The TikTok divide

This is an audio transcript of the FT News Briefing podcast episode: ‘The TikTok divide’

Sonja Hutson
Good morning from the Financial Times. Today is Wednesday, April 19th, and this is your FT News Briefing.

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Fox News’s parent company settled a defamation lawsuit. The biggest US banks have emerged from the banking panic in pretty great shape. China’s economy is bouncing back from the pandemic. And a lot of lawmakers want to restrict the use of TikTok. The FT’s Yuan Yang says if you look closely at the debate . . . 

Yuan Yang
There’s a really big gulf in public narrative between the Generation Z and millennial, let’s say under-thirties, who largely use the platform, and the politicians who, let’s face it, are largely over the age of 50 or 60.

Sonja Hutson
I’m Sonja Hutson, in for Marc Filippino, and here’s the news you need to start your day.

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The corporation that owns Fox News has settled a defamation case over its claims of US election fraud to the tune of about $787mn. That’s according to a lawyer for the voting machine maker Dominion. Dominion sued Fox Corporation for on-air statements that accused the company of rigging its devices to award votes to President Joe Biden. The settlement means that Fox can avoid public testimony from several Fox stars, including Tucker Carlson and Laura Ingraham.

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Bank of America reported earnings yesterday and like other US megabanks, BofA sailed out of last month’s banking crisis in fine shape. First-quarter profits were up 15 per cent. Here’s the FT’s Josh Franklin.

Joshua Franklin
So the big banks — the JPMorgan Chases, the Citigroups, the Bank of Americas of the world — they very clearly benefited in March from deposit inflows from a lot of these regional banks that did struggle a little bit more during March. What was particularly interesting was that this reversed the trend of these big banks actually losing deposits during the first three months of the year. And that was really a continuation of something we’ve seen going back all the way to March of last year when the Federal Reserve started raising interest rates and banks didn’t really start rewarding customers with higher rates. They started just charging more for loans, and some bank deposits gradually started migrating out away from banks into higher-yielding products like money market funds. But what the events of March, with Silicon Valley Bank and Signature Bank, did is they kind of reversed that trend and meant that deposits started migrating back to the big banks. The question is how sustainable that is.

Sonja Hutson
So Bank of America’s earnings beat expectations, but the bank also announced yesterday that they’re slashing up to 4,000 jobs. Why is that?

Joshua Franklin
Interesting. It’s a little bit of a hangover from, you know, the good times, I suppose. You know, the times of, you know, back in 2021 and 2022 when jobs and finance were really plentiful and banks were really worried about losing people in a competitive job market. So what that, a lot of banks did and a lot of financial institutions did is they kind of overhired because they thought that attrition was gonna be particularly high. And now what Bank of America is saying is the job market is really cooling off. Attrition isn’t nearly as high as it was, you know, 12, 18 months ago. So now we actually probably are a little bit too big as an organisation.

Sonja Hutson
That’s the FT’s US banking editor Josh Franklin.

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China’s economy is rebounding from the pandemic. The latest GDP numbers, out yesterday, show the economy grew 4.5 per cent last quarter. That’s on track to meet the government’s target for 5 per cent growth for the year. Here’s the FT’s Joe Leahy.

Joe Leahy
The strongest point was consumption, which rose very quickly during the quarter. We saw it reached in March at 10.6 per cent, which was the highest in two years. And we saw people returning, as I mentioned, to restaurants. So this was a big change from last year, of course, when the entire economy was shut down and people were staying home.

Sonja Hutson
China’s exports also jumped largely because of electric vehicle sales and exports to Russia. But economists say the strength in exports may not last if consumer demand drops in important markets like the US and Europe. Joe says another crucial factor for China’s economic growth is domestic housing.

