Happy Monday! Taco Bell announced the other day itโs going to bring back its โ90s-era โVolcano Menu.โ
We know what youโre thinking, and no, the name doesnโt refer to the physiological response it elicits.
Quick Hits: Todayโs Top Stories
- In a deal brokered by the Swiss government, UBS agreed Sunday to a more than $3 billion takeover of foundering rival Credit Suisse, the first merger of such a scale since the 2008 financial crisis. Swiss authorities agreed to provide more than $9 billion to cover any losses UBS incurs following the transaction and a $100 billion line of credit to facilitate the takeover. The failure of Silicon Valley Bank earlier this month put a spotlight on Credit Suisseโs already weak accounts, and regulators brokering the takeover wanted to avoid a messy bankruptcy and panic spreading to other banks.
- Silicon Valley Bank parent company SVB Financial Group has filed for Chapter 11 bankruptcy, reporting about $2.2 billion in cash and liquid securities, $3.3 billion in bond debt, and $3.7 billion of preferred stock. The move would enter SVB Financial into a court-directed selloff process of the companyโs surviving subsidiaries.
- The International Criminal Court on Friday issued a largely symbolic arrest warrant for Russian President Vladimir Putinโand Russian childrenโs commissioner Maria Lvova-Belovaโfor the alleged war crime of deporting Ukrainian children to Russia. Ukrainian President Volodymyr Zelensky said Ukraine is investigating the forced removal of more than 16,000 children from the country, while Russian officials dismissed the warrant out of hand. Over the weekend, Putin visited both Russian-occupied Crimea and Mariupol, an eastern Ukrainian city largely destroyed during Russiaโs months-long siege.
- The deal allowing export of Ukrainian grain through Black Sea blockades has been extended for another 120 days despite initial Russian resistance, Ukraine announced Saturday. Ukrainian Infrastructure Minister Oleksandr Kubrakov said 25 million tons of Ukrainian grain have already been exported under the deal since its adoption last July.
- Turkey and Hungary announced Friday they will approve Finlandโs NATO accession bid, clearing its path to membership in the defensive alliance. Finland applied together with Sweden after Russia launched its full-scale invasion of Ukraine, but Turkey has opposed Swedenโs bid, accusing it of supporting Kurdish terrorists.
- French police arrested more than 500 people over the weekend amid ongoing protestsโand riotsโsparked by President Emmanuel Macronโs decision on Thursday to push through pension reforms raising the countryโs retirement age without a vote in the National Assembly. Macronโs government faces a no-confidence vote today but will likely survive the challenge, clearing the way for the change to become law. Labor unions have called for continuing strikes.
- North Korea tested a suspected short-range ballistic missile Sunday amid ongoing joint military exercises around the peninsula by the United States and South Korea, including an aerial exercise Sunday. North Korea has completed a barrage of similar tests in recent months, including firing an intercontinental ballistic missile Thursday.
- Republican Gov. Mark Gordon of Wyoming on Friday signed into law a ban on abortifacientsโthe first such measure explicitly banning the pills. Wyomingโs ban penalizes physicians and distributors with up to six months in prison and a $9,000 fine, but prohibits criminal prosecution of women attempting chemical abortions and includes exceptions for treating a natural miscarriage or if the woman is in โimminent peril that substantially endangers her life or health.โ Fifteen other states have extra safety restrictions on abortion pills and 13 include them in broader abortion bans, according to the pro-abortion access Guttmacher Institute. Guttmacher estimates medication abortions account for just over half of abortions in the United States.
- Former President Donald Trump claimed on Saturday he expects to be arrested Tuesday in connection with Manhattan District Attorney Alvin Braggโs investigation of hush money payments Trump allegedly made to adult film star Stormy Daniels ahead of the 2016 election. A Trump spokesperson clarified the former president hasnโt received official notification of an imminent arrest and said the former president plans to rally in Texas next weekend. In a Truth Social post, Trump encouraged his supporters to โprotestโ his impending arrest and โtake our nation back.โ Bragg sent a note to DA staffers over the weekend telling them their safety was his โtop priorityโ and that he will not tolerate โattempts to intimidate our office or threaten the rule of law in New York.โ
- YouTube on Friday lifted restrictions on Trumpโs channel that were imposed after the January 6 Capitol riot, when the company said heโd violated policies against inciting violence. The video streaming platformโs decision to reinstate Trump follows similar moves by Facebook, Instagram, and Twitter after Trump became an official political candidate again. The former president swiftly posted a video announcing his return to YouTube and Facebook.
