TikTok goes to court
TikTok fires latest broadside in battle with US government, suing to block legislation that would separate the company from Chinese owner ByteDance and could otherwise face a ban in the US caused
The company argues that the law violates the First Amendment by effectively shutting down an app that millions of Americans use to share their opinions. There is. Another problem is that a sale within 270 days is virtually impossible, Sapna Maheshwari and David McCabe report in the Times.
DealBook spoke to Maheshwari about the lawsuit filed yesterday and what's next.
Do legal experts think TikTok has a chance?
It could go either way.
Alan Rosenstein, an associate professor at the University of Minnesota Law School, said there is a chance of victory based on the “very substantial First Amendment challenges” involved. But he stressed that this is not certain.
The government can justify First Amendment rights violations in certain cases, especially in matters of national security, and ByteDance also has the option to sell the app.
How does this lawsuit address accusations that TikTok is a national security risk?
TikTok has always said it has spent billions of dollars on security plans to address government concerns. But the company also shared a bit of a bombshell in its filing. The company said it has agreed to provide the U.S. government with a kill switch that blocks the app if it violates the terms of the draft national security agreement.
In another case, a federal judge in Montana Prevented a statewide ban on the app. Does that tell us anything about what will happen this time?
The judge in the Montana case said the ban most likely violates the First Amendment. He also said the bill violates a clause that gives Congress the power to regulate commerce with other countries, but that is not relevant here because Congress passed the bill last month.
TikTok challenged the Montana law and funded a separate lawsuit from creators who use the platform. A second lawsuit from TikTok users is likely in the coming weeks.
what's happening here
Our investigation found that the FDIC has a toxic and misogynistic workplace culture. A report released yesterday said discrimination, bullying and sexual harassment were widespread at the agency. The findings essentially confirm last year's Wall Street Journal report and do not call for Chairman Martin Gruenberg to resign or be fired, but they do add to the pressure on him.
The NFL is said to be close to allowing private equity firms to own teams. They would be able to buy up to 30 percent of NFL franchises under the proposal being considered, Bloomberg reports. Team owners are expected to present guidelines regarding a potential ownership change at a meeting this month.
The US government will revoke Huawei's license to export some US-made chips. The move means Intel and Qualcomm will be banned from supplying chips used by Chinese telecommunications companies in laptops and mobile phones, the Financial Times reported.
Stormy Daniels has revealed explicit details of her relationship with Donald Trump. Yesterday, the porn star testified for nearly five hours in the hush-money case about her secret meetings with President Trump, which are at the heart of the case. She plans to return to the stand tomorrow. But there was some good news for the former president in Florida, where a federal judge indefinitely postponed the classified documents lawsuit, potentially handing him a pivotal victory.
FTX redemption
The collapse of FTX appears poised to have a happy ending for the failed cryptocurrency exchange's millions of customers. The company said it plans to repay the amount in full with interest.
It's a rare moment when a bankrupt company clears its creditors. However, it also raises questions. Was former FTX leader Sam Bankman Fried, who was sentenced to 25 years in prison for stealing billions of dollars from his customers, right when he said he could pay it back?
Creditors were optimistic that this would happen; Since John Ray III, who took over as the company's chief executive officer after FTX filed for Chapter 11 protection, floated the idea this year. Even before that, speculative bets on FTX's bankruptcy debt, some of which he bought for $1, had become a popular investment.
Yesterday's news also helped push the price of FTX's crypto token, FTT, up 37% amid a broader rally in crypto assets and Bitcoin.
There are a few things to keep in mind.
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Customers will only get back the amount owed and interest as of November 2022, when FTX filed for bankruptcy. That means they will not be able to benefit from the subsequent significant rise in cryptocurrency prices. For example, if a customer borrows one Bitcoin, they will get less than $20,000, even though the token is currently trading for more than $62,000.
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Federal Judge John Dorsey, who is presiding over FTX's Chapter 11 case, must approve the company's reorganization plan. That means no payments will be made for months.
Does this prove Mr. Bankman Freed's innocence? The co-founder of FTX says that the exchange is everytime They were solvent and fully capable of repaying their customers. This argument was pushed by his lawyers, friends and family for a more lenient sentence. From an essay by Ian Ayers and John Donoghue, law school professors and friends of Bankman Freed's parents:
If the public realizes that FTX has enough assets to wipe out all its customers and other creditors, it will significantly change its view of Bankman Freed.
