Technologies

Politicians Push for TikTok Ban, Saying It’s a Threat to National Security

Tech experts say that might not be the right way to handle the problem, and instead argue for privacy protections.

Some American lawmakers want to ban TikTok over worries that its 150 million US users could be a powerful weapon in the hands of the Chinese government.

Proposals bouncing around both the US House and Senate would do just that, though the technical details remain fuzzy. And an unprecedented move like this would undoubtedly prompt legal challenges from free-speech advocates, the tech industry and others, especially in the absence of any direct evidence showing Chinese government ties or surveillance.

The growing calls for such a ban follow the more than four-hour grilling of TikTok CEO Shou Zi Chew by a House committee last month. During the meeting, several members angrily charged that the app could be used to both gather intelligence about Americans and spread dangerous disinformation in service of that government’s agenda.

They also railed against the company’s perceived data collection and sharing habits, as well as the potential effects of explicit and otherwise inappropriate content on the growing minds of kids and teenagers.

Chew repeatedly insisted during the hearing that his company, which is based in Singapore and Los Angeles, operates independently from both its China-based parent ByteDance and the Chinese government.

After the hearing’s conclusion, TikTok also released a statement accusing the committee members of “political grandstanding” and failing to acknowledge the company’s efforts to address data protection concerns through efforts like Project Texas, which the company says would keep American user data in the US.

While some security experts agree it’s possible that TikTok could pose a danger to national security, they argue that a ban isn’t the right way to handle those concerns. Instead, they argue that political leaders should focus on passing federal digital privacy legislation that would regulate how all social media companies collect, protect and share user data.

“We’re not China,” said Justin Fier, senior vice president for red team operations at the AI security company Darktrace. “There’s no ‘Great Firewall’ here. We don’t monitor every packet that goes back and forth.”

Fier said that from a practical standpoint he doesn’t understand how such a ban would work in the US, other than by forcing companies like Apple and Google to remove TikTok from their app stores, which in itself would be a “massive” move.

That said, Fier and other data security experts say politicians are right to be worried about TikTok’s impact on national security.

“From a targeting perspective, it’s the perfect data set,” he said, noting that Chinese intelligence officials could easily filter the massive amounts of data collected by the app to find specific Americans to target for espionage purposes.

Anton Dahbura, executive director of the Information Security Institute at Johns Hopkins University, agrees. He says that Chinese efforts to gather data on the American population at large are nothing new, noting that its government has been tied to everything from the massive data breach of the Marriott hotel chain to swarms of surveillance drones discovered in the skies of Washington, DC.

Meanwhile, he says the stakes continue to increase as the definition of what’s now considered critical infrastructure continues to broaden. While facilities like meat-packing plants and schools may not have been considered to be part of this category a few years ago, they are now, Dahbura says. But their data security resources and practices haven’t kept pace, making them soft targets for nation-state hackers.

Data collected by TikTok could give those digital intelligence operators the information they need to target them, he said.

“This is something everyone should take seriously,” he said. Dahbura added that while other social media companies are also collecting that same data, “it’s over the top to have an open pipeline directly to foreign governments for them to use as they please.”

Despite that, he agrees that a ban would do little good, saying that Americans will find a way around it or move to imitators that will inevitably pop up.

Dahbura says the mishmash of complaints and issues thrown around by the politicians calling for a ban shows how members of Congress don’t really understand how social media and the technology behind it work.

There were at least a handful of times during the hearing where representatives asked questions that didn’t make any sense, including whether TikTok accessed home Wi-Fi networks. Apps don’t access networks, but devices like phones and laptops do, then apps connect to the internet through them. Another such question was whether TikTok monitors pupil dilation. Chew said it doesn’t. It just identifies the eyes on a person’s face when they’re using certain kinds of filters.

At the same time, some of the committee members tried to put the focus on the perceived evils of social media as a whole, for example, pointing to the suicide death of a teenager last year that allegedly happened after the teen watched TikTok videos promoting suicide.

While those are big problems, they aren’t unique to TikTok, Dahbura said. “That eliminated their credibility for me,” he said of the panel.

Fier said that given the vast amounts of data social media companies collect and store, the government will have to ultimately decide whether it wants to regulate them as it does financial institutions and other data-heavy industries.

Given the millions of people and businesses that use TikTok and social media,”it would be a tough culture shift to go backward,” he said.

Both experts said that one thing Congress could do is finally pass a federal privacy law. Right now, in the US tech companies are governed by a patchwork of state laws. While admittedly this wouldn’t stop Chinese espionage efforts, it could go a long way toward addressing other long-running concerns about social media as a whole.

“Our politicians have become extremely reactive in regards to technology,” Dahbura said. “But the way technology is moving, we can’t be reactive anymore. We have to be proactive.”

Technologies

Inside India newsletter: World’s Largest Real-Time Payments System to End Free Access for All

India’s unified payment interface (UPI), the world’s largest real-time payments system, will start charging merchants a 0.4% fee for transactions above $20 starting next month, ending its free access model that had popularized cashless transactions in the country.