Tick, Tock, Tick, Tock
![The TikTok logo is displayed outside the TikTok company offices in Culver City, California. (Photo by PATRICK T. FALLON/AFP via Getty Images)](https://thedispatch.com/wp-content/uploads/2023/03/GettyImages-1248389538.jpg?w=1024&h=1&crop=1)
The editors of this newsletter have been writing about the prospect of a TikTok ban for nearlyโlet us check our notesโthree years. Maybe this time it will take.
The Biden administration has issued an ultimatum to TikTok, according to a Wall Street Journal report late last week: Oust your Chinese ownership or get out of the country. The Committee on Foreign Investment in the United States (CFIUS)โa body that reviews international transactions for potential national security risksโhas reportedly informed TikTok of the conditions and, while details of the ultimatum have not been publicly released, the news comes as bipartisan scrutiny of the social media platform is reaching a fever pitch.
Republican and Democratic lawmakers alike have criticized the Biden administration in recent weeks for dragging its feet on TikTok, leading a handful to take matters into their own handsโsort of. Earlier this month, a bipartisan group of senators introduced the RESTRICT Actโlegislation that would provide a framework for the Commerce Department to review and block foreign transactions involving companies hailing from a handful of adversarial countries. โToday everybodyโs talking about TikTok,โ Democratic Sen. Mark Warner of Virginia said when announcing the legislation. โBut before there was TikTok there was Huawei and ZTE, and before that there was Russiaโs Kaspersky Lab.โ
โWe need a comprehensive, risk-based approach that proactively tackles sources of potentially dangerous technology before they gain a foothold in America, so we arenโt playing Whac-A-Mole and scrambling to catch up once theyโre already ubiquitous,โ he added.
The White House backed the proposal. โThis legislation would empower the United States government to prevent certain foreign governments from exploiting technology services operating in the United States in a way that poses risks to Americansโ sensitive data and our national security,โ said Jake Sullivan, Bidenโs national security advisor.
But before news of the CFIUS decision leaked, some Republican lawmakers expressed skepticism of their colleaguesโ RESTRICT Act, arguing it wouldnโt explicitly ban TikTok and could be used as a shield for further inaction from the White House. โWhat this bill does is it gives them the ability to say, โCongress passed something, and itโs bipartisan,โโ said Sen. Marco Rubio, who has introduced his own bill targeting TikTok with GOP Rep. Mike Gallagher and Democratic Rep. Raja Krishnamoorthi. โIt gives the illusion of action, but itโs not action.โ
The skepticism isnโt entirely unfounded. The RESTRICT ACT would empower Secretary of Commerce Gina Raimondo to make any final determination on TikTok, and sheโs thus far been far from forceful on the subject. โPassing a law to ban a single company is not the way to deal with this issue,โ she told Bloomberg last month. โHowever much I hate TikTokโand I do, because I see the addiction in the bad s— that it serves kidsโyou know, this is America.โ Raimondo also made reference to the potential political fallout: โThe politician in me thinks youโre gonna literally lose every voter under 35, forever.โ The Biden administration has repeatedly courted TikTok influencers in its efforts to reach younger Americans on issues from COVID-19 vaccines to the Inflation Reduction Act.
But the reported CFIUS decisionโalongside recent measures prohibiting the app on government devicesโseems to indicate the White House is growing more hawkish on the issue, with nothing short of full Chinese divestment preventing TikTok from being banned nationwide. An executive order Biden signed in September 2022 encouraging CFIUS to consider additional โnational security factorsโ like data security in its review process may have been a preview of the decision.
