Episode 4: Is Tik Tok really going to get banned? With Megan Gray.

Summary

The Monopoly Report: Episode 4 Summary – "Is TikTok Really Going to Get Banned?" Featuring Megan Gray

Release Date: October 30, 2024

In Episode 4 of The Monopoly Report, host Ari Paparo and co-host Alan Chappelle engage in a comprehensive discussion with guest Megan Gray, a seasoned tech lawyer and founder of Gray Matters. The episode delves deep into the ongoing controversy surrounding the potential ban of TikTok in the United States, exploring the legal, political, and economic dimensions of this high-stakes issue.

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1. Introduction to Megan Gray and TikTok's Legal Challenges

[01:35]
Alan Chappelle introduces Megan Gray, highlighting her extensive experience in tech law, including her tenure as senior counsel at the Federal Trade Commission and general counsel at DuckDuckGo. The conversation sets the stage by addressing TikTok's fraught history with U.S. regulators, particularly focusing on its compliance issues with the Children's Online Privacy Protection Act (COPPA).

[02:01]
Megan Gray explains, “there's a federal law called COPPA that regulates how you handle, process, delete children's personal information... they violated it. So they got slapped.” This violation underscores the early regulatory challenges TikTok faced, emphasizing the broader issue of data privacy in social media platforms.

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2. The Trump-Era Executive Orders and Judicial Pushback

[03:21]
The discussion shifts to the Trump administration's efforts to ban TikTok through executive orders. Megan Gray details how President Trump issued two separate orders targeting TikTok and WeChat, invoking legal authorities related to national emergencies and foreign acquisitions.

[03:21]
She states, “the courts determined up through appeal that that was excessive use of presidential authority,” highlighting the judiciary's role in limiting executive overreach.

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3. Project Texas: An Attempted Compromise

[04:55]
Alan Chappelle brings up Project Texas, an initiative where TikTok agreed to stringent vetting and operational changes to placate U.S. security concerns. Megan Gray elaborates, “Project Texas was to kind of outsource to Oracle... to put a firewall between ByteDance and TikTok.”

[05:10]
Despite its comprehensiveness, the Biden administration deemed Project Texas insufficient, though the specific reasons remain undisclosed due to national security sensitivities. This stalemate set the stage for congressional intervention.

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4. Legislative Maneuvering: The Protecting Americans from Foreign Adversary Controlled Applications Act

[09:16]
The conversation turns to the legislative process that culminated in the Protecting Americans from Foreign Adversary Controlled Applications Act (PFACA). Megan Gray explains how a determined congressman in the House attempted to attach the TikTok ban to a critical government appropriations bill, ensuring its passage despite initial resistance.

[10:45]
Megan Gray notes, “He threw that in there with the support of House leadership, thinking that that would result in a shutdown,” but a negotiated agreement allowed the ban to proceed without halting government operations.

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5. Presidential Implications and Enforcement Challenges

[12:25]
Ari Paparo raises the question of presidential discretion in enforcing the ban. Megan Gray responds, “TikTok has to divest to a, quote, unquote, qualified company... The President gets to decide whether the company is qualified.”

[13:21]
This structure limits presidential flexibility, as refusal to enforce the ban could result in severe penalties for companies like Oracle, Apple, and Google involved in hosting TikTok, thereby pressuring adherence regardless of administration stance.

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6. Potential Outcomes and Predictions for TikTok

[20:50]
When asked to predict the ban’s outcome, Megan Gray confidently states, “I think TikTok will be banned,” despite acknowledging the lack of alignment with U.S. legal precedent and potential negative ramifications for national security and business integrity.

[23:46]
Alan Chappelle adds that TikTok's current strategy involves minimal lobbying and reliance on judicial appeals, which Gray concurs, suggesting that TikTok's primary recourse lies in the courts, where odds appear stacked against it.

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7. Broader Implications for Tech Regulation and International Relations

[24:59]
The hosts explore the wider consequences of the TikTok ban, with Megan Gray warning about the dangerous precedent of branding companies based on their foreign ownership, which could exacerbate partisan divides and complicate regulatory frameworks for social media.

[27:02]
Alan Chappelle draws parallels between the TikTok situation and long-standing tensions between U.S. tech giants and EU regulatory bodies, cautioning against creating a fragmented global tech landscape that favors only large corporations capable of navigating diverse regulatory environments.