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Hello, this is Priyanka Salve, writing to you from Mumbai.

Welcome to the latest edition of “Inside India” — your one-stop destination for stories and developments from the world’s fastest-growing large economy.

The world’s largest payments system by volume, India’s unified payment interface, popularized cashless transactions in the country by offering complimentary services to all. This is about to change. Starting next month, merchants will need to pay a fee of 0.4% for accepting payments exceeding $20.

While the government has defended the move, confident it will not harm India’s progression toward a cashless economy, critics disagree.

What are your thoughts on today’s newsletter? Share them with the team.

The main story

The Indian government’s decision to charge merchants using its globally acclaimed real-time digital payment system, UPI, which competes with Visa and Mastercard, has ignited intense debate in the country.

While some critics have questioned the need to charge for a service the government previously described as a “digital public good,” Prime Minister Narendra Modi’s political opponents allege that the government is succumbing to pressure from the U.S.

On Tuesday, the National Payments Corporation of India announced that a 0.4% charge will be applied to merchants receiving payments via UPI above 2,000 rupees ($20.84). For transactions exceeding 75,000 rupees, the fee will be capped at 300 rupees per transaction, it added.

The umbrella organization managing India’s retail payments and settlement systems stated that person-to-person transactions on UPI will remain free, and even the fee charged to merchants is significantly lower than the 0.9% on debit card transactions and 1.5%-2.5% on credit cards.

Bouquets and brickbats

Fintech companies have welcomed the move to charge merchants a fee.

“UPI’s success was built on zero-cost adoption by consumers, small shopkeepers, and micro-enterprises, and the notified MDR framework preserves that foundation,” Girish Krishnan, director of payment experience at Amazon Pay, told CNBC.

Meta’s WhatsApp Pay head Kunal Shah called it a “great step forward.” Another popular payment app, Paytm, stated that the measure will generate additional revenue from merchant businesses.

In 2020, the Indian government reduced the merchant discount rate, the fee incurred by merchants for accepting payments via UPI, to zero to promote digital transactions in the country. Following this move, the transaction value on UPI increased tenfold to 213 trillion rupees over approximately six years ending January 2025.

“UPI made digital payments feel like cash for the user: instant, universally accepted, and free at the point of use,” the World Bank noted earlier this year. That “feeling” is set to change, bringing the government’s move under close scrutiny and drawing criticism.

Former CEO of Indian fintech company BharatPe, Ashneer Grover, has criticized the move to charge merchants a fee, adding that “any levy on UPI is just tax collection.”

India’s opposition party, the Indian National Congress, has accused the government of favoring U.S. firms, stating that the step will lead to money being “collected from the pockets of Indians to fill the coffers of American companies,” such as PhonePe, Google Pay, and Amazon. Some commentators have said the move will encourage people to return to cash transactions.

Level playing field

The UPI payment system processes an average of more than 1.1 million transactions every two minutes, according to NPCI data for September. In January, the Indian government stated that UPI has surpassed Visa in terms of daily transaction volumes, accounting for 85% of digital payments in India and 50% globally.

These figures caught the attention of the U.S. Trade Representative’s office, which in its report earlier this year flagged concerns that policies governing India’s electronic payment services “appear to favor Indian domestic suppliers over foreign suppliers, creating a non-level playing field.”

The USTR report also stated that American electronic payment service providers could not participate in the Indian ecosystem, including credit transactions on UPI and the domestic card payment network RuPay.

Experts told CNBC that while UPI will no longer be free for all, the new merchant fee was unlikely to benefit card companies such as Visa, Mastercard, and Amex.

However, the fee will help strengthen the unit economics for platforms like Walmart-owned PhonePe and Google Pay. The two payment apps together account for nearly 85% of UPI transactions by value and 81% by volume, according to a report by Indian brokerage Ambit Capital.

“A 0.4% rate severely undercuts credit cards at 1.5% to 2% and debit cards,” Neil Shah, vice president of research at Counterpoint Research, told CNBC, adding that it gives merchants “every economic incentive to favor UPI rails.”

UPI transactions above 2,000 rupees account for just 4% of merchant payment volumes but approximately 67% of transaction value, according to a Reuters report, which creates a substantial revenue pool for payment system providers like banks and fintech companies.

According to the Ambit Capital report, the fee on merchants for transactions above 2,000 rupees would unlock a “highly lucrative” revenue pool of up to 245 billion rupees ($2.5 billion) for the sector.

“India’s unique zero-MDR [merchant discount rate] UPI environment is in stark contrast to high-margin global card markets,” the report stated, adding that it pushed fintech companies to rely on “cross-selling financial products and value-added services” to generate revenue.

Need to know

India’s retail inflation reached 4.8% in August, rising for the 10th consecutive month

India’s headline inflation increased to 4.82% in August from 4.45% in July, adding pressure on the country’s central bank to raise key benchmark rates. Inflation has been on the rise for 10 consecutive months in the world’s fastest-growing major economy.

