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President Trump reportedly has approved the Oracle deal for TikTok’s US operations

President Donald Trump said has has given his stamp of approval “in concept” on the Oracle bid for the U.S. operations of the wildly popular social media app, TikTok, according to a report from Bloomberg.

According to the Bloomberg report Trump said, “I have given the deal my blessing,” as he left the White House for a campaign rally in North Carolina on Saturday.

“I approved the deal in concept,” Trump reportedly said.

The spinout of TikTok’s U.S. operations from its parent company Bytedance was something that Trump administration had demanded on the grounds that the company’s data handling policies and popularity in the U.S. posed a national security threat.

The President’s push to sever the applications ties to China also followed TikTok users’ alleged prank that turned what was supposed to be a triumphal rally for the President in Oklahoma City into a Presidential campaign embarrassment that cost the job of Trump’s campaign manager, Brad Parscale.

That said, the U.S. has been looking to curtail the operations of several Chinese technology companies on the grounds that they pose security threats to the U.S. Indeed, the Presidential order that demanded TikTok’s spinout also called for the discontinuation of the U.S. operations of the messaging service WeChat, which is owned by Tencent — one of China’s largest technology companies. And the U.S. government has also put a target on the telecommunications and networking technology developer, Huawei.

With the TikTok deal set to be approved, a new company called TikTok Global will be created as part of the deal, according to statements from Treasury Secretary, Steven Mnuchin, earlier this week.

Bloomberg reported that Trump said the new company would be headquartered in Texas, would hire as many as 25,000 people and would contribute $5 billion toward U.S. education.

The bulk of TikTok’s U.S. operations are now in Los Angeles.

As the Trump Administration continues its push to disrupt the operations of Chinese tech companies in the U.S., strange bedfellows are uniting to voice opposition to the deal.

On Friday, the American Civil Liberties Union and the head of Facebook’s Instagram subsidiary both came out with statements opposing the proposed transaction.

“This order violates the First Amendment rights of people in the United States by restricting their ability to communicate and conduct important transactions on the two social media platforms,” said Hina Shamsi, director of the American Civil Liberties Union’s National Security Project, in a statement on Friday.

And the dragnet against Chinese influence through ownership of U.S. technology companies has reportedly widened to include many of the top U.S. gaming companies, which have been backed (or are wholly owned) by Tencent.

All of this could be exceptionally bad for U.S. technology businesses, as Instgram’s chief, Adam Mosseri pointed out in a series of Friday tweets.

“A US ban of TikTok would be meaningful step in the direction of a more fragmented nationalized internet, which would be bad for US tech companies which have benefited greatly from the ability to operate across borders,” Mosseri wrote.

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Decrypted: As tech giants rally against Hong Kong security law, Apple holds out

It’s not often Silicon Valley gets behind a single cause. Supporting net neutrality was one, reforming government surveillance another. Last week, Big Tech took up its latest: halting any cooperation with Hong Kong police.

Facebook, Google, Microsoft, Twitter, and even China-headquartered TikTok said last week they would no longer respond to demands for user data from Hong Kong law enforcement — read: Chinese authorities — citing the new unilaterally imposed Beijing national security law. Critics say the law, ratified on June 30, effectively kills China’s “one country, two systems” policy allowing Hong Kong to maintain its freedoms and some autonomy after the British handed over control of the city-state back to Beijing in 1997.

Noticeably absent from the list of tech giants pulling cooperation was Apple, which said it was still “assessing the new law.” What’s left to assess remains unclear, given the new powers explicitly allow warrantless searches of data, intercept and restrict internet data, and censor information online, things that Apple has historically opposed if not in so many words.

Facebook, Google and Twitter can live without China. They already do — both Facebook and Twitter are banned on the mainland, and Google pulled out after it accused Beijing of cyberattacks. But Apple cannot. China is at the heart of its iPhone and Mac manufacturing pipeline, and accounts for over 16% of its revenue — some $9 billion last quarter alone. Pulling out of China would be catastrophic for Apple’s finances and market position.