Gallagher and Krishnamoorthiโthe chairman and ranking member of the Houseโs new select committee on China, respectivelyโsaid reports of the decision were โencouragingโ and reaffirmed their views of the danger posed by the app: โTikTok under its current ownership and control structure, is an unmitigatable threat to our national security and needs to be dealt with as such.โ
For a quick refresher, hereโs what we wrote in late December:
Chinaโs authoritarian system dictates that Chinese tech companies must turn over user data whenever the CCP asks, leading to fears the Chinese government could surveil the location data and viewing habits of military or intelligence officials, for example, or alter the algorithm to push China-friendly content. โThe Chinese government could [control] data collection on millions of users or control the recommendation algorithm,โ FBI Director Chris Wray warned Congress in November. โ[This] could be used for influence operations if they so chose, or to control software on millions of devices, which gives it an opportunity to potentially technically compromise personal devices.โ
Skeptics shoot back that, although China-based employees have accessed U.S. user data, thereโs no public evidenceโyetโthat the CCP has demanded U.S. user data. Theyโll also argue a lot of American user data is already for sale, and that plenty of non-Chinese-owned platforms have proven effective vectors of misinformation campaigns. Facebook, for example, has capitalized on security concerns over TikTok to downplay its own aggressive data collection habits.
But although TikTok insists it stores Americansโ data on servers outside China, a steady drumbeat of revelations in recent months hasnโt exactly smoothed security hawksโ ruffled feathers. This summer, Buzzfeed reported that China-based TikTok employees had repeatedly accessed U.S. user data and that former ByteDance employees claimed the company had used its now-defunct news app, TopBuzz, to push pro-China propaganda and censor negative stories. Forbes reported this fall ByteDance had planned to use TikTok to monitor specific U.S. citizensโ locations, and noted that the app allowed unlabeled Chinese state media to share videos criticizing U.S. political candidates ahead of the midterms. Just last week, Forbes and the Financial Times revealed ByteDance had accessed certain journalistsโ TikTok data in an effort to track their locations and find out if employees met with the reporters to leak information.
According to a Forbes report last week, the Justice Department has opened an investigation into TikTokโs alleged tracking of U.S. journalists, and the FBI is also conducting an inquiry.
Over the past few months, more than half of state governments and a dozen universities have restricted or banned TikTok on school and government devices. A swath of other countries and jurisdictions have followed suit in recent weeks including the U.K., Belgium, Denmark, New Zealand, and the European Union. Last fall, ByteDance disclosed that its employees outside of Europe, including those in China, could access European user data.
While opponents of banning the app claim thereโs still no evidence of the Chinese Communist Party itself accessing user data, top law enforcement officials have noted it may be difficult to find a smoking gun. โWeโre not sure that we would see many of the outward signs of it happening if it was happening,โ Wray testified earlier this month at a Senate Intelligence Committee hearing. โThis is a tool that is ultimately within the control of the Chinese government and to me it screams out with national security concerns.โ
In an effort to stave off a ban or a sale, TikTok has sought to assuage regulatorsโ data security concernsโwith little success. CFIUS has been reviewing TikTok since 2019, and the company has proposed a $1.5 billion plan to submit to oversight from a government-approved panel and erect a data firewall for U.S. users called Project Texasโa nod to Austin-based Oracle, the company that would theoretically house the American user data.
โA change in ownership would not impose any new restrictions on data flows or access,โ said Maureen Shanahan, a spokesperson for TikTok. โThe best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing.โ
Former TikTok employees have argued the companyโs U.S. data security plan is insufficient. One, who spoke under the condition of anonymity with the Washington Post, has met with lawmakers and claimed there are deficiencies in Project Texas that would still leave U.S. usersโ data exposed.
It remains to be seen whether a forced sale or ban could actually be implemented. The Trump administrationโs moves targeting the company were ultimately blocked in federal court, and the logistical challenges of banning the app would be significant, requiring the cooperation of third parties like app stores, internet service providers, and cloud computing companies. โThere wonโt be action from CFIUS as a result of this review that will be taken against third parties that are not a part of this transaction,โ Shannon Reaves, an expert in CFIUS compliance, told CNBC.
