US legislators questioned TikTok CEO Shou Zi Chew Thursday on the app’s purported ties to China and the danger it poses to the country’s “national security.”
The Congressional questioning for more than five hours was to get clarification on TikTok’s autonomy.
Due to its ties to China, TikTok’s future is in doubt, not just in the US but also in other countries.
While the company has made efforts to allay fears, it looks like the challenges are far from over for several other countries which have rushed to ban the app from devices of govt officials.
A number of countries including the UK, Denmark, Canada, and New Zealand, along with the European Union, have already banned TikTok from devices issued to government employees, citing security concerns.
TikTok has said it has spent more than $1.5 billion on data security efforts under “Project Texas” which currently has nearly 1,500 full-time employees and is contracted with Oracle to store TikTok’s US user data, according to a Reuters report. It also says it rigorously screens content that could harm children.
Read our explainer to understand what is happening between TikTok and the US government.
However, Chew told US lawmakers that China-based employees at ByteDance may still have access to some US data, but that new data will stop flowing once the firm completes its Project Texas plan.
TikTok CEO Shou Zi Chew (L) talks with his company’s Vice President for Public Policy Michael Beckerman (C) during a break in Chew’s testimony.
“ByteDance is not owned or controlled by the Chinese government and is a private company,” Chew told lawmakers on Thursday.
“We believe what’s needed are clear transparent rules that apply broadly to all tech companies — ownership is not at the core of addressing these concerns,” he added.
TikTok has over one billion monthly active users, however, it has faced increasing scrutiny from governments around the world due to its China links. This is when the platform has repeatedly claimed that China does not have access to the data of its users.
Even though the company has been seen downplaying its China links, Beijing has made it clear that it would “strongly oppose” a forced sale of TikTok.
India and Taiwan are the only two countries to have banned the app fully.
Also read: India set an important precedent by banning TikTok
Meanwhile, thousands of creators who depend on TikTok to connect with their followers, are closely following the recent developments.
Executive Shake-up
Outgoing TCS CEO Rajesh Gopinathan’s ops model may have led to unease: A new operating model mooted last year by outgoing chief executive of Tata Consultancy Services (TCS) Rajesh Gopinathan may have caused ‘unrest’ among some employees of the country’s largest software services exporter, several sources in the company and industry experts told us.
Gopinathan in line for advisory role, sources: Outgoing chief executive Rajesh Gopinathan may stay on in TCS in an advisory role, people familiar with the matter said.
Nykaa sees five key executives quit the firm: In a significant top-level management shakeup, omnichannel beauty retailer Nykaa has seen five members of its leadership team quit the firm.
Flipkart rejigs VP-level positions amid exits and cost cutting: Walmart-owned Flipkart has reshuffled executives at the vice-president level in some of its key operating categories, according to an internal note that the ecommerce firm sent to all its employees in late January. Meanwhile, Ravish Sinha, senior VP of supply chain, has left Flipkart, a person in the know told ET.
Tech Layoffs Continue
Layoffs at Accenture, Indeed, Amazon: Software services behemoth Accenture is among the latest companies to join the layoffs bandwagon as the firm will cut around 19,000 jobs giving in to macroeconomic concerns and uncertainty. Close to 40% of the company’s 7.38 lakh employees are in India. Amazon CEO Andy Jassy said the tech major will slash another 9,000 jobs after the firm had sacked over 18,000 employees in January. Meanwhile, job search company Indeed on Wednesday announced that it will cut approximately 2,200 jobs or roughly 15% of its total workforce.
Tech companies which laid off most number of employees in 2023: After the post-Covid boom, a majority of technology companies are on a layoff spree. So far this year, 522 tech companies laid off 153,208 employees, as per the latest available data from layoffs.fyi, a real-time layoff tracking platform.
Livspace fires nearly 50% tech, product staff eyeing profitability: Omnichannel home interiors and renovation platform Livspace has laid off about 2% of its overall workforce in a bid to drive profitability by the financial year ended March 2024.