The move by Silicon Valley to cut off Hong Kong authorities from their vast pools of data may be a largely symbolic move, given any overseas data demands are first screened by the Justice Department in a laborious and frequently lengthy legal process. But by holding out, Apple is also sending its own message: Its ardent commitment to human rights — privacy and free speech — stops at the border of Hong Kong.

Here’s what else is in this week’s Decrypted.


THE BIG PICTURE

Police used Twitter-backed Dataminr to snoop on protests

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Huawei posts revenue growth in H1 despite sanctions and pandemic

Huawei reported a 13.1% year-over-year revenue growth in the first half of 2020, even if countries around the world continued to weigh up bans on its equipment and smartphone sales shrink amid the pandemic, the telecom giant said in a brief on Monday.

The firm’s revenue reached 454 billion yuan ($64.88 billion) in the period, with its carrier, enterprise, and consumer businesses accounting for 35%, 8% and 56% of total revenue, respectively. It finished with a net profit margin of 9.2%, a slight increase from 8.7% in the same period last year.

The privately-owned company did not specify what contributed to its H1 growth, but said in the release that amid the COVID-19 pandemic, “information and communications technologies” — the main focus of its business — “have become not only a crucial tool for combatting the virus, but also an engine for economic recovery.”

The growth came amid the U.S.’s ongoing campaign urging allies to remove Huawei from their network infrastructure. The U.K. is reportedly scheduled to phase out Huawei gear in its 5G network as soon as this year, a plan that critics warn could cause network outages and other security risks.

Though Huawei does not break down its regional sales, it’s reasonable to expect China to be its bedrock of growth as it stumbles abroad. The company and its local competitor ZTE — which is also on the U.S. trade blacklistdivide up the bulk of 5G base station contracts from China’s main carriers. The network operators have also agreed to procure 5G phones from Huawei, which would naturally give the company a boost in sales.

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U.S. government may finalize ban on federal contractors using equipment from Huawei this week

The Trump administration is set to finalize regulations this week that ban the United States government from working with contractors who use technology from five Chinese companies: Huawei, ZTE, Hikvision, Dahua and Hytera Communications, according to a Reuters report.

The ban was first introduced as a provision in the 2019 National Defense Authorization Act that prevents government agencies from signing contracts with companies that use equipment, services and systems from Huawei, ZTE, Hytera, Hikvision and Dahua, or any of their subsidiaries and affiliates, citing national security concerns.

Contractors were given until August 13, 2020 to comply, but immediately began voicing concerns over the ambiguity of the law.

More recently, the National Defense Industrial Association, a trade group, asked the government to extend the deadline because it said many contractors are currently dealing with the economic impact of the COVID-19 pandemic, reported Defense News.

Another challenge for federal contractors is that the companies on the blacklist are global market leaders in their respective categories, making it harder to find alternatives. For example, Huawei and ZTE are two of the largest telecom equipment providers in the world; Dahua and Hikvision are two of the biggest providers of surveillance equipment and cameras; and Hytera is a market leader for two-way radios.

The ban is one of many entanglements Huawei has had with the U.S. government since it was first identified as a national security threat, along with ZTE, in a 2012 Congressional report.

In May 2019, Huawei filed a legal motion against the provision in the National Defense Authorization Act, with the company’s chief legal officer stating that “politicians in the U.S. are using the strength of an entire nation to come after a private company.”

The United States, however, is not the only country with national security concerns about Huawei. On Thursday, for example, Reuters reported that Telecom Italia (TIM) decided to exclude Huawei from its tender for 5G equipment in Italy and Brazil, as the Italian government deliberates whether to bar Huawei’s tech from the country’s 5G network. Huawei told Reuters that “the security and development of digital Italy should be based on an approach grounded in facts and not baseless allegations.”

The United Kingdom is also reportedly considering a similar ban on Huawei in its 5G network.

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Decrypted: Police hack criminal phone network; Randori raises $20M Series A

Last week was, for most Americans, a four-day work week. But a lot still happened in the security world.