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8. Conclusion: The Future of TikTok and Regulatory Landscape

[29:02]
The discussion wraps up with reflections on why TikTok is under scrutiny in the U.S. but not similarly in Europe, with Megan Gray questioning the rationale and pointing out inconsistencies in regulatory approaches across continents.

[30:14]
In a lighter moment, Megan shares a personal detail about her involvement in roller derby, showcasing her multidimensional persona beyond her legal expertise.

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Key Takeaways:

• Regulatory Scrutiny: TikTok's journey has been marred by regulatory challenges, particularly concerning data privacy and national security.

• Legislative Strategy: The PFACA represents a strategic legislative maneuver to enforce the ban despite executive pushback and judicial limitations.

• Enforcement Complexity: The ban's enforcement hinges on presidential discretion and corporate compliance, presenting significant legal and practical challenges.

• Future Predictions: Experts like Megan Gray predict the ban's eventual success, though the path raises questions about legal precedents and international consistency in tech regulation.

• Broader Impact: The TikTok ban exemplifies the complexities of regulating global tech platforms, highlighting risks of fragmented international policies and heightened partisan tensions.

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Notable Quotes:

• Megan Gray at [02:01]:
  “There's a federal law called COPPA that regulates how you handle, process, delete children's personal information... they violated it. So they got slapped.”

• Megan Gray at [03:21]:
  “The courts determined up through appeal that that was excessive use of presidential authority.”

• Megan Gray at [09:16]:
  “He threw that in there with the support of House leadership, thinking that that would result in a shutdown.”

• Megan Gray at [12:25]:
  “TikTok has to divest to a, quote, unquote, qualified company... The President gets to decide whether the company is qualified.”

• Megan Gray at [20:50]:
  “I think TikTok will be banned.”

• Megan Gray at [24:59]:
  “The idea of characterizing TikTok as just unadorned evil and a tool of the Chinese government is one not only inaccurate, but I think it makes it difficult to have conversations about how we actually should regulate social media.”

---

This episode of The Monopoly Report offers a nuanced exploration of the TikTok ban, presenting expert legal insights and highlighting the intricate interplay between legislation, executive power, and corporate strategy in the realm of tech regulation.

Transcript

[Ari Paparo]

This podcast is brought to you by Chalice. Chalice is the leading AI application for brands applying their own data and analytics in the real time decisioning of ad buys. And now Chalice can deploy custom AI as a pmp. We're talking real time curation at page level to drive any outcome. Learn more about AI that's yours at Chalice AI. That's Chalice AI Foreign. Welcome to the Monopoly Report. The Monopoly Report is dedicated to chronicling and analyzing the impact of antitrust and regulations on the global advertising economy. If you're new to the Monopoly Report, you can subscribe to our weekly newsletter at Monopoly Market tv. I'm Ari Paparo. I'm joined by Alan Chappelle and we're here to talk to Megan Gray. So, Alan, why don't you introduce Megan?

[Alan Chappelle]

So in this episode we have Megan. Megan's a tech lawyer with her own law and policy firm called Gray Matters. It's headquartered in Washington, D.C. she focuses on information, Internet innovation and intangibles and serves at the advisory board for the Electronic Frontier foundation and the center for Democracy and Technology. Earlier in her career, Megan was senior counsel at the Federal Trade Commission and general counsel of DuckDuckGo. So today we're going to talk about a US federal law that seeks to ban TikTok from US app stores. And we covered this in our weekly newsletter a few weeks ago. So, Megan, thank you so much for being here.

[Megan Gray]

Sure. Thank you for having me. I love talking about this topic. It's fascinating.

[Alan Chappelle]

So let me set the stage here and I'll let you jump in and provide color commentary. So going back to 2017, TikTok was born when a Chinese company, ByteDance, bought their US social app Musical Ly. And soon after purchasing Musical Ly, bytedance had a little bit of a run in with the FTC over some COPPA issues, some children related issues. Can you just give us a little bit of background on that?

[Megan Gray]

Well, I mean, it was, I actually don't know if it started prior to ByteDance. I think it did, musically. Yeah. But by the time you had the resolution, the settlement, bytedance was the owner. So basically there's a federal law called COPPA that regulates how you handle process, delete children's information, personal information, and it can be very technical. There's a lot of bureaucracy, regulatory aspects to it and they violated it. So they got slapped.