Hindenburg Targets Block
Hindenburg shorts Jack Dorsey’s payments firm Block: Hindenburg Research said on Thursday it held short positions in Block Inc, alleging that the Jack Dorsey-led payments firm overstated its user counts and understated its customer acquisition costs. Meanwhile, Dorsey saw a massive drop in his fortunes a day after the report. His net worth fell by $526 million and he is now worth $4.4 billion, according to Bloomberg Billionaires Index.
Who is Amrita Ahuja, the Indian-origin CFO of Block named in Hindenburg report?
The Hindenburg report on Thursday accused Jack Dorsey’s fintech firm Block of committing financial fraud of $1 billion. The report also accused the Indian-origin CFO of the company, Amrita Ahuja, of liquidating millions of dollars in equities during the pandemic as the firm’s price climbed on the strength of its facilitation of fraud.
SVB Aftermath
 logo.jpg "FILE PHOTO: Illustration shows destroyed SVB (Silicon Valley Bank) logo")
Banking crisis in the West may hit tech expenditure at home, say analysts: The banking crisis in the US and Europe could take a toll on the India’s $245 billion IT business process management (BPM) industry, which draws close to 41% of its revenues from the banking, financial services and insurance (BFSI) sector, analysts said.
IT firms stare at 30 bps revenue hit from US banking crisis: Indian IT majors such as Tata Consultancy Services and Infosys could take an up to 30 basis points hit on the revenue in the fiscal fourth quarter due to their exposure to crisis-ridden regional banks in the US, said analysts.
Silicon Valley Bank collapse and how it impacted Indian startups: all the top stories | It took just a few days for Silicon Valley Bank from being one of the most sought-after financial institutions among startup founders and the tech community to being shut down by US regulators. The crisis impacted Indian startups like cross-border SaaS firms and Y Combinator’s portfolio firms.
Here are the top stories to understand how the fallout of the bank affected the domestic startup ecosystem.
ETtech Interviews
Spotify India wants to double down on ad revenues: Amarjit Singh Batra | Spotify Technology, which launched its audio streaming service here in 2019, plans to bulk up its sales team five-fold in an effort to increase advertising revenue in India, a senior company executive told ET.
Netflix expects to continue growth momentum in India this year: Netflix India VP- content Monika Shergill | Netflix India is ramping up its content investments and has lined up an extremely ambitious content slate for 2023, Netflix India VP- content Monika Shergill told ET.
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Tech Policy Updates
‘Negative list’ for data transfer in works: IT MoS | The centre is likely to notify a “negative list” of countries to which data pertaining to Indian users cannot be transferred, MoS, IT, Rajeev Chandrasekhar told ET. “The government will have the right to restrict certain geographies and will decide the criteria for restriction,” Chandrasekhar said.
Government working on tightening ecommerce rules for frauds by sellers | The consumer affairs ministry is working on tightening ecommerce rules to make online retail platforms liable for fraud committed by sellers and attaching “fallback liability” to their role as intermediaries, said a senior official.
FAME-II sops of two EV makers on hold; govt seeks localisation proof | The government has stopped processing pending FAME-II subsidy claims of two electric vehicle (EV) makers until these companies submit sufficient evidence to show their compliance with the scheme’s conditions, minister of state for heavy industries Krishan Pal Gurjar has said.
ET Ecommerce Index
We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.
Other Top Stories By Our Reporters
Exclusive: Byju’s offers to pay higher interest rate on $1.2 billion loan | Edtech major Byju’s has offered to increase the rate of interest on its $1.2 billion term loan B (TLB) as part of renegotiating debt-financing arrangements, said several people with knowledge of the matter. This has been prompted by the delay in posting FY21 earnings and is linked with the FY22 financials as well.
Ola Electric in talks to raise $250-300 million in fresh funding round | India’s largest electric two-wheeler company Ola Electric Mobility Pvt. Ltd is planning to raise a fresh round of $250-300 million in growth equity to expand two-wheeler operations and fund its planned battery facility, said people with knowledge of the matter.
PhysicsWallah developing products to enter K-12 segment | Edtech company PhysicsWallah is working towards entering the K-12 segment next year with digital learning products that would be made available through both online and offline channels, people aware of the matter said. The digital courses will be sold along with relevant books, they said.
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