Joe Leahy
The property sector, of course, over the past few years was absolutely crushed by government policies to try to get companies to deleverage. And during this quarter, there were still signs of weakness in the property sector. The thing that really picked up during this last quarter were property prices. So they started to recover. And that should help with confidence among consumers as the prices of their properties begin to recover. We can see them becoming more confident about consuming and perhaps spending again. So I think that’s going to determine how strong the economy is this year as well.

Sonja Hutson
That’s the FT’s Beijing bureau chief Joe Leahy.

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There’s been a lot of political hand-wringing about TikTok. The social media app is owned by Chinese company ByteDance. Many western politicians are so concerned about Beijing’s ability to access user data, they want to ban or restrict the app. More than half of all US states have already banned TikTok from being used on government devices. One even blocked it from personal devices. But the FT’s Yuan Yang has been paying attention to lawmakers and activists who don’t want these bans. She joins me now to talk more about this. Hi, Yuan.

Yuan Yang
Hi there.

Sonja Hutson
So the politicians and activists who don’t want to restrict people from using TikTok, what’s their argument?

Yuan Yang
I think what’s interesting is that there’s quite a range of politicians from different parts of the political spectrum. So in the US, for example, you have conservatives like Rand Paul who are using the freedom of speech argument to say that the government shouldn’t be restricting what kinds of social media its citizens can and can’t go on to. And also that ironically that makes the US a bit more like China, which does heavily censor and restrict social media platforms. And then you have more of the younger and left-leaning politicians, for example, Alexandria Ocasio-Cortez, who is pointing out the hypocrisy or the inconsistency of banning one social media platform in the US while not looking at any of the other social media platforms and the kind of absence of data protection law in the US that leads these problems in part in the first place. And those younger politicians are also more likely to be actually on the platform and using social media to communicate with their constituents.

Sonja Hutson
But do you see any validity to the argument for banning or restricting TikTok and the concerns that politicians have about the app’s ability to keep its users data out of Beijing’s hands?

Yuan Yang
So I think these concerns are valid in part, but not to the extent that they’ve been playing out in the US debates. So firstly, any company in China, whether that’s American, European or Chinese, can be compelled to give data to the intelligence agencies. But that I think is a slightly separate issue to the questions that are now plaguing TikTok, which is kind of what kind of data is being gathered, how much does that put people at risk. Is that malicious access to data that’s not even the data that you consent to giving TikTok? So I see there being a case for restricting the use of TikTok and let’s say kind of leisure or recreational apps on work devices, particularly if you’re working for a government as the European Commission have done. But restricting access to a whole platform for the entire population, regardless of their personal security risks and what kinds of intelligence they’re holding is quite a different level. And you do start to look a bit like the Chinese great firewall and system of internet controls when you go down that route.

Sonja Hutson
You mentioned earlier the absence of data protection laws in the US and that’s a big difference with the EU, which does have a whole system of laws to protect consumers’ online data. How does that affect the debate over TikTok?

Yuan Yang
I think it does make a big difference that in the European Union there is, at least on the statute books as the GDPR, the General Data Protection Regulations, and that there is a framework there that would decide what constitutes a violation of privacy, what is reasonable data collection and for what uses. In the US, there is no such consumer-facing protection, and so the discussion over TikTok is not actually tied to any law or any framework of rights, which means that it can go a bit all over the place. And I think in a rule of law, democracy, there should be a framework for having these discussions. Otherwise, the goalposts can be moved arbitrarily and also applied arbitrarily to different companies.

Sonja Hutson
Yuan Yang is the FT’s China-Europe correspondent. Thanks, Yuan.

Yuan Yang
Thank you.

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Sonja Hutson
Before we go, here’s an alert for our British politics junkies or aspiring junkies. Today, our UK political columnist Stephen Bush is moderating a special online panel to discuss Britain’s political future, the economy and Brexit. You’ll be able to submit your own questions, too. It’s today at 1pm London time, 8am New York. It’s a subscriber-only event and we’ve got a link in the show notes to register.

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You can read more on all these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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