized China’s critical role in Apple’s supply chain, signaling his company’s commitment to China as both a market and a production base.
According to Bloomberg’s analysis, the broader context of Cook’s outreach includes deteriorating relations between the US and China, and Beijing’s efforts to reassure foreign investors unnerved by regulatory uncertainty.
AI-generated Text in Scientific Journals
An essay published in Surfaces and Interfaces began with the abstract, “Certainly, here is a possible introduction for your topic,” which clearly seemed to be AI-generated. The author is affiliated with a Chinese university, but this phenomenon is not limited to China alone. According to 404 media, AI-generated language is increasingly appearing in even reputable academic journals.
Why it matters: This trend raises the question of whether researchers can use AI in their research process. The policy of Surfaces and Interfaces on AI use states that “authors should only use these technologies to improve readability and language.” While using AI to proofread their work might not be problematic, the practice underscores longstanding issues with some peer-reviewed journals.
Glimpse
Ooops, we missed a lot. Here are some important news items from Asia on March 11…
Apple plans to work with Baidu to use the Wenxin LLM. This is another partnership after Apple’s deals with Google and OpenAI to include third-party AI in its devices in the US. In China, Samsung and Xiaomi’s AI features are based on Wenxin LLM. (Raffaele Huang / WSJ)
China’s government investment funds are investing in AI. They have chosen Zhipu AI, a leading AI startup in China, and have not disclosed the investment amounts.
Moonshot AI’s Kimi assistant upgrade. Now it supports input of up to 2 million characters. This upgrade enhances its long-text capability by tenfold compared to previous versions.
Softbank is thinking of investing in the French AI star startup Mistral. Any deal could potentially value Mistral at more than $2 billion. Founded in early 2023 by ex-engineers from Google’s DeepMind and Meta Platforms Inc., Mistral collaborates with Microsoft, IBM, and Snowflake. (Bloomberg)
Tencent releases its first image-to-video model. Users can simply click on a desired area and add prompt words to transform that area into video. This model primarily overcomes issues seen in traditional I2V models, such as complex prompts and the inability to precisely target image areas.
Doubao has replaced Wenxin Yiyan to become the number 1 app in China. According to QuestMobile, as of January 2024, among LLMs, Baidu’s Wenxin Yiyan holds a market share of 59.7%, followed by Alibaba Cloud’s Tongyi Qianwen and Huawei’s Pangu large model. The top three apps in terms of active user scale are Doubao, Wenxin Yiyan, and Tiangong.
Red lines on AI risks. a statement by Western and Chinese AI scientists has warned that a joint approach to AI safety is needed to prevent “catastrophic or even existential risks to humanity within our lifetimes”. (Cristina Criddle and Eleanor Olcott / FT)
China is falling behind the US in the AI race. Researchers at the Beijing Academy of Artificial Intelligence have told the Chinese premier that China faces “a serious lack of self-sufficiency” in building its own generative AI.（Ben Jiang / SCMP)
India no longer requires government approval before launching or deploying an AI model to users. (Manish Singh / Techcrunch) It seems India’s government can’t decide what level of regulation is appropriate for the AI industry.
A US lawmaker says China is “more thoughtful” about protecting children from social media. Democratic Sen. Chris Murphy thinks unregulated and unchecked social media are driving Americans mad. (Semafor) Really?
Samsung planning to use rival chip-making technology? One important reason might be that Samsung’s technology falls behind, leading to the absence of any deal-making with AI chip leader Nvidia. (Heekyong Yang / Reuters)
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As always, I greatly appreciate your comments, questions and story tips, reach out to me: jp.li@theabacus.news
Originally published at https://theabacus.substack.com.