[Alan Chappelle]

And then that's sort of an endemic challenge, I think, for the social platforms, particularly those. I mean, they just have a way of sort of attracting kids. And so when you attract kids and you, you COPPA usually comes calling eventually.

[Megan Gray]

Well, if you don't, if you don't practice good hygiene and particularly for a lot of young, suddenly successful tech companies, they have not put together the, the right data legal regimes in place. So they end up getting slapped.

[Alan Chappelle]

Yep. Well, okay, so we Fast forward to 2020 during the Trump administration and the Trump had issued an executive order that effectively banned TikTok. And then that ban was challenged in court. And you know what happened there because it, it sounds like as we lead up to today, that Tick Tock has sort of had a history of thorny issues with the government for sure.

[Megan Gray]

You know, interestingly, Trump actually issued two executive orders because trying to ban TikTok. Apparently he didn't think he covered enough ground with the first one. He also tried to ban WeChat and he tried to ban based on two executive branch legal authorities, one dealing with emergencies like in wartime, and another one called cisfius, which is often used for, if a company is purchased in the United States by Japan or Saudi Arabia or Canada, they have to consider Cisfius review, which is we don't want to have a foreign country buying our oil pipelines, for example. And here he, Trump, put forward the cspus regulatory regime as a basis where we don't want to have a Chinese company owning so much of a social media platform. Those were challenged in court, those executive orders, and the courts determined up through appeal that that was excessive use of presidential authority. So that ended. And, and then ultimately, once the presidency transferred to Biden, Biden continued within the executive branch to evaluate what Cisfius could do in terms of putting some guardrails on TikTok. And they reached a stalemate, kind of just sitting there trying to figure out what they were going to do next when, and I'm sure you're about to get into this, then Congress started moving on the ban that we're dealing with today.

[Alan Chappelle]

Right. Right before the ban, though, there was this thing called Project Texas where it seemed like TikTok had, had agreed to a whole bunch of additional vetting and scrutiny. And, and what happened there? Why did Project Texas like, why was that deemed insufficient?

[Megan Gray]

We don't know. That was part of the negotiation between the Biden CSP group and TikTok. And Project Texas was a way to put guardrails on the fact that TikTok has a Chinese company owner, ByteDance, which is presumably controlled in some respect by the Chinese government because that's how capitalism works there. And Project Texas was to kind of outsource to Oracle, an American company, certain operations of TikTok to put a firewall between ByteDance and what ByteDance could do to exfiltrate or infiltrate into the US company TikTok. But for reasons that has never been fully explained because it's national securities, yada yada, there were people within the Biden administration that did not think that Project Texas was sufficient even though it was pretty extensive as far as I can tell and they have not explained why it is insufficient.

[Ari Paparo]

Isn't there some cloak and dagger here where we've heard that congressional sources have been in closed top secret meetings and they come out all white faced and shocked at what they've heard and immediately want to ban TikTok?

[Megan Gray]

I know exactly the closed door meeting that you're talking about and it's funny, it depends on whose characterization you listen to because you also had people come out of that meeting going where's the beef? I don't understand how we are supposed to come out of this 20 minute meeting, 10 minutes of which were a congressional member asking about whether the Chinese government was poisoning his water and sending radio waves through his television set possible. How we're supposed to come out of that meeting and think that an entire media platform should be banned and then other people come out of that meeting saying oh my gosh, how could this have possibly happened?

[Ari Paparo]

Let me ask. I like to play the dumb guy in this podcast compared to Alan, who knows what he's talking about. My dumb guy approach is like when I was growing up, the communist Russian government, Soviet Union wasn't allowed to buy local newspapers or, or TV stations. So why should.

[Megan Gray]

Well that's not true. They were absolutely, they were absolutely allowed to buy newspapers.

[Ari Paparo]

Newspapers, yes, but not television.

[Megan Gray]

But not, not television stations. And people often say, well then it's the exact same situation. But it's not because radio stations are operate based on government owned spectrum.

[Alan Chappelle]

Yeah. And there's some, you know, some similarities to that. But I think that, you know, for, for better or worse, the way we've currently constructed things, social platforms are not subjected to the same set of rules as television stations and for that matter newspapers in many regards. And, and we could have a whole separate pod on section 230 and immunity for platforms and maybe we will it one day. But I think, you know, the answer to your question is that, you know, as far as the, the, the law is concerned, those are separate things.