More details will likely surface this week. TikTokโs CEO Shou Zi Chew is set to testify before the House Energy and Commerce Committee on Thursday morning. Maybe heโll come prepared with a fun little viral dance for lawmakers.
Worth Your Time
- Inside Old Station Subs in Phoenix, Arizona, Joe and Debbie Faillace are trying to be kind and keep the shop open. Outside, residents of one of the nationโs largest homeless encampmentsโShina Sepulveda, Brandon Mack, and hundreds of othersโcope with violence, mental illness, and addiction. โ[The Faillaces have] bought an extra mop to clean up the daily flow of human waste, replaced eight shattered windows with plexiglass, installed a wrought-iron fence around their property and continued opening their doors at exactly 8 each morning,โ Eli Saslow reports for the New York Times. Meanwhile, Kipp Polston, 65, had in the last year โlost his business to heroin addiction, his apartment to eviction, and his truck to an accident,โ Saslow writes. โNow he was working to get clean, leaving his tent at 5:30 each morning for an appointment at a methadone clinic before riding the city bus to businesses all across Maricopa County. He was trying to piece his life back together one window at a time, washing each for $3.โ
- Pongโthe table tennis-themed arcade gameโwas introduced to the American public 50 years ago this month. It changed the world. โAtari became a huge company in the wake of Pongโs success,โ Charles Russo reports for SFGATE. โIts trajectory and legacy over the next decade is a colorful and turbulent story involving myriad lawsuits, iconic products, corporate takeovers and all manner of classic games. Locally, its offbeat and unorthodox workplace is often considered a precursor of modern Silicon Valley office culture. At one point, Atari even employed young Steve Wozniak and Steve Jobs to help develop the classic game Breakout prior to the duo founding Apple Computers. Present-day industry juggernaut Activision was originally founded in 1979 when a group of disgruntled Atari employees defected to start their own boutique video game company. In late 1982, the New York Times cited Atariโs $2 billion in sales to declare it โprobably the fastest growing company in the nation.โ All told, Atari was in many ways the early embodiment of the modern Silicon Valley narrative: groundbreaking innovation, unconventional business strategy and โ most notably โ the profound impact of integrating technology into our lives (namely in the form of the culturally ubiquitous Atari 2600 home gaming system).โ
USA! USA! USA!
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March Madness Update
After an incredible weekend of games, weโve got a dogfight at the top of the TMD pool standings. Leaderboard to come tomorrow!
Toeing the Company Line
- In the newsletters: Jonah discusses why we need labels and what happens when we misuse them, Nick wonders (๐) if Ron DeSantis is paying for Donald Trumpโs foreign policy sins, and Chris reviews (๐) Bidenโs improving political fortunes over the past year.
- On the podcasts: Jonah delivers a curmudgeonly diatribe on Vice President Kamala Harris, the dangerous mirage of โnewโ ideas, Silicon Valley Bank, the difference between an explanation and an excuse, and whether or not he wears a toupee.
- On the site this weekend: Douglas Ollivant made the case for visiting Iraq, Guy Denton bemoaned the wasted potential of Scream VI, Isaac Schorr finished reviewing season four of You, and John Guaspari tackled the PGA Tour docu-series Full Swing.
- On the site today: Harvest and Price look into a congressional effort to protect Social Security and Kevin writes on Joe Exoticโs presidential bid and the power of celebrity in American politics.
Let Us Know
Do you think Commerce Secretary Gina Raimondoโs concerns about prohibiting a specific company from operating in the country hold water? Would banning TikTok represent a departure from the American tradition of open markets, or a much-needed step to protect national security?
Please note that we atย The Dispatchย hold ourselves, our work, and our commenters to a higher standard than other places on the internet. We welcome comments that foster genuine debate or discussionโincluding comments critical of us or our workโbut responses that include ad hominem attacks on fellow Dispatch members or are intended to stoke fear and anger may be moderated.