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The U.S. government sends mixed messages about TikTok’s future

The fate of TikTok in the United States got even more confusing this week. The U.S. Justice and Commerce Departments sent conflicting messages today about TikTok’s future, which is now up in the air with the upcoming administration transition.

The Department of Commerce said Thursday it would abide by an injunction issued October 30 by the District Court in the Eastern District of Pennsylvania that would have blocked TikTok from operating in the U.S. starting from today. In a statement, the department said it is complying with the court’s order and its prohibition against TikTok “HAS BEEN ENJOINED, and WILL NOT GO INTO EFFECT, pending further legal developments.”

But on the same day, the Justice Department appealed the Pennsylvania court’s ruling just as it was set to go into effect.

But wait! It gets even more convoluted: another court–the U.S. Court of Appeals in Washington–just set new deadlines in December for ByteDance, TikTok’s Beijing-based parent company, and the Trump administration, to file documents in a case involving a divestment order that would force ByteDance to sell TikTok to continue operating in the U.S.

ByteDance reached an agreement with Oracle and Walmart in September, but the future of the deal is also uncertain.

The Justice Department’s appeal is part of a lawsuit filed against the U.S. government on September 18 by three TikTok creators, Douglas Marland, Cosette Rinab and Alec Chambers. Each has more than a million followers on TikTok, which has about 100 million users in the U.S., and argues that a ban would impact their ability to earn a living from brand collaborations on the app.

On Oct. 30, Judge Wendy Beetlestone issued an injunction against the U.S. government’s restrictions. In her ruling, Beetlestone wrote that the “government’s own descriptions of the national security threat posted by the TikTok app are phrased in the hypothetical.”

This case is separate from the one ByteDance filed against the U.S. government in a federal appeals court in Washington D.C. Earlier this week, ByteDance asked that court to vacate the U.S. order forcing it to sell the app’s American operations. ByteDance told TechCrunch in a statement that without an extension on the November 12 deadline, it “[had] no choice but to file a petition in court to defend our rights and those of our more than 1,500 employees in the U.S.”

The Commerce Department’s statement today, along with the Justice Department’s appeal and the new deadlines in the divestment case, underscore the confusion about the future of the Trump administration’s actions against TikTok after President-Elect Joe Biden takes office on January 20.

While some analysts believe the Biden administration may give Chinese tech companies that were targeted under the current administration, including Huawei and ByteDance, a chance to re-negotiate with the government, that may take second priority as Biden deals with domestic issues, including the resurgence of COVID-19 in the U.S.

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ByteDance asks federal appeals court to vacate U.S. order forcing it to sell TikTok

In a new filing, TikTok’s parent company ByteDance asked the federal appeals court to vacate the United States government order forcing it to sell the app’s American operations.

President Donald Trump issued an order in August requiring ByteDance to sell TikTok’s U.S. business by November 12, unless it was granted a 30-day extension by the Committee on Foreign Investment in the United States (CFIUS). In today’s filing (embedded below) with the federal appeals court in Washington D.C., ByteDance said it asked the CFIUS for an extension on November 6, but the order hasn’t been granted yet.

It added it remains committed to “reaching a negotiated mitigation solution with CFIUS satisfying its national security concerns” and will only file a motion to stay enforcement of the divestment order “if discussions reach an impasse.”

Security concerns about TikTok’s ownership by a Chinese company were at the center of the executive order Trump signed in August, banning transactions with Beijing-headquartered ByteDance.

The executive order claimed that TikTok posed a threat to national security, though ByteDance maintains that it does not. But in order to prevent the app, which has about 100 million users in the U.S., from being banned, ByteDance reached a deal in September to sell 20% of its stake in TikTok to Oracle and Walmart. With the Biden administration set to take office in January and ByteDance’s ongoing legal challenge against the divestment order, however, the future of the deal is now uncertain.

The new filing is part of a lawsuit TikTok filed against the Trump administration on September 18. It won an early victory when the court stopped the U.S. government’s ban from going into effect on its original deadline that month.

In a statement emailed to TechCrunch, a TikTok spokesperson said it has been working with the CFIUS for a year to address its national security concerns “even as we disagree with its assessment.”

