Apple, Meta caught in proxy war between U.S. and China, NY Times' Mike Isaac suggests

The Apple complying with China’s order to remove Meta’s WhatsApp and Threads from the country’s App Store. Meta shares dropping 4% today, while Apple fell 1%. The move coinciding with an expected US vote on a bill that could ban TikTok in the US if it’s not divested from China’s bite dance. Let’s bring in Mike Isaac, technology correspondent at the New York Times. Mike, great to have you with us. Hey, thanks for having me. You actually think the App Store is like a, a new proxy war location for, for what’s going on with with China and the United States. Do you think it go can go further than than where it’s gone so far? I, this is the sort of strange position that China is in here in terms of, I guess, remuneration for, you know, the threat of taking down TikTok, which is that a lot of the apps that they took down yesterday, which includes WhatsApp and threats, but also Signal and Telegram were largely banned in China already. So I think, you know, you’re not exactly hurting Americans in the same way that, you know, Americans might hurt the Chinese by cutting off a huge market for them over here. So I, I do wonder what their escalation would be next. So you’re not really clear on what they could do next. You don’t think that there’s any further clear pain? I mean, Apple is the obvious sort of pawn or would be the obvious pawn in this tech war. Do you think that there could be repercussions for that or could it, could it go like Shin and Timu pulling all the ads from the US? No, you’re, you’re exactly right. Like one of those. We did a story the other day on how Shin and Timu and Chinese companies in general make up about 10% of Meta’s entire advertising budget over the last few quarters. I want to say, and you know, Meta is quick to say, hey, that’s pretty diversified. It’s not any one or two companies, but the Chinese government starts saying, you know, stop spending there, that that can Ding Meta pretty quickly. Maybe they talk to Chinese gaming companies that are there that also spend tons of money on advertising dollars. There are like indirect ways that I think this sort of proxy war could be ratcheted up, But I feel like Apple is just in a super gnarly position because they don’t they don’t want to be caught in the middle of it and their business is so reliant on China. Hey, Mike, it’s Tim and good use of gnarly there, by the way. So and I guess let’s let’s use gnarly again. I feel like in the last three days, this has gotten really gnarly, right? Isn’t this a function of the Chinese embassy going to the hill and lobbying on behalf of at first just somebody and then it was a Chinese company and then it’s a Chinese company that that really, you know, you wouldn’t be doing this to anyone else but a Chinese company. So, you know, Apple has been able to navigate this tightrope for a long time. We’ve all been amazed at an Apple who’s pretty self-righteous about their ability to protect the consumer and rights and freedom of speech. But somehow in China they can be a monster and be OK. And we let them, you know, anyway, I’ll leave that alone. Did it get a lot worse in the last three days? Is this really a function of what just happened with TikTok? I think that is largely, I mean, the way I’ve been looking at this whole thing is pretty symbolic in some ways because again, 15,000,000 people use WhatsApp in China. The Great Firewall already doesn’t let you use it unless you’re using a VPN, which sort of circumvents that. So it’s not say cutting off a huge arm for for Meta, but it is saying, look, these are American popular apps in the rest of the world. We are, you know, we the Chinese government are saying we don’t want them here anymore. They, according to people we talked to, sort of were saying it had to do with President Xi Jinping and content that was inflammatory towards him. But you’re exactly right. Like, this has been ratcheting up in the past few days. We saw that political story about people on the Hill now lobbying Congress. And I’m very curious what’s going to happen this weekend basically in terms of what could happen, Mike, I mean, let’s say this thing does pass. I mean, do, do you honestly think the, the Chinese government is going to allow bite dance to sell TikTok? I mean, the what is what is golden about TikTok is the algorithm. And do you think the Chinese government is going to let that go with the sale of TikTok? I, I would doubt it is this sort of just, I mean, what are we really arguing out about here? Because if you do this effectively, the next step is going to be TikTok pulling out of the US. Yeah, I think you’re right. I think that, you know, it’s been interesting to see the, the Chinese sort of say we would rather kill this than sell it and give the the golden goose to some other company. And to some degree, that was probably brinksmanship. But at the same time, they probably would not be a huge deal if they lost, you know, let’s say, 10s of billions of dollars or even $100 billion, depending on how much you value the algorithm compared to, you know, whatever untold riches or power this company could lead to in the hands of an American coalition. And there’s been, you know, sort of investor groups saying they want to try and buy it or rebuild the algorithm. I don’t think it’s that simple. I think it’s very hard to copy what they’ve done over there. But I could see a real scenario where they just they shut it off and say here if you want to buy the rest of it without without the algo. Good luck basically.