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What does TikTok have to do with Aussie supermarkets? 

tiktok legislation

What does TikTok have to do with Aussie supermarkets? 

The week of March 18, 2024 marked a significant legislative move as the U.S. House of Representatives endorsed a bill mandating the separation of TikTok from any affiliations with the Chinese government. The endorsement received substantial bipartisan support, with 90 per cent of Republicans and 75 per cent of Democrats voting in favour. 

The push to separate TikTok in the U.S. from China’s Communist Party is a significant development in the ongoing discussion about democratic values, digital governance, privacy protection, and antitrust enforcement.  

While critics argue the bill infringes on free speech, harbours xenophobic undertones (xenophobia seems only to exist in times of peace) and will undermine the livelihoods of creators and businesses reliant on TikTok, the move is a step towards comprehensive reform in social media and privacy. 

Recent privacy protection developments reveal a significant shift in how sensitive consumer data is handled, and they’re consistent with recent landmark rulings and settlements in cases against data brokers and technology firms. Together they highlight a broader effort by the U.S. government to curb the unchecked exploitation of consumer data. 

Regulatory actions in the U.S., such as the Network Advertising Initiative’s (NAI) new standards for location data and the U.S. Federal Trade Commission’s (FTC) enforcement changes, signify a departure from the lenient ‘notice and consent’ model towards more stringent scrutiny of data practices.  

In the case of the NAI – a self-regulatory coalition of online advertising companies and data brokers, including Microsoft, Yahoo! Inc, Adobe and Google – they announced the development of new industry standards for corporations who “collect and process sensitive consumer location data.”  Their lawyers simply advised they cease using location data to target individuals.  

As one commentator noted, people really don’t like corporations, abusers or employers knowing when they’re at the doctor, at church, at a political rally, a reproductive health clinic or a gay bar. 

Previously, and a little like Australia’s ‘disclosure regime’, U.S. data brokers could do anything with users’ privacy and location data provided the broker/advertiser gave notice and the user ‘consented’, typically by agreeing to a pages-long web agreement that was never read.  

More recently, the FTC repudiated the ‘notice and consent’ framework, arguing it wasn’t enough to put a form in front of a ‘domestic abuse victim’ to ask if they consented to let a broker sell their data. Instead, they argued the data simply couldn’t be sold, period. 

In the case against data broker Kochava, Inc., brought by the FTC, the presiding judge ruled for the FTC and, in February this year, upheld ‘unfairness’ as grounds for banning the aggregation and sale of large amounts of consumer data, regardless of whether the corporation disclosed its behaviour.  

Unfair and deceptive practices now mean that mass collection, processing, and sale of sensitive data is unlawful. 

The U.S. debate over TikTok’s ownership also encapsulates broader concerns about foreign influence and antitrust issues within that country’s digital landscape. If Australia wants to remain the ‘dumb luck country’ rather than the’ lucky and dumb country,’ the same debate and action should be occurring here.  

Of course, the U.S. call for divestiture stems not only from privacy and data security considerations but also from a desire to safeguard the digital public square from undue foreign influence with the current TikTok case illuminating the intertwined nature of privacy, antitrust, and national security. 

We should all be concerned with and reassess how digital infrastructure is owned and operated. 

Without a doubt, the potential divestiture of TikTok raises questions about the market dynamics that follow and the future of digital competition.  

Here in Australia, the same issues will need to be debated as the Greens table a Bill in the Australian Senate to introduce divestiture powers into Australian competition law. Ostensibly, the Bill is designed as a threatening stick to change the behaviour of supermarkets, but its power to change TikTok’s influence in this country should not be ignored.  

Back to the U.S. TikTok debate, and the possibility of new ownership scenarios also opens discussions about safeguarding the digital ecosystem’s diversity and resilience against monopolistic practices, the very thing divestiture laws typically seek to edify. 

If TikTok is bought by Google, for example, and allowed to atrophy, it increases the share and power of the incumbents – something the move sought to mitigate. 

In sum, the legislative effort to divest TikTok from Chinese government-affiliated entities is a pivotal moment in a broader dialogue on digital governance, privacy protection, and enforcement against monopolistic behaviour.  

As investors, we should be watching closely because it represents a critical juncture in reassessing the principles that will guide the operation and ownership of key digital and analogue platforms. Putting investing to one side, we can all agree on the need for a governance framework that aligns with democratic values and the public interest. 

INVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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2 Comments

  1. “we can all agree on the need for a governance framework that aligns with democratic values and the public interest.”

    Democracy Is Not Freedom by Ron Paul
    “…man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts.”
    ~ Ronald Reagan

    George Orwell wrote about “meaningless words” that are endlessly repeated in the political arena. Words like “freedom,” “democracy,” and “justice,” Orwell explained, have been abused so long that their original meanings have been eviscerated. In Orwell’s view, political words were “Often used in a consciously dishonest way.” Without precise meanings behind words, politicians and elites can obscure reality and condition people to reflexively associate certain words with positive or negative perceptions. In other words, unpleasant facts can be hidden behind purposely meaningless language. As a result, Americans have been conditioned to accept the word “democracy” as a synonym for freedom, and thus to believe that democracy is unquestionably good.

    The problem is that democracy is not freedom. Democracy is simply majoritarianism, which is inherently incompatible with real freedom. Our founding fathers clearly understood this, as evidenced not only by our republican constitutional system, but also by their writings…

    “A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.”
    ~ Thomas Jefferson, 3rd President of the United States

    How big is today government:

    The Origins of Totalitarian Democracy by J. L. Talmon

    I think that the species of oppression by which democratic nations are menaced is unlike anything that ever before existed in the world.… The supreme power then extends its arm over the whole community. It covers the surface of society with a network of small, complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrious animals, of which the government is the shepherd. —Alexis de Tocqueville

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