Facing continual new requests and no clarity on whether our proposed solutions would be accepted, we requested the 30-day extension that is expressly permitted in the August 14 order,” the statement continued.

“Today, with the November 12 CFIUS deadline imminent and without an extension in hand, we have no choice but to file a petition in court to defend our rights and those of our more than 1,500 employees in the US.” 

TikTok asks U.S. federal appeals court to vacate U.S. divestment order by TechCrunch on Scribd

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PUBG Mobile plots return to India following ban

PUBG Mobile, the sleeper hit title that was banned in India two months ago over cybersecurity concerns, is plotting to make a return in the world’s second largest internet market, two sources familiar with the matter told TechCrunch.

The South Korean firm has engaged with global cloud service providers in recent weeks to store Indian users’ data within the country to allay New Delhi’s concerns about user data residency and security, one of the sources said.

The gaming giant has privately informed some high-profile streamers in the country that it expects to resume the service in India before the end of this year, the other source said. Both the sources requested anonymity as they are not authorized to speak to the press. PUBG Corporation did not respond to a request for comment Thursday.

The company could make an announcement about its future plans for India as soon as this week. It also plans to run a marketing campaign in the country during the festival of Diwali next week, one of the sources said.

In recent weeks, PUBG has also engaged with a number of local firms including SoftBank-backed Paytm and telecom giant Airtel to explore whether they would be interested in publishing the popular mobile game in the country, an industry executive said. A Paytm spokesperson declined to comment.

Chinese giant Tencent initially published PUBG Mobile apps in India. After New Delhi banned PUBG Mobile, the gaming firm cut publishing ties with Tencent in the country.

Late last month, two months after the ban order, PUBG Mobile terminated its service for Indian users. “Protecting user data has always been a top priority and we have always complied with applicable data protection laws and regulations in India. All users’ gameplay information is processed in a transparent manner as disclosed in our privacy policy,” it said at the time.

With more than 50 million monthly active users in India, PUBG Mobile was by far the most popular mobile game in the country before it was banned. It helped establish an entire ecosystem of  esports organisations to teams and even a cottage industry of streamers that made the most of its spectator sport-friendly gameplay, said Rishi Alwani, a long-time analyst of Indian gaming market and publisher of news outlet The Mako Reactor.

PUBG Mobile’s return, however, could complicate matters for several industry players, including some that are currently building similar games to cash in on its absence and their conversations with venture capital firms over ongoing financing rounds.

It would also suggest that more than 200 other Chinese apps that India has banned in recent months could hope to allay New Delhi’s concerns by making some changes to where they store their users data. (That was also the understanding between TikTok and Reliance when they engaged in investment opportunities earlier this year.)

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TikTok stars got a judge to block Trump’s TikTok ban

TikTok has won another battle in its fight against the Trump administration’s ban of its video-sharing app in the U.S. — or, more accurately in this case, the TikTok community won a battle. On Friday, a federal judge in Pennsylvania issued an injunction that blocked the restrictions that would have otherwise blocked TikTok from operating in the U.S. on November 12.

This particular lawsuit was not led by TikTok itself, but rather a group of TikTok creators who use the app to engage with their million-plus followers.

According to the court documents, plaintiff Douglas Marland has 2.7 million followers on the app; Alec Chambers has 1.8 million followers; and Cosette Rinab has 2.3 million followers. The creators argued — successfully as it turns out — that they would lose access to their followers in the event of a ban, as well as the “professional opportunities afforded by TikTok.” In other words, they’d lose their brand sponsorships — meaning, their income.

This is not the first time that the U.S. courts have sided with TikTok to block the Trump administration’s proposed ban over the Chinese-owned video sharing app. Last month, a D.C. judge blocked the ban that would have removed the app from being listed in U.S. app stores run by Apple and Google.

That ruling had not, however, stopped the November 12 ban that would have blocked companies from providing internet hosting services that would have allowed TikTok to continue to operate in the U.S.

The Trump administration had moved to block the TikTok app from operating in the U.S. due to its Chinese parent company, ByteDance, claiming it was a national security threat. The core argument from the judge in this ruling was the “Government’s own descriptions of the national security threat posed by the TikTok app are phrased in the hypothetical.”

