Weekly Reads - May 22, 2023
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TikTok opposition remains prominent, yet there is a growing movement of TikTok users and organizations who oppose bans on the platform based on First Amendment rights violation that could put U.S. courts and lawmakers in a tough position on how to regulate this divisive national problem.
TikTok has been officially banned in Montana and TikTok is scrambling to find any avenue to overturn this new law. The company is suing and alleging that the state was unconstitutionally shutting down the forum for speech for all speakers on the app. Montana has blocked the app from being downloaded by any state resident and is fining the company for every person who downloaded or operated the app within state lines. Montana is the first state to block the use of TikTok, potentially setting a precedent for other states to enact laws to reduce or block the usage of TikTok. Fighting this new law is in the best interest of TikTok which has become one of the largest social media platforms in the U.S. and extracts valuable data from users that is being used to grow their advertising business. TikTok is garnering support from Montana users who are also suing the state for violation of their First Amendment rights and civil rights organizations who are decrying this new law. With over 150 million users TikTok has ingrained itself in U.S. culture despite dubious connections to the Chinese government and lack of transparency. It is going to be an uphill battle to have these bans approved by U.S. courts and we could see these restrictive bans soften as more opposition from users and civil organizations increases. While the national ban on TikTok would positively impact national security and the success of domestic social media platforms, there seems to be increasing support for TikTok to stay stateside.
With the onset of AI, edge computing, and machine learning alongside rising geopolitical tension we are entering a semiconductor cycle that will be filled with rapid new discoveries, the onshoring of semi-manufacturing, and investments in cultivating the next generation of local engineering talent.
China has banned some sales of Micron products after launching a probe into the company for cybersecurity risks. Micron is the newest scapegoat for the continuing economic competition between China and the U.S. This follows last year’s news that the U.S. was barring Chinese-backed memory chip maker Yangtze Memory Corp from being supplied by U.S. companies and banning NVIDIA from exporting its H100, its GPU, for generative AI training. Micron has been denounced by The Cyberspace Administration of China for having serious cybersecurity issues that pose a big risk to the country’s supply chain. Micron has been operating in China for the last 16 years and is one the largest memory chip makers in the world making it suspicious that such a major cybersecurity issue was found so recently. It is likely that this ban is just another tactic to punish the U.S. for its actions in disrupting its semi-supply chain and push local manufacturers like Yangtze. This ban will ultimately benefit local providers helping push the Chinese government’s agenda of shoring up its own semi-infrastructure which has historically been dependent on foreign providers. Lawmakers in both countries are likely to continue this tit-for-tat competition until each country can build its own domestic semi-supply chain. Headlines like this push the narrative that the world is heading toward a period of industrial onshoring that will change the ways supply chains are structured.
The complexity and expense of running logistic networks is creating wide competitive moats for the largest retailers in the world who can deliver products quicker and more cost efficiently than their smaller competitors.
Flexport’s acquisition of Shopify’s logistics business has flowed under the radar despite the company aiming to compete with the greatest logistics business in the world, Amazon. The Shopify logistic acquisition included fulfillment and order storage provider Deliverr and its 3rdparty network of U.S. warehouses along with Shopify-owned warehouses. Flexport has historically helped shippers move their international freight until it reached the customer’s fulfillment provider's warehouse. The new Flexport will combine its legacy capabilities with last mile and e-commerce fulfillment allowing it to be a one-stop-shop for logistic solutions from manufacturing to delivery to the end customer. Flexport is copying the Amazon model of creating an integrated logistics solution that can be offered to smaller customers who can not afford to have their own logistics network. Flexport plans to offer this service to Shopify, Walmart, eBay, and Amazon businesses setting itself up to be a major competitor in 3rd party logistics. In order to differentiate itself from Amazon, Flexport plans to offer e-commerce fulfillment alongside direct fulfillment to a retailer’s physical store. The future relationship between Flexport and Amazon is likely to be as “frenemies” with Flexport relying on the Amazon platform as a way to get new e-commerce customers that want to expand to other e-commerce and physical channels.