The U.S. government’s cybersecurity agencies warned of two critical vulnerabilities — one in Palo Alto’s networking tech and the other in F5’s gear — that foreign, nation state-backed hackers will “likely” exploit these flaws to get access to networks, steal data or spread malware. Plus, the FCC formally declared Chinese tech giants Huawei and ZTE as threats to national security.

Here’s more from the week.


THE BIG PICTURE

How police hacked a massive criminal phone network

Last week’s takedown of EncroChat was, according to police, the “biggest and most significant” law enforcement operation against organized criminals in the history of the U.K. EncroChat sold encrypted phones with custom software akin to how BlackBerry phones used to work; you needed one to talk to other device owners.

But the phone network was used almost exclusively by criminals, allowing their illicit activities to be kept secret and go unimpeded: drug deals, violent attacks, corruption — even murders.

That is, until French police hacked into the network, broke the encryption and uncovered millions of messages, according to Vice, which covered the takedown of the network. The circumstances of the case are unique; police have not taken down a network like this before.

But technical details of the case remain under wraps, likely until criminal trials begin, at which point attorneys for the alleged criminals are likely to rest much of their defense on the means — and legality — in which the hack was carried out.

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FCC declares Huawei, ZTE ‘national security threats’

The Federal Communication Commission has declared Chinese telecom giants Huawei and ZTE “national security threats,” a move that will formally ban U.S. telecom companies from using federal funds to buy and install Huawei and ZTE equipment.

FCC chairman Ajit Pai said that the “weight of evidence” supported the decision. Federal agencies and lawmakers have long claimed that because the tech giants are subject to Chinese law, they could be obligated to “cooperate with the country’s intelligence services,” Pai said. Huawei and ZTE have repeatedly rejected these claims.

“We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure,” the Republican-majority FCC said in a separate statement.

The order, published by the FCC on Tuesday, said the designation takes immediate effect, but it’s not immediately clear how the designation changes the status quo.

In November of last year, the FCC announced that companies deemed a national security threat would be ineligible to receive any money from the Universal Service Fund. The $8.5 billion fund is the FCC’s main way of purchasing and subsidizing equipment and services to improve connectivity across the country.

Huawei and ZTE were “initially designated” as security threats at the time, but the formal process of assigning them that status has taken place in the intervening months, resulting in today’s declaration.

We’ve asked the FCC for comment but did not immediately hear back. In a public statement, FCC commissioner Geoffrey Starks, a Democrat, explained that labeling the companies threats is a start, but that there is a great deal of Huawei and ZTE equipment already in use that needs to be identified and replaced.

“The Commission has taken important steps toward identifying the problematic equipment in our systems, but there is much more to do,” he wrote. “Funding is the missing piece. Congress recognized in the Secure and Trusted Communications Networks Act that many carriers will need support to transition away from untrustworthy equipment, but it still has not appropriated funding for replacements.”

The declaration is the latest move by the FCC to crack down on Chinese technology providers seen. But it puts telecom companies working to expand their 5G coverage in a bind. Huawei and ZTE are seen as leading the way in 5G, far ahead of their American rivals.

Spokespeople for Huawei and ZTE did not immediately comment.

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Cambricon, once Huawei’s core AI chip supplier, eyes $400M IPO

One of China’s most valuable artificial intelligence chipmakers Cambricon is one step closer to its initial public offering, and its prospectus reveals a rare snapshot of where Chinese companies stand in relation to their international counterparts in this critical field.

Cambricon got the nod in early June to list on the Star Market, China’s new Nasdaq-like stock exchange conceived to attract high-potential tech startups. This week, the chipmaker received the final green light from the China Securities Regulatory Commission, the stock market watchdog, for its first-time sale.

The company is aiming to raise 2.8 billion yuan ($400 million) from its IPO and spend the proceeds on cloud-based algorithm training and inference, edge computing, and cash flow boost. It was last valued at 2.5 billion yuan in 2018 and expects its market cap to exceed 1.5 billion yuan when it floats.