[Megan Gray]

Yes, very separate. And we've had newspapers and magazines and brochures and all sorts of things for communication on on just like old fashioned mechanisms that have never been regulated. That that is the premise of how this country started is that people can believe and advocate for what they want people in America to believe. That is the whole premise that we should not have a government act as a filter, as a sensor for saying I, you know, you need to check with me before you can read this brochure.

[Alan Chappelle]

Okay, so now Congress has decided that there is a problem and I think it's whether there's actual problem is probably a debatable point, but there's enough momentum there that they decided there's a problem and we need to solve it. And we, we're going to solve it with, and I'm only going to say this once, the Protecting Americans from Foreign Adversary Controlled Applications act, the only time I'm ever going to say that. But they came up with the TikTok ban. Walk us through that.

[Ari Paparo]

Is that an interesting acronym that's like pfaka, like usually they have an acronym that spells something?

[Megan Gray]

Yeah, they did it here. And you know, it's interesting because we talk about Congress as if it's a single entity and I don't think that's accurate. There are many, probably majority of people in both the Senate and the House that did not want to pass legislation dealing with TikTok because it does raise a lot of thorny issues and there's a lot of countervailing interests here. For example, if you are in favor of diversifying the economic social media market and you think Facebook is too dominant, then you might favor the presence of TikTok even though it has a parent company that is based out of China. It raises the First Amendment issues. It raises issues of reaching a younger generation, which is why you have Harris and Trump both with very active TikTok accounts now. So there's a lot of reasons why people in Congress didn't want to wade in here. But there was one guy who really, really did in the House and he formed a special committee within the House of Representatives to deal with the China threat.

[Alan Chappelle]

As he posed it, that congressman came in and basically through what I would call some chicanery that is perfectly fine in a congressional setting, but, but came up with some interesting shenanigans to effectively cram this law through Congress. And then what happened?

[Megan Gray]

He actually was not successful in cramming it through Congress. He was hitting all sorts of problems getting it through the House of Representatives. He couldn't find anybody to sponsor a companion bill in the Senate and he was spinning out. He was making no progress until it turns out that the Republicans, for their own reasons, were battling with Biden on passing a general government appropriations bill. It was hung up on funding for Israel and most importantly for Ukraine. And into that area. This House of Representatives member said, hey, I've got a great idea. Why don't I try to attach this TikTok bill that doesn't seem to be going anywhere to a must pass law, which is government appropriations. He threw that in there with the support of House leadership, thinking that that would result in a shutdown, a government shutdown. But Biden's folk said, hey, look, here's an idea. We'll let you have your TikTok ban if you will allow the government to stay open and pass the Ukraine Israel bill. And that got negotiated and ultimately the law was passed and signed with gritted teeth by President Biden who issued a press release about the funding, but made no mention about the TikTok ban. And here we are with a law now on the books saying that TikTok either must divest to an appropriately qualified American company or, or it can no longer be in the app stores or be hosted by Oracle.

[Ari Paparo]

So neither presidential candidate wants to talk about this, right?

[Megan Gray]

Well, actually Trump wants to talk about it. He posted back in September and was also quoted in July saying that if you vote for him, he will save TikTok.

[Ari Paparo]

Now what? There is an option to just not enforce this law. Right. Because the president, okay, that is the.

[Megan Gray]

Most fast that, that's why the, the Trump statement is so crazy. It's not like he has a choice. It is self effectuating. There is nothing that a president can do to stop it from going into effect. Because the guy in the House of Representatives that I keep referring to, he was well aware that whoever was going to be the next President, Trump or otherwise, was not a reliable ally on this particular issue. So he didn't want to leave any discretion to the President on whether or not to enforce.

[Ari Paparo]

But isn't there a possibility they could find that they were in compliance and just.

[Megan Gray]

Yes, yes. So the way that this self effectuating law is structured is that TikTok has to divest to a, quote, unquote, qualified company. And qualified has a lot of description in the, in the statute. And the President gets to decide whether the company is qualified. So whether the divestiture is appropriate or not. And it is certainly possible that you could have a sham, an illusory divestiture. However, that's all the President does. It's ultimately up to Oracle, Apple and Google to decide whether or not they're going to play this game, subjecting themselves to billions of dollars of civil penalties if the President changes its mind or you have a different election, that all of a sudden they would be on the hook for billions of dollars of fine. And I just have a very hard time imagining that any of these companies would be willing to risk that, knowing that it's a sham divestiture.