(Bankman Fried's allies also said that Judge Lewis Kaplan, who oversaw the former FTX chief's criminal trial, had excluded evidence and testimony that suggested Bankman Fried could make his clients whole.) )
But critics say it was never a given that creditors would be made whole. What makes repayments to customers possible is a combination of cryptocurrency price recovery. The value of FTX's stake in AI startup Anthropic soared, with most of it sold by crypto exchanges. The federal government will reduce its bill for unpaid taxes. and asset sales and clawbacks.
At Bankman Freed's sentencing hearing in March, Kaplan said of the victims of the exchange: “The assurance that the defendant will be paid in full is misleading. It is logically flawed. It is speculative.”
Red states step up attacks on ESG
The war on climate finance is intensifying in red state politics.
The latest salvo involves the National Treasurer's Foundation, a group working with Republican state treasurers to slow President Biden's climate change policies. Their tactics are also having a chilling effect on boardrooms, as the coalition seeks to coerce companies into backing away from climate and social initiatives, often by threatening to cut deals with them.
The Foundation is introducing a new lobbying and political pressure group, SFOF Action. Its target was ESG, or environmental, social and governance investing principles, which grew into a $1 trillion force on Wall Street but faced conservative backlash.closely related to the foundation Leonard Leo is an activist who led efforts to shift the judiciary to the right and is now focused on defeating the ESG movement.
SFOF Action supports anti-ESG candidates and advances legislation that opposes the adoption of such principles. “SFOF Action knows ESG is dead, so SFOF Action will fight until ESG is gone,” executive director Noah Wall told Dealbook.
The State Treasurer became a powerful political force.. Of the 113 anti-ESG actions since 2018, treasurers accounted for nearly half of them, far outpacing governors and most other officials, according to a new report from Pleiades Strategy, which tracks anti-ESG actions. exceeded.
These developments are a sign that the fight over ESG is becoming localized. Since 2021, lawmakers have introduced bills targeting ESG in 39 states. Of those, 40 were passed in 22 states. This has led to large companies withdrawing from climate action and scaling back operations in states hostile to the ESG investment movement.
87
— Percentage of respondents Research announced today Employment law firm Littler conducted the survey of more than 400 executives who were concerned about managing divisive political and social beliefs among employees ahead of the 2024 election. Ta.
Geopolitics and Trump 2.0 at Milken
At the Milken Institute Global Conference in Los Angeles this week, attendees are talking about everything from trading to artificial intelligence. But there's one topic they're less worried about. It's the US election. DealBook's Lauren Hirsch reports from the event.
Business moguls are praising the possibility of President Donald Trump's return. Attendees told Dealbook they expect more M&A. If the former president is re-elected, government policy will become even more pro-business. But they don't expect President Biden to lift big industrial policies like the CHIPS Act and the Suppression of Inflation Act, given the benefits these policies have had on Republican-led states.
Many say Trump's advisers say the president will rein in any aggressive moves to consolidate power, including over the Federal Reserve, and markets are already pricing in a Trump victory in November. I'm here. (However, the betting market currently favors Biden.)
They are more concerned about geopolitics.
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The war in Gaza dominated the conversation during panel discussions, private dinners, and side conversations. However, in recognition of the heated debate on the issue, some refer to it as the “Middle East conflict” to avoid implying support for one side or the other.
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The challenges of doing business in China are also a top concern. Participants see the fight over TikTok as emblematic of a clash between the world's two largest economies. Few inside Milken believe the conflict over the video app can be easily resolved, such as by selling the U.S. business to avoid a ban.
Despite the serious challenges, participants are finding time to have a little fun. One of the most high-profile tickets was a dinner hosted by private equity firm Cerberus at the home of Republican pollster Frank Luntz, where people toured a replica of his Oval Office.
speed reading
Information of sale
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A private equity firm is reportedly considering buying struggling fitness company Peloton, whose market capitalization has shrunk to about $1 billion. (CNBC)
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Technology-focused investment giant Silver Lake has raised $20.5 billion for its latest private equity fund, its largest ever. (FT)
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