Cambricon began life in a lab within the Chinese Academy of Sciences (CAS), the national institute for science and technology backed by government money. In 2016, the project spun out as a separate entity, making money by licensing intellectual property and selling chips for deep-learning acceleration. Before long, it had made its name as a major supplier of Huawei’s first AI chip-powered smartphones and other flagship models later on.

But the partners’ ties have weakened ever since Huawei began doubling down on its own semiconductor arm — HiSilicon — to hedge against U.S. sanctions. The direct consequence is a substantial revenue drop for Cambricon’s licensable IP, which slumped to an estimated 16-18 million yuan in 2018, down from 117 million yuan in 2018.

“Huawei Silicon has chosen to develop its own AI chips for end devices and has not extended the partnership with our company, and our AI chip business with other clients remains relatively small,” the company replied to regulators during the vetting process for its listing. Finding new clients at Huawei’s enormous scale is also challenging, as “most of the other well-known Chinese smartphone makers are using established handset chips and solutions from Qualcomm and MediaTek,” Cambricon noted.

The chipmaker also flagged that it remains “well behind” international competitors such as Nvidia, Intel, AMD in areas including “overall scale, capital reserve, resources for research and development and sales channels.” It’s also well aware of rising domestic competition from its old ally, Huawei, which has opted for chips from its home-grown HiSilicon unit.

Cambricon’s co-founders Chen Tianshi and Chen Yunji both hail from academia. The company still maintains close relationships with CAS and also works closely with Olivier Temam, a researcher at Inria, the French national institute for computer science and applied mathematics.

Cambricon is still operating in the red, adding up to a total loss of 1.6 billion yuan ($230 million) in the last three years in part due to large sums spent on research and development, according to its prospectus. It generated revenues of 444 million yuan ($63 million) in 2019, up from 7.84 million yuan in 2017.

The chipmaker is backed by a lineup of storied investors across the board. Besides the 41.7% stake Chen Tianshi commands, other shareholders include Zhongke Suanyuan, an asset management firm set up by CAS; Aixi Partners, an entity owned by Cambricon employees and controlled by Chen Tianshi; SDIC Venture Capital, a state-owned investment firm approved by China’s state council; e-commerce titan Alibaba; and voice recognition provider iFlytek.

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China Roundup: Huawei targets cars, ByteDance enters Tencent’s backyard

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, we have several heavy-hitting rumors swirling around, from Huawei’s chips for cars to Tencent’s potential buyout of its video rival iQiyi.

China tech at home

Huawei’s foray into autos

Huawei might be bringing the technology behind its Kirin smartphone processor into cars. According to Chinese tech publication 36Kr, Huawei has signed a strategic deal with domestic electric car giant BYD, which would be using the Kirin chips to digitize the “cockpits” (generally refer to the drivers’ cabins) in its cars.

The Kirin chips are developed by Huawei’s semiconductor subsidiary HiSilicon to hedge against U.S. sanctions and become self-sufficient in core smartphone technologies. What’s noticeable is that BYD, backed by Warren Buffet, had previously announced to adopt Qualcomm’s Snapdragon automotive chips in its electric vehicles, a partnership that was set to begin in 2019. Could the potential collaboration with Huawei be part of BYD’s move to decrease reliance on imported technologies?

BYD said it “does not have information to disclose at the moment,” while Huawei declines to comment on the rumor.

The potential alliance would not be all that surprising given the duo has already been working together closely. In March 2019, the companies, both Shenzhen-based, unveiled a strategic partnership to apply Huawei’s AI and 5G technologies in BYD’s alternative energy vehicles and monorails.

Automotive independence

More big moves from BYD — the automaker is rushing to become self-sufficient in the production of electric vehicles. After raising a 1.9 billion yuan ($270 million) Series A in late May, its chipmaking subsidiary BYD Semiconductor completed another 800 million yuan ($113 million) Series A+ round this week, apparently due to investors’ immense interest in getting involved in the only Chinese company capable of making the core chip part of electric cars called insulated gate bipolar transistors, or IGBTs.