That hypothetical risk was unable to be stated by the government, the judge argued, to be such a risk that it outweighed the public interest. The interest, in this case, was the more than 100 million users of TikTok and the creators like Marland, Chambers and Rinab that utilized it to spread “informational materials,” which allowed the judge to rule that the ban would shut down a platform for expressive activity.

“We are deeply moved by the outpouring of support from our creators, who have worked to protect their rights to expression, their careers, and to help small businesses, particularly during the pandemic,” said Vanessa Pappas, Interim Global Head of TikTok, in a statement. “We stand behind our community as they share their voices, and we are committed to continuing to provide a home for them to do so,” she added.

The TikTok community coming to the rescue on this one aspect of the overall TikTok picture just elevates this whole story. Though the company has been relatively quiet through this whole process, Pappas has thanked the community several times for its outpouring of support. Though there were some initial waves of “grief” on the app with creators frantically recommending people follow them on other platforms, that has morphed over time into more of a “let’s band together” vibe. This activity coalesced around a big swell in voting advocacy on the platform, where many creators are too young to actually participate but view voting messaging as their way to participate.

TikTok has remained active in the product department through the whole mess, shipping elections guides and trying to ban QAnon conspiracy spread, even as Pakistan banned and then un-banned the app.

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Apple eyes the TikTok generation with an updated version of Clips

Apple is today rolling out an update to its video creation app, Clips, which brings much-needed support for vertical videos, allowing for sharing to TikTok and the “Stories” feature in other social apps. The addition is one of several arriving with the release of Clips 3.0, which also introduces support for horizontal video, as well as HDR for iPhone 12 users, along with other smaller changes, like new stickers, sounds and posters, for example.

Apple’s Clips was first launched in 2017 with an eye on being a first stop for video creation before publishing to Instagram. But the app’s support for only square-formatted video has since become outdated. Casual social videos today are often now published to newer video-centric social media networks, like TikTok and its short-form rivals, including Triller, Dubsmash, Instagram Reels, and others.

Meanwhile, Stories — like those found on Instagram, Facebook, Snapchat, Pinterest and soon, Twitter — have become a key way that today’s users publish content to social media.

Apple, in fact, says that support for vertical video had become its No. 1 request from users since Clips launched.

Clips 3.0 introduces supports both 16:9 and 4:3 aspect ratios, in addition to the square format. When the app is opened on iPad, it will default to the landscape format, which can be particularly useful in educational scenarios where teachers are using the app in the classrooms with students.

On iPad, Clips users can also interact with the app when their iPad is in a case, like Magic Keyboard for iPad and others. It also supports use with a mouse or trackpad, and allowing users to write text in text fields using Apple Pencil.

Image Credits: Apple

The new app will also now support recording HDR video footage with the rear-facing camera on iPhone 12 and iPhone 12 Pro.

Clips’ overall user interface has been refreshed, too. You’ll notice a redesigned record screen that floats on top of the viewer when shooting vertically or horizontally, which could help to address some user complaints of the app feeling “slow.”

Users will also be able to more easily view and access the various Effects options, their Clips Projects and other media.

The tweaks to the user interface also feel a bit like a nod to TikTok. For example, you can now swipe up on the Effects to see a full-height card that shows you the available stickers and text labels to add to your videos. This format of a pop-up card filled with effects is similar to TikTok — though there it’s opened with a button tap and not a gesture.

Image Credits: Apple

The update also brings more content options, including 8 new social stickers (like “Sound On” for Instagram Stories), 24 new royalty-free soundtracks (bringing the total library to 100), and 6 new arrows and shapes. From the new Media browser in Clips, you can pull in your own photos and videos or toggle over to a Posters section to pick from 70 customizable, animated full-screen title cards that can be added to your video.

There are also updated filters, Live Titles and Selfie scenes available.

When your project is complete, you can easily share the resulting video to social networks from an updated sharing screen that includes quick access to destinations like Instagram, YouTube, TikTok, Twitter and Snapchat, in addition to standard options like iMessage or saving the file locally.

Though Clips hasn’t had as much attention as some of Apple’s other apps — its last update was 6 months ago, for instance — it has gained a following. Apple says that users create “millions” of Clips projects per day, and it sees higher usage in the U.S., U.K., and China.

