TNB Tech Minute: Supreme Court Appears Skeptical of TikTok’s Arguments

Summary

WSJ Tech News Briefing: Summary of January 10, 2025 Episode

The latest episode of the WSJ Tech News Briefing, hosted by James Rundle, delves into pivotal developments in the technology sector. This summary encapsulates the critical discussions on TikTok's legal challenges, the burgeoning Bitcoin ETF market, and regulatory actions against Liquidnet.

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1. Supreme Court Skeptical of TikTok’s Legal Arguments

James Rundle opens the episode by addressing TikTok's ongoing legal battle with the U.S. federal government. The social media platform is contesting a federal mandate that requires its Chinese parent company, ByteDance, to divest its U.S. operations by January 19, 2025, or face an outright ban in the United States.

Key Points:

• First Amendment Claims: TikTok argued that the federal law infringed upon its First Amendment rights. However, the Supreme Court appeared unconvinced during oral arguments.

• Justice Elena Kagan’s Statement: Addressing TikTok's claims, Justice Kagan noted, "The law was targeted at ByteDance, its foreign owner, which doesn't have such protections under U.S. law." [00:31]

• Chief Justice John Roberts’ Remarks: Emphasizing national security concerns, Chief Justice Roberts stated, "The court can't ignore congressional concerns that the app, which is used by over 170 million people in the U.S., could be used to spread propaganda and stockpile sensitive data." [00:31]

• Expedited Hearing: The Supreme Court has agreed to hear the case on an expedited schedule to deliver a ruling before the January 19 deadline. Should the law be upheld, TikTok will be removed from U.S. app stores unless ByteDance complies with the divestiture, a move the company has so far refused.

2. Surge in Bitcoin ETFs Drives Crypto Market Rally

Shifting focus to the cryptocurrency landscape, Rundle highlights the impressive growth of Bitcoin exchange-traded funds (ETFs) launched by financial giants such as BlackRock and Fidelity.

Key Points:

• Market Influx: These new Bitcoin ETFs have attracted approximately $37 billion in total net flows within their first year of trading, contributing significantly to a rally that saw Bitcoin prices surpass $100,000 per coin for the first time.

• SEC Approval: In December of the previous year, the U.S. Securities and Exchange Commission (SEC) approved the launch of "spot" Bitcoin ETFs. These financial products enable retail investors to purchase Bitcoin directly through their brokerage accounts, similar to trading stocks.

• BlackRock’s iShares Bitcoin Trust: This particular ETF has become the most successful in history based on inflows, now managing $53 billion in assets. Its success underscores the increasing institutional and retail adoption of cryptocurrency investment vehicles.

• Market Impact: The accessibility and popularity of these ETFs have likely played a crucial role in the substantial price appreciation of Bitcoin, signaling a maturation of the cryptocurrency market.

3. Liquidnet Faces SEC Fine Over Data Protection Failures

The episode also covers significant regulatory actions taken against Liquidnet, an electronic trading network.

Key Points:

• SEC Fine: Liquidnet has agreed to pay a $5 million fine to resolve allegations from the SEC regarding inadequate protection of confidential data and improper controls over market access.

• Violations Detailed: The SEC accused Liquidnet, owned by London-based financial services firm TPIcap, of failing to sufficiently limit employee access to sensitive subscriber trading information. Additionally, the firm was alleged to have violated rules by maintaining inappropriate credit limits over several years.

• Settlement Terms: Liquidnet has settled the charges without admitting or denying guilt, marking a significant compliance setback for the company.

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Conclusion

In this episode, James Rundle provides a comprehensive overview of major issues impacting the tech industry, from high-stakes legal battles and the evolution of cryptocurrency investments to significant regulatory enforcement actions. For listeners seeking an in-depth analysis of these topics and more, the Monday's Tech News Briefing podcast is recommended for a deeper dive into the rapidly evolving tech landscape.

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Notable Quotes:

• Justice Elena Kagan: "The law was targeted at ByteDance, its foreign owner, which doesn't have such protections under U.S. law." [00:31]

• Chief Justice John Roberts: "The court can't ignore congressional concerns that the app, which is used by over 170 million people in the U.S., could be used to spread propaganda and stockpile sensitive data." [00:31]

Transcript

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[James Rundle]

Here's your TNB Tech minute for Friday, January 10th. I'm James Rundle for the Wall Street Journal. TikTok seemingly failed to convince the Supreme Court during oral arguments today that it should stop a federal law requiring its Chinese owner to divest it by January 19th or face a ban in the U.S. tikTok argued that the law violated its First Amendment rights. But Justice Elena Kagan said that it was targeted at ByteDance, its foreign owner, which doesn't have such protections under US law. Chief Justice John Roberts also said that the court can't ignore congressional concerns that the app, which is used by over 170 million people in the US could be used to spread propaganda and stockpile sensitive data. Here's Roberts during the proceedings.

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[James Rundle]

The Supreme Court agreed to hear the case on an expedited schedule to rule before the January 19 deadline. If the law is upheld, TikTok will disappear from app stores in the US unless ByteDance divests ownership, which it has said it cannot and will not do. A host of new bitcoin exchange traded funds from companies such as BlackRock and Fidelity attracted about $37 billion of total net flows in their first year of trading. That their popularity helped fuel a rally in bitcoin that saw it cross the $100,000 per coin price for the first time. In December, the U.S. securities and Exchange Commission approved the launch of the products, known as spot ETFs a year ago. These allow retail investors to purchase Bitcoin in their brokerage accounts just like they buy stocks. BlackRock's iShares Bitcoin Trust became the most successful ETF launch in history based on inflows, and is now the largest bitcoin fund in the world with $53 billion in assets. And the electronic trading network Liquidnet has agreed to pay a $5 million fine to resolve allegations that have failed to protect confidential data and had improper controls over market access. That's according to the sec, who said that liquidnet, owned by London based financial services firm tpicap, failed to adequately limit employee access to confidential subscriber trading information. The regulator also alleged that liquidnet violated its rules by setting inappropriate credit limits for years. Liquidnet settled the charges without admitting or denying guilt. For a deeper dive into what's happening in tech, check out Monday's Tech News Briefing podcast.