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The US government ramps up its pressure campaign against TikTok

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The Biden administration is escalating its pressure campaign against TikTok, threatening a U.S. ban against the world’s most popular app if the company doesn’t split with its Chinese ownership.

The current administration’s public concerns around the hit app have ratcheted up considerably in recent days. The Wall Street Journal reported this week that the U.S. government is again seeking to separate the app from its Chinese owners, demanding the sale through the Committee on Foreign Investment in the U.S. (CFIUS).

TikTok pushed back against the new White House demand, arguing that the proposed solution wouldn’t resolve the U.S. government’s concerns. TikTok claims that the company’s own unusual gesture at self-regulation — undergoing an audit by U.S.-based tech giant Oracle, among other measures — would offer more resolution.

“If protecting national security is the objective, divestment doesn’t solve the problem: a change in ownership would not impose any new restrictions on data flows or access,” TikTok spokesperson Maureen Shanahan told TechCrunch. “The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing.”

That program, known as Project Texas, is part of an ongoing TikTok charm offensive in the U.S. that seeks to portray the company’s U.S. operations as transparent and accountable. The campaign comes with about $1.5 billion in infrastructure spending and corporate re-organization to erect a firewall between the company’s U.S. business and its Chinese ownership.

In an interview with the Journal, TikTok CEO Shou Zi Chew argued that Project Texas would place U.S. data beyond the reach of the Chinese government. He declined to answer if TikTok’s parent company ByteDance’s founders would be open to divesting.

“I do welcome feedback on what other risk we are talking about that is not addressed by this,” Chew said in the interview. “So far I haven’t heard anything that cannot actually be solved by this.”

The TikTok national security saga began during the Trump administration. The Trump White House’s threats against the company eventually culminated in a plan to force TikTok to sell its U.S. operations to Oracle in late 2020. At the time, TikTok also rejected an acquisition offer from Microsoft, but ultimately didn’t sell to Oracle either.

The deal was shelved indefinitely when the Biden took office the following year, a result of changing White House priorities and a flurry of successful court challenges by TikTok parent company ByteDance.

Last year, TikTok’s odd relationship with Oracle turned a new page, with the company shifting data on U.S.-based users to Oracle’s domestic servers. Around the same time, an explosive story from BuzzFeed documented internal TikTok discussions in which Chinese employees admitted to having open access to data on American users — reporting that ran counter to the company’s reassurances.

Since then, the Biden administration has expressed its own concerns over the hit Chinese app, which has taken the world by storm and dislodged U.S.-based social media incumbents.

On Thursday, Emily Baker-White, who has published a number of illuminating stories about TikTok and national security concerns, reported that the FBI and the Department of Justice are both investigating the company over concerns that it has surveilled American journalists. The U.K. also announced a TikTok ban for government devices Thursday — a move the U.S. government previously implemented. In recent months, some U.S. based colleges have also followed suit, complying with the guidance issued by state-level executive orders restricting the app.

In a recent Senate Intelligence hearing, FBI director Chris Wray voiced his agency’s own worries about the app and its ties to an authoritarian state with an increasingly adversarial relationship to the U.S. Wray confirmed his belief that the Chinese government could force TikTok’s U.S. operation to hand it control of the software, affecting many millions of Americans. If that came to pass, Wray argued that there might not be “outward signs” to indicate that the app was compromised at all.

“Something that’s very sacred in our country — the difference between the private sector and the public sector — that’s a line that is nonexistent in the way the CCP operates,” Wray said.

The timing of the Biden administration’s fresh efforts to raise alarm about TikTok probably isn’t random. Next week, TikTok CEO Shou Zi Chew will testify before the House Energy and Commerce committee, the chief executive’s first time before Congress. The hearing, scheduled for March 23, will explore TikTok’s “consumer privacy and data security practices, the platform’s impact on kids, and their relationship with the Chinese Communist Party,” according to the now Republican-led committee.

“Americans deserve to know how these actions impact their privacy and data security, as well as what actions TikTok is taking to keep our kids safe from online and offline harms,” Committee Chair Cathy McMorris Rodgers said.

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Just 7 days until the TC Early Stage early bird flies away

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Budget-minded entrepreneurs and early-stage startup founders take heed — this is no time to procrastinate. We have only 7 days left of early-bird pricing to TechCrunch Early Stage 2023 in Boston on April 20.

Don’t wait…the early bird gets the…SAVINGS: Buy a $249 founder pass and save $200 before prices increase on April 1 — that’s no joke.

TC Early Stage is our only event where you get hands-on training with experts to help your business succeed. No need to reinvent the startup wheel — you’ll have access to leading experts across a range of specialties.

During this one-day startup bootcamp, you’ll learn about legal issues, fundraising, marketing, growth, product-market fit, pitching, recruiting and more. We’re talking more than 40 highly engaging presentations, workshops and roundtables with interactive Q&As and plenty of time for networking.