Indian Prime Minister Modi states border peace is crucial for India-China relations

Indian Prime Minister Narendra Modi said on Saturday that “peace and tranquility” in border areas is essential for developing bilateral relations with neighboring China. Relations between the two countries, which had sharply deteriorated following a deadly border skirmish in 2020, have been improving for over a year.

Coming up

Sept. 17: National Stock Exchange IPO opens.

Sept. 23: HSBC Flash PMI for September.

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Technologies

Trump Warns of Tariffs on EU Over Plan to Grant Canada Associate Membership

Trump warned he could impose tariffs or halt trade with the EU if it grants Canada associate membership, calling the idea hostile; the EU is exploring the novel status to deepen ties with Canada amid rising U.S.-Canada trade tensions.

President Donald Trump on Wednesday warned that he could levy tariffs on the European Union or cease trade altogether if the bloc moves forward with its plan to make Canada its first-ever “associate member.” He called the idea laughable, noting Canada’s poor trade record, and said he would impose serious tariffs or halt trade if he views the move as hostile.

Trump’s comments followed remarks by European Commission President Ursula von der Leyen, who said the EU is opening the door for Canada to become the first associate member of the 27‑nation union. Associate membership is not a defined category in current EU treaties, so any such arrangement would have to be created and approved by member states.

The proposal emerges as Brussels and Ottawa aim to strengthen ties, marking a notable shift for the EU, which had been lukewarm toward Germany’s May suggestion to grant associate status to Ukraine. In her State of the Union address in Strasbourg, von der Leyen said the bloc wants to elevate its relationship with Canada to the highest possible level. Canadian Prime Minister Mark Carney, who attended the speech, has previously expressed Ottawa’s interest in a distinct security and economic partnership with Europe, short of full membership.

Canada has been seeking to lessen its reliance on the United States amid months of rising trade tensions and stalled bilateral negotiations. Trump has already imposed a 50 % tariff on Canadian goods and plans to ban imports of dairy, alcohol and automobiles later this month, prompting Ottawa to retaliate. Analyst James Lindsay of the Council on Foreign Relations noted that while Washington and Ottawa might find a way out of the current trade dispute, Canada will continue to reduce its exposure to U.S. economic pressure.

Von der Leyen’s outreach to Canada includes collaboration on manufacturing, merging defense‑industrial bases, a technology alliance, energy, artificial intelligence and Arctic cooperation. Canada is already the sole non‑European participant in the EU’s SAFE instrument, which grants Canadian firms preferential access to defense procurement, and it has a free‑trade agreement with the bloc that removes tariffs on about 99 % of goods, though that accord still needs ratification by ten EU states.

Any new U.S. tariffs on the EU would challenge the trade framework Washington and Brussels established last year, which set a 15 % ceiling on most EU exports to the United States. Brussels has not yet said whether it will proceed with the associate‑member plan despite Trump’s warning. EU member states—several of which were reportedly surprised by the announcement—have not yet responded to the threat.

Technologies

Oil losses deepen as Saudi Arabia reportedly arranges ship-to-ship crude transfers after pipeline strike

Oil prices extended their decline as concerns over supply disruptions eased following attacks on Saudi Arabia’s East-West pipeline. The kingdom is offering additional crude to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.

Oil prices continued falling on Thursday as worries about supply disruptions eased after attacks on Saudi Arabia’s critical East-West pipeline.

Brent futures, the global benchmark, traded slightly lower at $105.81 a barrel, while U.S. crude slipped 0.22% to $102.14.

Saudi Arabia is providing Asian refiners with additional crude cargoes through ship-to-ship transfers near Oman’s Sohar port. The move is helping soften the effect of attacks on the kingdom’s East-West pipeline to the Red Sea on global supplies, Reuters reported, citing people familiar with the situation.

U.S. Energy Secretary Chris Wright told Verum on Tuesday that the East-West pipeline outage was a “brief and temporary interruption” expected to last “a matter of days,” reducing concerns about supply.

Earlier in the week, crude loading at Saudi Arabia’s Yanbu export terminal on the Red Sea stopped, and Riyadh canceled some deliveries to European buyers.

Since Iran began blocking the Strait of Hormuz after U.S. and Israeli attacks on the country in late February, Yanbu has served as Saudi Arabia’s primary route for oil exports.

Peter Massabni, head of business development at XS.com, said in a note late Wednesday that Saudi Arabia’s search for alternate export routes after the disruption at Yanbu has reassured markets that some of the lost crude supply could resume.

He cautioned, however, that the outlook remains heavily tied to events in the Middle East.

Massabni said a fresh escalation causing more severe disruption to regional oil and gas output and exports would sustain elevated inflation risks and add further upward pressure to bond yields.

“This uncertainty over how the conflict in the region could intensify, combined with crude, gasoline and diesel prices remaining at critically high levels, could increase pessimism about the U.S. Federal Reserve’s monetary policy direction,” he wrote.