 Last week on Talking Science in Tech, we had discussed the sort of pressure the US administration is exerting on TikTok. The threats that it is that TikTok is facing to sell or be banned in the US and this week we will delve into this issue further since a recent report by the Wall Street Journal has revealed how Facebook's lobbying could have also influenced the current stance of the United States on TikTok. We have with us Prabir Pukhaisa. Thank you Prabir for joining us today. So can you tell us about how these lobbying efforts by Marx, Zuckerberg and by Facebook might have influenced the current position, the current aggressive stance on TikTok we are seeing by the US? You know, there is of course a larger sequence of events that is already there that started with the US-China trade war. That is where it really started from and there were a number of sanctions imposed, trade sanctions imposed by United States on China, a lot of which violates trade agreements. So that was always in the background, but you know, one of the things that's happened which people have lost sight of, but the World Trade Organization dispute settlement mechanism has now been made defund by United States, not nominating, allowing any tribunal member to be nominated and because of this disputes tribunals don't have members anymore. They I think have only one and they cannot therefore have a tribunal which means history members. So the World Trade Organization has become defund and as a consequence the United States is violating various agreements, trade agreements earlier. Now what has happened, this particular ban is what the United States has threatened that if TikTok doesn't close its business or it doesn't sell its business, it will be stopped function, it will be stopped from functioning in the United States and they have called it a security threat. Now the minute you use national security threat, then of course trade laws don't work. So that's the other part of it. U.S. all the things that they have done which are essentially trade related or related to technology terms have been connected to national security that they steal our data kind of arguments. We all know that Facebook and Google of course takes its data outside the country and that's of course the country which is the United States, the parent country of this company says access to the data under the U.S. law. So it's not something which is hidden from SNI site and this is something which Snowden revelations also make clear. So the U.S. position has been that you have to divest, sell TikTok. So I will say this is effectively a highway robbery if you will of one country's assets being robbed by the other. That's really where it comes because they are now supposed to do garage sale, bargain basement sale as it is called, sell it and whoever is a buyer whatever money they get to take it otherwise they have to shut business. So that's the threat TikTok is facing. Now it's also what you've said the Wall Street Journal also makes clear who was TikTok threatening in terms of its expansion of its business and it's interesting because TikTok was the fastest growing social media company in the United States and it's clear that that social media space in which it was going was something which Instagram is also a competitor. There are other competitors, there's a competitor called Snap which is also growing but the biggest threat to that space and these are really very short dance videos which are lip synced kind of thing. Now those kind of the demography of that is really people who are young and that's also the Instagram's demography and Facebook knew that for instance that demography it was not addressing through Facebook. Facebook had lost a lot of charm for the younger people and in fact a lot of the people now on Facebook are people of the older generation they seem to be using Facebook more than the younger people. So the younger people have shifted to Instagram and also to TikTok as you know that in India as well. There are supposedly 100 million users of TikTok in the United States so that was a threat that Facebook saw and therefore now we know that Mark Zuckerberg campaigned with Trump and the Trump administration to ban TikTok being a national security threat. Everything that the US does is national security everything that any other country does is essentially protecting its market which is illegal according to the United States that's the threat they give us routinely. USTR threats against India and all the number of other countries come from that. If you protect your market you are violating US law and of course whatever US does is according to its national security needs and no other country is supposed to have national security needs whatsoever. So it's very clear that Mark Zuckerberg lobbied the US government so that TikTok ceases to be a competitor of course somebody else will buy it it's possible that Microsoft will buy it or Oracle will buy it those talks are going on Oracle is emerged as a competitor Twitter is also the sidelines but it doesn't have the kind of financial heft that obviously Oracle has and of course what Microsoft has. So given that this is really something which is being forced for the needs of Facebook to protect its social media monopoly and hope that if Biden's divests from TikTok at least for the four countries I think the countries they are they are targeting right now is the US Australia New Zealand and Canada these are the four countries that are being negotiated for divestment. So if that happens then Facebook loo at least defends a cost-strong competitor because whatever it is it's a Biden's parent which is which holds the technology for what they have been developing and somebody to take that over compete on technological development infrastructure all of it which shared with Biden's that's a parent company that would be much harder for them to do and the two suitors Oracle and Microsoft both are not in social media space at all. So they in fact cannot be real competition to Facebook. So in some sense even they do get an arm face social media arm they do invest in social media in some sense whether they will be able to understand the pulse of social media and do what social media companies are doing well is an open question. Let's not forget for instance Hotmail was the biggest mailing applications that people used before Yahoo or Google Mail became popular. Yahoo Mail of course is also not so popular anymore but Hotmail failed when it was taken over by Microsoft. It paid a lot of money to take over Hotmail at that stage. It failed because essentially Microsoft does not understand users and certainly doesn't understand what social media users do or want. So it's a relatively stodgy old-fashioned company built on the monopoly of its operating system windows and its basic window based application word Excel and so on which are very popular and of course it's office applications which are really right on top of all of that. They also produce servers and they're also expanding into other business but nevertheless the core of Microsoft business is really the Windows monopoly and its office applications. So I don't see it to be a major player in the social