Here are just a few examples of the topics we have on tap. You’ll find plenty more listed in the event agenda.

How to Tell Your TAM: Dayna Grayson from Construct Capital invests in the rebuilding of the most foundational and broken industries of our economy. Industries such as manufacturing and logistics, among others, that formed in an analog world have been neglected by advanced technology. Dayna will talk about how, beyond the idea, founders can pitch investors on their TAM, including how they will wedge into the market and how they will eventually disrupt it.

How to Think About Accelerators and Incubators: Founders often hear they should get involved with an incubator or accelerator, but when is the “right” time for early-stage founders to apply to these types of startup support ecosystems, and how can they best engage if accepted? In this talk, Harvard Innovation Labs executive director Matt Segneri will cover everything from the types of incubators and accelerators available to early-stage founders, to what startups should consider before applying, and tips for getting the most out of these ecosystems.

How to Raise Outside of SV in a Down Market: Silicon Valley’s funding market tends to be more immune to macroeconomic conditions than elsewhere in the world. So how do you raise outside the Valley bubble? General Catalyst’s Mark Crane has ample experience on both the founder and VC side from all over Europe, as well as a firm understanding of the funding landscape in the northeastern U.S., so he’ll give practical advice on how to stay alive and thrive.

At TechCrunch Early Stage you’ll walk away with a deeper working understanding of topics and skills that are essential to startup success. Founders save $200 with an early-bird founder ticketcollege students pay just $99!

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Twitter will kill ‘legacy’ blue checks on April 1

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Twitter has picked April Fool’s Day, otherwise known as April 1, to start removing legacy blue checkmarks from the platform.

Despite the significance of the day Twitter chose, the removal of legacy checkmarks has been anticipated for months now. Musk tweeted in December that the company would remove those checks “in a few months” because “the way in which they were given out was corrupt and nonsensical.”

Since then, legacy blue checkmark holders have been seeing a pop-up when they click on their checkmark that reads, “This is a legacy verified account. It may or may not be notable.”

Before Musk acquired the company, Twitter used checkmarks to verify individuals and entities as active, authentic and notable accounts of interest. Verified checkmarks were doled out for free.

Today, Twitter users can purchase a blue check through the Twitter Blue subscription model for $8 per month (iOS and Android signups will cost $11 per month, due to app store costs). There are also other checkmark colors and badges available for purchase to denote whether an account is a business or a government, for example.

Twitter says the purchase of a checkmark gives users access to subscriber-only features like fewer ads on their timeline, prioritized ranking in conversations, bookmark folders, and the ability to craft long tweets, edit tweets and undo tweets.

The news comes within hours of Twitter also announcing the availability of the Blue subscription globally.

Twitter did not respond to TechCrunch’s request for more information about how many users have already signed up for Twitter Blue.

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Roofstock, valued at $1.9B last year, cuts 27% of staff in second round of layoffs

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Proptech company Roofstock has laid off about 27% of its staff today, according to an email sent to employees viewed by TechCrunch. The cuts come just five months after the startup laid off 20% of its workforce.

The company’s website states that it has 400+ employees, or “Roofsters” as they’re dubbed, but it is not known if that figure is current.

Roofstock, an online marketplace for investing in leased single-family rental homes, one year ago raised $240 million at a $1.9 billion valuation. SoftBank Vision Fund 2 led that financing, which included participation from existing and new backers including Khosla Ventures, Lightspeed Venture Partners, Bain Capital Ventures and others. Roofstock has raised a total of over $365 million in funding since its 2015 inception, per Crunchbase.

According to the email seen by TechCrunch, co-founder and CEO Gary Beasley said today’s reduction in force (RIF) was “in response to the challenging macro environment” and the “negative impact” it is having on Roofstock’s business.

He added that the company was not expecting to have to cut more staff so soon but that it needed to “right size” in an effort “to reduce cash burn rate” and ensure it has “adequate capital runway until the market eventually turns.”

Beasley sent the email because apparently, the Zoom meeting where it was addressed “maxed out on attendees.”

Oakland, Calif.-based Roofstock lets people buy and sell rental homes in dozens of U.S. markets. The premise behind the company is that both institutional and retail investors can buy and sell homes without forcing renters to leave their homes. Meanwhile, buyers can also presumably generate income from day one. 

At the time of its raise in March 2022, the company said that it had facilitated more than $5 billion in transaction volume, more than half of which had come from the last year alone.

Just days before its last round of layoffs last year, Roofstock made headlines for selling its first single-family home using NFTs, or non-fungible tokens.

Rising mortgage rates and a slowdown in the housing market led to challenges for many real estate technology companies in 2022 that continue this year. Opendoor, Redfin, Compass, Better.com and Homeward were among the other startups that also laid off workers. IBuyer Reali also announced it was shutting down after raising $100 million the year prior.

TechCrunch has reached out to Roofstock but had not heard back at the time of writing but multiple sources confirmed that layoffs had taken place today.

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