📱 SOCIAL MEDIA

The Clock Is Tikking On Tiktok

In a first of its kind action, the US is set to ban TikTok from the country after passing an ultimatum to the company inside of a foreign aid spending bill. The US has never before banned a tech company for doing business here.

TikTok, which is one of the world's most popular apps, and has some 170 million American users (or about half the country's population), came into Congress's crosshairs as US-China relations soured during the Trump Administration. Then, last year, CEO Shou Chew was questioned by a bipartisan committee over fears of Chinese surveillance and the app's impact on children. “We do not trust TikTok will ever embrace American values,” said Rep. Cathy McMorris Rodgers, a Republican and the chair of the House Energy and Commerce Committee, during the hearing, reports the New York Times. “TikTok has repeatedly chosen the path for more control, more surveillance and more manipulation. Your platform should be banned.”

Banning TikTok in the US has become a political issue with bipartisan support, but a singular bill has failed to pass the Senate. This week, however, bundled inside a bill sending money and aid to Ukraine and Israel, TikTok's parent company ByteDance has now been given an ultimatum: sell TikTok or face a ban in the United States.

But strong legal standing is already in question. TikTok will undoubtedly challenge the bill in court, which will, at the very least, delay things. The company released a statement reading: "We believe the facts and the law are clearly on our side, and we will ultimately prevail."

As Kate Ruane, director of the Center for Democracy & Technology's Free Expression Project, told NPR, banning TikTok is a violation of free speech. "Congress shouldn't be in the business of banning platforms. …They should be working to enact comprehensive privacy legislation that protects our private data no matter where we choose to engage online."

Of course, not everyone agrees with Ruane's assessment. "Congress is not acting to punish ByteDance, TikTok or any other individual company,” Democratic Senate Commerce Committee Chair Maria Cantwell said of the bill, reports The Verge. “Congress is acting to prevent foreign adversaries from conducting espionage, surveillance, maligned operations, harming vulnerable Americans, our servicemen and women, and our U.S. government personnel.”‍

Tiktok's Lobbying

According to CNBC, TikTok and ByteDance have spent a combined $7 million on lobbying efforts this year alone. In 2023, the two companies spent nearly $10 million combined on lobbying. But, as Politico reports, the two companies' spending on Capitol Hill has garnered some not-so-great attention. "The volume of TikTok lobbyists in the last three weeks is eyebrow-raising and suspicious, and lobbyists or lobbying firms taking TikTok money will be viewed differently moving forward,” an unnamed member fo the House China Committee told the site in mid-March.

THE VERDICT:‍

The legal ramifications of a TikTok ban could be widespread on the global tech industry, yet, it seems a lengthy court fight lies ahead before any real action takes place. Should in-house counsels for American tech firms begin planning for retaliatory laws in China?

🧑‍⚖️ REGULATION

The Noncompete Is Disappearing

In a sweeping new rule announced this week, the Federal Trade Commission has banned noncompete agreements, citing their detrimental effects on workers and the market.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina M. Khan said in a statement announcing the ban. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

The rule is set to become law 120 days after its official publication, and will enforce the nullification of any standing noncompete agreements. However, "under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions."

“This would be an immediate shock that would allow millions of workers to be free to take a better job in their industry,” Evan Starr, who teaches economics at the University of Maryland, told the New York Times. “I would expect the labor market to increase almost overnight.”

In a post on X, former Labor Secretary Robert Reich said that "it's estimated that the ban could increase wages by $300 billion a year and impact nearly 30 million Americans."

But the backlash was just as swift. The US Chamber of Commerce filed a lawsuit over the ban shortly after it was announced, claiming the FTC is overstepping its authority. As the Times adds, the lawsuit accuses the ban of "a vast overhaul of the national economy, and applies to a host of contracts that could not harm competition in any way."

The Chamber of Commerce added in their suit that "companies will face substantial legal costs as they are forced to resort to other tools to attempt to protect their investments. …And the economy as a whole will suffer as start-ups and small businesses are unable to prevent dominant firms from hiring their best employees and gaining access to their confidential information."

In response, Douglas Farrar, a spokesman for the FTC, stood by the agency's decision and said this new rule is squarely within their jurisdiction. "Addressing noncompetes that curtail Americans' economic freedom is at the very heart of our mandate, and we look forward to winning in court."

Overtime

Labor advocates won more than one battle this week. In addition to the FTC's ruling, the Department of Labor expanded the qualification threshold for overtime pay to include millions more workers.

"Effective July 1, 2024, the salary threshold [for overtime exemption] will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025," the Department's press release states. In it, Acting Secretary Julie Su noted that "too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable."

THE VERDICT:‍

With any major shakeup in employment laws comes a period of recalibration. These two major rulings by the Biden Administration will not only see legal challenges in the months and years ahead, but will be tweaked to find their final shape.