This year, Clips usage increased by 30%, Apple noted — a change that could have been brought about by the shift to virtual schooling which saw teachers in need of tools for creating digital content.

Image Credits:

With its expanded focus on vertical video, Clips has the potential to reach a much broader audience.

Today, many users prep videos for Stories or TikTok on third-party apps, like InShot, Prequel, Splice, PicCollage, Canva, VSCO, Funimate, KineMaster, Magisto, CapCut and others topping the App Store charts. But Clips, until now, couldn’t compete because it didn’t include vertical video support at all.

The new version of Clips is rolling out today to users worldwide.

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Week in Review: Snapchat strikes back

Hello hello, and welcome back to Week in Review. Last week, I wrote about the possibility of a pending social media detente, this week I’m talking about a rising threat to Facebook’s biz.

If you’re reading this on the TechCrunch site, you can get this in your inbox here, and follow my tweets here. And while I have you, my colleague Megan Rose Dickey officially launched her new TechCrunch newsletter, Human Capital! It covers labor and diversity and inclusion in tech, go subscribe!


Image: TechCrunch

First off, let me tell you how hard it was to resist writing about Quibi this week, but those takes came in very hot the second that news dropped, and I wrote a little bit about it here already. All I will say, is that while Quibi had its own unique mobile problems, unless Apple changes course or dumps a ton of money buying up content to fill its back library, I think TV+ is next on the chopping block.

This week, I’m digging into another once-maligned startup, though this one has activated quite the turnaround in the last two years. Snap, maker of Snapchat, delivered a killer earnings report this week and as a result, investors deemed to send the stock price soaring. Its market cap has nearly doubled since the start of September and it’s clear that Wall Street actually believes that Snap could meaningfully increase its footprint and challenge Facebook.

The company ended the week with a market cap just short of $65 billion, still a far cry from Facebook $811 billion, but looking quite a bit better than it was in early 2019 when it was worth about one-tenth of what it is today. All of a sudden, Snap has a new challenge, living up to high expectations.

The company shared that in Q3, it delivered $679 million in reported revenue, representing 52% year-over-year growth. The company currently has 249 million daily active users, up 4% over last quarter.

Facebook will report its Q3 earnings next week, but they’re still in a different ballpark for the time being, even if their market cap is just around 12 times Snap’s, their quarterly revenue from Q2 was about 28 times higher than what Snap just reported. Meanwhile, Facebook has 1.79 billion daily actives, just about 7 times Snapchat’s numbers.

Snap has spent an awful lot of time proving the worth of features they’ve been pushing for years, but the company’s next challenge might be diversifying their future. The company has been flirting with augmented reality for years, waiting patiently for the right moment to expand its scope, but Snap hasn’t had the luxury of diverting resources away from efforts that don’t send users back to its core product. Some of its biggest launches of 2020 have been embeddable mini apps for things like ordering movie tickets or bite-sized social games that bring even more social opportunities into chat.

Snap’s laser focus here has obviously been a big part of its recovery, but as expectations grow, so will demands that the company moves more boldly into extending its empire. I don’t think Snapchat needs to buy Trader Joe’s or its own ISP quite yet, but working towards finding its next platform will prevent the service from settling for Twitter-sized ambitions and give them a chance at finding a more expansive future.


Image Credits: Bryce Durbin

Trends of the Week

These next few weeks are guaranteed to be dominated by U.S. election news, so enjoy the diversity of news happenings out there while it lasts…

Quibi is dead
Few companies that have raised so much money have appeared quite dead-on-arrival as Jeffrey Katzenberg’s mobile video startup Quibi. This week, the company made the decision to shut down operations and call it quits. More here.

Pakistan unbans TikTok
It appears that the cascading threat of country-by-country TikTok bans has stopped for now. This week, TikTok was unblocked in Pakistan with the government warning the company that it needed to actively monitor content or it would face a permanent ban. Read more here.

Facebook Dating arrives in Europe
Facebook Dating hasn’t done much to unseat Tinder stateside, but the service didn’t even get the chance to test its luck in Europe due to some regulatory issues relating to its privacy practices. Now, it seems Facebook has landed in the tentative good graces of regulatory bodies and has gotten the go ahead to launch the service in a number of European countries. Read more here.

Until next week,

Lucas M.

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