[Alan Chappelle]

So I think that Meta or Google should buy TikTok. What do you think the chances of that getting through the current FTC is?

[Megan Gray]

Well, we're not going to have the current ftc. Right. We're going to have the ban or divest goes into effect January 20th. There'll be a new presidential administration at that point. And really we don't know even yet who's going to control the Senate. The Senate is who determines confirmation for political appointees, including at the FTC and doj. Antitrust. That is just up in the air. Nobody knows right now. And whether your question of whether Meta, for example, could buy TikTok is going to depend on whether that would be approved by the FTC or doj. And we don't know who's going to be making those decisions yet.

[Ari Paparo]

Wait, January 20th. So like the new President's first day, they get, they get sworn in and before the inauguration balls start, like, hey, by the way, yeah, this is not.

[Megan Gray]

Even going to be the number one thing on their radar. Right. That law will go into effect. And incidentally, the law allows the President to grant a three month extension of time, but only if there is a binding qualified divestiture. So like it requires them to run through a lot of hoops to even grant the extension of time.

[Ari Paparo]

Well, don't count Elon Musk out of this because if Trump wins, he'll just give the spoils to whoever supported him, more or less.

[Megan Gray]

That is true, but we're not sure if that's actually a spoil. Right. Because the Chinese government has passed its own law saying any sale of an algorithm, the secret sauce here that really powers TikTok, cannot be a part of any divestiture. So you would get TikTok, but perhaps not the most valuable parts of it. And I also think, for example, if you were to have a Trump presidency, there's going to be a lot of back and forth on whether or not a musk could be encouraged to buy Truth Social. So there, there's going to be a few social media platforms up for sale.

[Alan Chappelle]

Yeah. So I, I have some friends at TikTok and I've sort of, I, I'VE told them this. I'm sort of surprised about how they're playing this. And I'm going to leave aside the court stuff, but more like the, the political angle. Like, if I was Tik Tok, I would be using every bit of force that I had to make it very uncomfortable for either the Harris or the Trump campaigns. Maybe less of the Trump campaign because he's already, you know, committed to fixing it. But, and it's weird, it doesn't feel like that groundswell of support for Tik Tok has, has quite emerged. And I'm, I'm curious, like, well, firstly, does anybody have any answer or any, any thoughts to why that is? And then maybe open it up to like, how is TikTok playing this and how could they be doing better?

[Megan Gray]

TikTok didn't do that early on when this ban was suddenly moving very fast on the Hill and they got just beaten up black and blue by people in Congress for pulling out all the stops and having their creators, for example, go and pick it and petition the various people in Congress. So I think as a result of that blowback, TikTok has re strategized on what the best approach is, that embarrassing public pressure campaigns are not the best way to go forward with trying to get people to change their mind. But more importantly, what do you expect Congress to do at this point? Do you think Congress is going to pass a pro TikTok ban reversal? They can barely pass a budget. I don't think this is going to happen in Congress. So I. It doesn't surprise me that Tick Tock has been, as far as we can see, fairly quiet in lobbying because there's not much possibility of that moving forward. I think Tick Tock has put all of the eggs in the only basket that they have available to them right now, which is the courts.

[Ari Paparo]

So how's that going? What's the state of the case?

[Megan Gray]

Yeah, not going great. It was very unfortunate. Judges are assigned randomly to every case and TikTok got a bad random assignment. They got two, they got one MAGA judge, they got one very old Republican judge and they got the chief judge who was appointed by a Democrat and is fairly even keeled here, but would still be outvoted 2 to 1. And going to the oral argument, as I did, I walked out there a little shell shocked at how little, I think consideration there was of what are pretty strong meritorious arguments from TikTok. That oral argument was China, China, China. It was. No, it was just, it was crazy bad for TikTok and It doesn't get better from that. Because even if TikTok loses there and goes to the Supreme Court, the current constitution of our Supreme Court doesn't look great for TikTok.

[Ari Paparo]

Right. But isn't the Supreme Court very pro business and anti regulation Abid, not pro.

[Megan Gray]

Chinese business, which is how everybody seems to be viewing TikTok in the courts right now. It is orthodoxy in the Republican Party to be very, very rabid on China as a national security threat. And the Democrats, even to the extent that they recognize that that's perhaps not entirely true, do not want to be in a position of defending China.