ByteDance encroaches on Tencent’s turf

ByteDance just paid 1.1 billion yuan ($160 million) for a big plot of land to build offices in the heart of Shenzhen’s Nanshan district, according to public information disclosed by the government. Shenzhen is home to multiple Chinese tech heavyweights, including Tencent, Huawei and DJI. It also houses the China offices of foreign retail giants such as Lazada and Shopify, given the city’s rich manufacturing and logistics resources.

That gives ByteDance, the parent of TikTok, a significant presence in Tencent’s backyard. ByteDance is known to have aggressively lured talents from the entrenched tech trio of Baidu, Alibaba and Baidu by offering lucrative packages. Being in Shenzhen will no doubt give the company more access to Tencent’s talent pool.

This may help it in its push into video gaming, an area that has long been dominated by Tencent, the world’s biggest games publisher. Meanwhile, the world’s second-largest games company — NetEase — is right next door in Guangzhou, an hour’s drive away from central Shenzhen.

Shakeup in video streaming

Reuters reported this week that Tencent has approached Baidu to become the biggest shareholder in iQiyi, the video streaming giant controlled by Baidu. Tencent’s video platform competes neck to neck with iQiyi to churn out variety shows and dramas that will convince Chinese audiences to pay for online content.

Both companies are bleeding money on video production. IQiyi, which shed from Baidu to list on Nasdaq, widened its net loss to 2.9 billion yuan ($406.0 million) in Q1 this year, up from 1.8 billion yuan the year before. Selling iQiyi to deep-pocketed Tencent may further ease the financial burden on Baidu, which is busy coping with ByteDance’s threat to its core advertising business. Both Tencent and iQiyi declined to comment on the report.

Robotics startup Geek+ raises $200 million 

Geek+, a startup that specializes in making logistics robots that are analogous to those of Amazon’s Kiva machines, just closed a substantial Series C round. The company is one to watch as retail companies in China and North America are increasingly looking to automate their warehouses.

China tech abroad

China’s gay dating app Blued goes public on Nasdaq

Despite limited support for LGBTQ communities in China, Blued, a Chinese app used by millions of gay individuals, has been quietly blossoming over the past few years and is eyeing to raise $50 million from a U.S. initial public offering.

JD.com goes public in Hong Kong

JD’s long-awaited secondary listing is here. The online retailer’s shares rose 5.7% to HK$239 ($30.8) on its first day of trading on the Hong Kong Stock Exchange. Several U.S.-listed Chinese companies have filed to list in Hong Kong because of a new bill that will impose more scrutiny on Chinese firms trading on the U.S. stock markets.

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„Tech-Freaks“-Podcast 142 – Alles neu bei iOS 14 und Android 11?

Im Handumdrehen sein Geld mithilfe des Internet verdienen – davon träumen viele Menschen. In BILD erzählen Onliner wie es geht.

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China Roundup: A blow to US-listed Chinese firms and TikTok’s new global face

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. It’s been a tumultuous week for Chinese tech firms abroad: Huawei’s mounting pressure from the U.S., a big blow to U.S.-listed Chinese firms, and TikTok’s high-profile new boss.

China tech abroad

Further decoupling

Over the years, American investors have been pumping billions of dollars into Chinese firms listed in the U.S., from giants like Alibaba and Baidu to emerging players like Pinduoduo and Bilibili. That could change soon with the Holding Foreign Companies Accountable Act, a new bill passed this week with bipartisan support to tighten accounting standards on foreign companies, with the obvious target being China.

“For too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors. Publicly listed companies should all be held to the same standards, and this bill makes commonsense changes to level the playing field and give investors the transparency they need to make informed decisions,” said Senator Chris Van Hollen who introduced the legislation.

Here’s what the legislation is about:

1) Foreign companies that are out of compliance with the Public Company Accounting Oversight Board for three years in a row will be delisted from U.S. stock exchanges.