media space. So Zuckerberg would have succeeded by knocking a major player out of his competition and it's also very clear that Trump would have a price for this. He had already said maybe a part of the price that they're paying should go to the US government instead of forcing this for this divestment otherwise there's no way Biden's would divest this shares. In fact they're planning for an IPO this year and maybe or 2021 and it's quite possible that they would have been one of the biggest IPOs in the world market. They considered one of the major new unicorns as they are called which means companies which do well initially and then of course make it very big on the share market. And also another question that arises from this is that if this sale to Microsoft or Oracle or any other US company does go ahead then what kind of precedent does this set for globally for social media companies that do they now have to comply with anything that a ruling government says or kind of threats does this pose for them because even Mark Zuckerberg has sort of not been very pleased with the idea of TikTok being banned entirely in the US. Yes part of it is of course what he has to say publicly having been the one who has instigated the move I suspect he was really covering his traces by condemning it all is not good you know people can do it. Well let's look at what is going to happen to the to Biden's and its valuation. You see Biden's valuation would have been of course dependent also on the US operations. US does provide a big chunk of its money of its revenue. It's a huge advertising market so it would have also contributed a lot to its not only its revenue but also its stock price. So what was the stock price of Biden's? Now if we look at the various transactions that has happened a company selling a few shares which it owned to other valuations which have come. So Biden's was today worth anything between 100 billion dollars to 200 billion dollars. It could be 180 200 billion but you're really looking at very very high figures. So this is the valuation of the company which now Trump has threatened with at least the US part being wiped off or being sold to somebody. What is the valuation of TikTok and the four country sale that it is now offering or has been forced to offer. So it is the major part of the Biden's revenue as well as user base really comes from TikTok. So that's the money spinner for them or the prospective money spinner for them if you look at IPOs which are likely to come later. So Biden's loses a lot of its as I said it's cloud if it loses the US business because its revenue is going to be a hugely important part of its empire. Now this part of it the negotiations that's taking place in Oracle and between Oracle and Microsoft and Biden's for TikTok. TikTok is an app as you know and it's owned by Biden's company. So at the moment we don't know the prices being talked about but possible something like 20 billion dollars could be the price or it could be 30 billion dollars. If we really take what it should have been it should have been at least 50 billion dollars. Let's look at another market indicator. The day Microsoft announced that it was trying to acquire TikTok the price of Microsoft shares rose by 5.6% or it rose to roughly about 87 billion dollars in the US market just one day. So that means that's the kind of money that people think Microsoft owning TikTok will be worth. So clearly there is a disjunct between what it is being forced to sell and how the market perceives its value. If it sells it for 20 to 30 billion 20 billion would be a good price given the fact Trump has given them now initially 45 days now 90 days deadline. So they're working under this deadline. So this is a said bargain sale that is a fire sale of the company's assets. It could go down by 20 to 25 billion instead of what Microsoft will gain out of it simply for its share price rising if it acquires TikTok. Now Oracle has entered so maybe they will get a slightly better price but it's unlikely they will get anything the price of what it has owned. So the question is who has lost the money? Obviously the buy dance investors have lost future income. They haven't lost actual money because obviously they are still making money and their revenue they make profit of see billion dollars last year not bad for a startup which is just a couple of years old. So given that this money that market would have brought them and what they're selling for this is the tax they're paying the United States government or the proceeds of the highway robbery that the United States has now imposed on TikTok. Does it open a precedence? Yes. In fact we are likely if this continues the US now could feel emboldened that any country any of its products it want to acquire will say you are a security risk you have to sell it to me you have to sell it to an American company here. Now the question is does what the US do work for other countries too. Now here is the big question the US has been violating international law for quite some time when it comes to war invasions trade relationships they have always played by two sets of rules. One is international law international rules when it suited them when it didn't suit them it said we don't care it's our rules that matter. So international law doesn't matter for the United States. So why do other countries not retaliate? It comes down to the fact that US is the bigger bully and because US is the sole country which claims it has two sets of laws one international law and the other is internal laws and this is the only country which actually takes this position or has taken this position. So can this continue? Yes as long as US controls the financial levers of the world and at the moment they do I think this will continue unless we are able to see that there is an alternative financial system or option by which other transactions transactions can take place. I think this is going to continue it's not a legal issue it's really at the end of it a political issue that do countries have the political will to build an alternative transfer of money system by which they can settle their internal their transactions between each other. So the main levers of financial power is what makes Trump's threats work and if US doesn't recognize international law what can the rest of the world do that is the key challenge that we have to face and I think with the TikTok case we have now understood that this was really protecting an American company Facebook and we also understand that Facebook monopoly is a threat to even democratic societies not only outside in the United States but even in the United States this is what the congressional hearings were and we know what Facebook has done in India we've already discussed that how it has differentially treated its internal rules internal rules operate for opposition parties but not for the BJP the ruling party. So given all of this we have to think about rethink that it's a I think a pivotal moment for international relations itself and TikTok is just a small symptom of a much larger problem that we have. Thank you for talking to us on this issue today and that's all the time we have to keep watching this.