[Ari Paparo]

Yeah, the Democrats aren't pro China. They're just pro reason and rule of law.

[Megan Gray]

I agree. But it's like being in favor of criminal reform, like, it's very difficult to walk that line and the Democrats are very careful on that.

[Alan Chappelle]

So anybody want to make a prediction? Because it does not sound great for TikTok right now. Things are not looking good. But does anybody want to make a prediction whether or not TikTok will ultimately be banned?

[Megan Gray]

I have done quite a bit of thinking about that, and I do have a prediction. I think TikTok will be banned. And I struggle with that because I don't think that accords with U.S. legal precedent. I don't think it's a good path forward for business, and I don't even think it's a good outcome for national security reasons. And in trying to map this out, because I've been mystified by the fact that TikTok is apparently not making any preparations, the fact that TikTok is hiring at a crazy mad pace right now, like, that does not seem consistent with my prediction. Right. And so I've had to keep going back, like, what am I missing? Maybe they've got some sort of secret plan here. Maybe they've got a handshake deal with Trump and Harris. But the more I look at it, I'm like, I just don't see an out. I don't see a way forward here. They could do a sham divestiture, but for the reasons I explained earlier, that doesn't seem likely. TikTok was banned in India and when that happened, they just pulled out. That was just the end of it. And they don't operate in India anymore. And so maybe that's their plan here, which doesn't make a lot of sense to me because I've always thought that for an online platform, the United States is where the money's made, that these are, these are the richest people the Most online, but that seems to be the ultimate outcome. I would like to say though that what this TikTok ban does is it only requires Google and Apple to drop TikTok from the app stores and it requires Oracle as a US company to not host them. It is very possible that you could have a situation where none of that matters. You can continue to side load, you can still have the website operating. You could have TikTok move to Canada and be hosted by a company out of Ireland. Like maybe this is all for not but I would have anticipated if that was TikTok's plan we would have gotten some inkling of this. Like them negotiating with a different hosting company. I haven't heard anything along those lines.

[Alan Chappelle]

Yeah, I just wonder if they're waiting for the dust to settle after the election and then figure out exactly which buttons they want to push. But I like the side loading option and I think there'll my prediction is some variant of that is going to happen in the TikTok for all intents and purposes is going to remain in the US Alternatively I heard a very strong rumor and I don't like to engage in rumors on this show, but I heard that market might be purchasing.

[Ari Paparo]

All I could say is in the club we'll all fam Sorry, you guys obviously are not TikTok users. That's the current phrase du jour.

[Megan Gray]

Well you know the other aspect too is the one thing that you can count on is that at least for the foreseeable future we are going to continue having problems funding the government. So the idea of Congress passing a reversal ban, if somebody in Congress wants to stand up to defend TikTok, maybe you could get a reversal ban that way.

[Ari Paparo]

So I'm a cynic. So I think sort of what I said earlier, which is Harris wins, it's banned, Trump wins, we have crony capitalism and it gets shoved into one of his donors pockets.

[Megan Gray]

I can't say I disagree.

[Alan Chappelle]

So one of the implications that we're seeing already with this whole situation is I'm hearing this from my friends at TikTok is like the salespeople at Meta and other large platforms and they're on their ad side are saying hey you know, you might not want to put all your ad dollars into TikTok anymore because they might not be around anymore. And so they're playing the FUD card. So that's certainly one of the implications. But I'd love both of your takes on like what are the other implications of all this? Because we are kind of messing with the rule of law here, Megan.

[Megan Gray]

I'm well aware. I think the implications are pretty horrific. The idea that anytime you can paint somebody with a foreign brush like you are an Israeli company because your owner is Israeli, or because your CEO has citizenship in dual citizenship in Russia, or anytime we're going to make someone else the other. Right. This is foundationally the problem that we have with partisan politics right now is that you're either on my team or you are a complete, you know, insect that should be squashed. And I think the idea of characterizing TikTok as just unadorned evil and a tool of the Chinese government is one not only inaccurate, but I think it makes it difficult to have conversations about how we actually should regulate social media.