PCAOB, which was set up in 2002 as a private-sector nonprofit corporation overseen by the SEC, is meant to inspect audits of foreign firms listed in the U.S. to prevent fraud and wrongdoing.

The rule has not sat well with foreign accounting firms and their local regulators, so over time PCAOB has negotiated multiple agreements with foreign counterparts that allowed it to perform audit inspections. China is one of the few countries that has not been cooperating with the PCAOB.

2) The bill will also require public companies in the U.S. to disclose whether they are owned or controlled by a foreign government, including China’s communist government.

The question now is whether we will see Chinese companies give in to the new rules or relocate to bourses outside the U.S.

The Chinese firms still have a three-year window to figure things out, but they are getting more scrutiny already. Most recently, Nasdaq announced to delist Luckin, the Chinese coffee challenger that admitted to fabricating $310 million in sales.

Those that do choose to leave the U.S. will probably find a warmer welcome in Hong Kong, attracting investors closer to home who are more acquainted with their businesses. Alibaba, for instance, already completed a secondary listing in Hong Kong last year as the city began letting investors buy dual-class shares, a condition that initially prompted many Chinese internet firms to go public in the U.S.

TikTok gets a talent boost 

The long-awaited announcement is here: TikTok has picked its new chief executive, and taking the helm is Disney’s former head of video streaming, Kevin Mayer.

It’s understandable that TikTok would want a global face for its fast-growing global app, which has come under scrutiny from foreign governments over concerns of its data practices and Beijing’s possible influence.

Curiously, Mayer will also take on the role of the chief operating officer of parent company ByteDance . A closer look at the company announcement reveals nuances in the appointment: Kelly Zhang and Lidong Zhang will continue to lead ByteDance China as its chief executive officer and chairman respectively, reporting directly to ByteDance’s founder and global CEO Yiming Zhang, as industry analyst Matthew Brennan acutely pointed out. That means ByteDance’s China businesses Douyin and Today’s Headlines, the cash cows of the firm, will remain within the purview of the two Chinese executives, not Mayer.

Huawei in limbo following more chip curbs

Huawei is in limbo after the U.S. slapped more curbs on the Chinese telecoms equipment giant, restricting its ability to procure chips from foreign foundries that use American technologies. The company called the rule “arbitrary and pernicious,” while it admitted that the attack would impact its business.

Vodafone to help Oppo expand in Europe 

As Huawei faces pressure abroad due to the Android ban, other Chinese phone makers have been steadily making headway across the world. One of them is Oppo, which just announced a partnership with Vodafone to bring its smartphones to the mobile carrier’s European markets.

All of China’s top AI firms now on U.S. entity list 

The U.S. has extended sanctions to more Chinese tech firms to include CloudWalk, which focuses on developing facial recognition technology. This means all of the “four dragons of computer vision” in China, as the local tech circle collectively calls CloudWalk, SenseTime, Megvii and Yitu, have landed on the U.S. entity list.

China tech back home

China’s new trillion-dollar plan to seize the tech crown (Bloomberg)

China has a new master plan to invest $1.4 trillion in everything from AI to 5G in what it dubs the “new infrastructure” initiative.

Fitbit rival Amazfit works on a reusable mask

The smartwatch maker is eyeing a transparent, self-disinfecting mask, becoming the latest Chinese tech firm to jump on the bandwagon to develop virus-fighting tech.

ByteDance moves into venture capital investment

The TikTok parent bankrolled financial AI startup Lingxi with $6.2 million, marking one of its first investments for purely monetary returns rather than for an immediate strategic purpose.

Bilibili is the new Youtube of China

The once-obscure video site for anime fans is now in the mainstream with a whopping 172 million monthly user base.

Xiaomi’s investment powerhouse reaches 300 companies 

It’s part of the smartphone giant’s plan to conquer the world of smart home devices and wearables.

Alibaba pumps $1.4 billion into content and services for IoT

Like Amazon, Alibaba has a big ambition in the internet of things.

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