[Alan Chappelle]

I could not agree more. And what I find really fascinating is that a lot of the arguments being made with respect to TikTok are almost identical to the arguments that have been made over the last 10 years with respect to the US tech companies in context with, you know, from the EU Commission and other folks in the EU. And I would be very wary if I were the U.S. if I ran things in the U.S. i'd be very wary of effectively creating a trade war because if you start to close down cross border data transfers, you sort of embolden the folks within Europe who have been clamoring to do that to the U.S. and so, you know, bring this back to like, okay, the market takes your audience, like, what? How does this impact me? Like, if you're looking to close a big deal that involves the transfer of European data into the US and if you're in the ad tech and you're working in Europe, that's inevitably the case. You know, you could have a situation where this blows up those data transfers. And like I've been on calls with clients where, you know, they have a large EU based advertiser who is jumping up and down and saying, listen, there's too much uncertainty here, we can't even move forward this deal.

[Megan Gray]

Absolutely. And there's two. There's a similar aspect of that which is the splinter net. Right. If you're going to have different regulatory regimes depending on whether you're in Europe or India or the United States, that means that ultimately the only companies that can operate in any truly successful way on the Internet are large companies because they are the only ones that can pivot and have different operations the the way that's necessary to operate in the Internet. You know, but on that point, I think most people perceive that Facebook, Google, etc. Are on the sidelines just passively watching whether or not the ban will go into effect. I don't think that's true at all. I think they recognize that this would be a huge boon for their business and they have proxies that are actively currying this anti Chinese sentiment.

[Ari Paparo]

Yeah, but if you look at what's going on in Europe from a business perspective, the big tech giants aren't being banned, but they're certainly being hindered. And you have to imagine inside Meta, they don't see the future of growth in Europe as even a possibility. I think given that they aren't even rolling out their AI products and they're quite limited in what they're able to do nowadays in Europe.

[Alan Chappelle]

Well, I almost think that's separate, though. I mean, there's. There's sort of like the bureaucratic hassle of being in Europe at all, and then there's the additional wrinkles if you're happen to be Meta or some other large company. But I'm saying, like, if you're the director of sales at some martech company and all of a sudden they close down EU data transfers, that's going to impact you directly. And that sort of already happened at least twice in the last 10 years.

[Ari Paparo]

Privacy Shield and srems and all these people.

[Megan Gray]

It's absolutely. But you know, the interesting thing though, that I keep asking folks about, and I still haven't gotten a satisfactory answer, is that if in fact TikTok is a Chinese government stalking horse, why is it okay in Europe?

[Ari Paparo]

It's a good question.

[Megan Gray]

The best answer I've gotten is that, you know, oh, Europe is. Is corrupt and beholden to China. And I'm like, really? That's our theory for why it makes no sense.

[Ari Paparo]

My take is they just love going after the Americans and the Chinese are less important. Do you think we get shrems on the show? I picture him as sort of like the Sprocket guys from snl.

[Megan Gray]

I love him. He's a great speaker.

[Ari Paparo]

Is he a nice guy?

[Megan Gray]

Yeah.

[Ari Paparo]

Okay. I don't know anything about him except his name on the lawsuits.

[Alan Chappelle]

Yeah, we should try to get him on.

[Ari Paparo]

All right, I think it's time to wrap this up. This was an amazing conversation. We didn't get to Megan's secret sport. What was that about?

[Megan Gray]

Well, it's not a secret and perhaps isn't that well known, but I play roller derby.

[Ari Paparo]

I'm speechless. I don't know what to say. That was not what I was expecting.

[Alan Chappelle]

That's the best mic drop we're gonna have.

[Megan Gray]

Ari, what were you expecting?

[Ari Paparo]

Well, we have dad curling. I was thinking, I don't know, like croquette or something. I don't know.

[Megan Gray]

I think I. I joined roller derby primarily because I just thought of a great roller derby name.

[Ari Paparo]

Yeah? What's her name?

[Megan Gray]

So sue me.

[Ari Paparo]

Oh, that's awesome. What's your cruise name? What's your team's name?

[Megan Gray]

It's just the DC Roller derby team.

[Ari Paparo]

Oh, okay. Usually they have cool. I know, but so Sue Me is pretty awesome. All right, this was a great conversation. We have more episodes coming of a Monopoly report. Please make sure to subscribe on Spotify, Apple, YouTube or wherever you like to listen to your podcasts. Macon, thank you so much for being here.

[Megan Gray]

Thank y'all.

[Ari Paparo]

And Alan, always fun to talk.

[Alan Chappelle]

Great time, Ari. Thanks, Megan.

[Megan Gray]

Thanks.