You Call That Recession?

Plus: Uber tries even harder with rental cars ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

June 9, 2023

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TOGETHER WITH

Good morning and happy Friday.

GameStop may be relapsing back to meme stock.

In Q4 2022, GameStop experienced impressive sales and actual profits, but (sigh) it wasn’t meant to last as this quarter saw the videogame retailer’s revenue drop 10% year-over-year. On Wednesday, the company announced it had let go of chief executive Matt Furlong and replaced him with Ryan Cohen, GameStop’s largest shareholder and board chair. A shakeup like that creates a lot of questions, but GameStop hasn’t fielded any from investors or analysts on earnings calls since 2020, The Wall Street Journal reported. And it looks like Cohen will be keeping with the company’s protocol of “they’ll ask, don’t tell.”

Morning Brief

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I always feel like TikTok is watching me.

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Europe is in a recession after all.

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Rent a car or rely on Uber? Uber says ‘both.’

Policy

China is Accessing TikTok User Data, Court Filings Say

(Photo Credit: Solen Feyissa/Unsplash)

A TikTok insider has confirmed Washington’s worst suspicion about what Beijing might be doing with all that data. His proof? Well, he didn’t really have any, but he swears it’s happening.

In court filings this week, a former employee of TikTok’s parent company ByteDance claimed the Chinese Communist Party has accessed the app’s user data for surveillance and political purposes. Although he offered no evidence beyond his testimony, Congress is no doubt inclined to take him at his word. Even more so after news that Beijing plans to install a military listening post in Cuba. (If this is the sequel to the Cold War, could they at least have given us a new locale?)

Caught Not So Red Handed

Shadowy threats to national security have been hot-button issues in Congress since before the Zimmermann telegram, but right now, Washington’s crosshairs are focused on TikTok, the China-born video-sharing app full of dance challenges, unboxings, ASMR recordings, and a whole bunch of other stuff to waste your time. Much of the US government believes TikTok could or would provide user information to the CCP thanks to Beijing’s near omnipotent and unfettered grasp on Chinese businesses. It’s great fodder to ramp up patriotism and support for the trade war against China, but new testimony is hardly a smoking gun.

Yintao Yu, a former executive in the US for ByteDance, alleged that the CCP spied on protestors in Hong Kong in 2018. He claims the government used “backdoor” access to TikTok to identify and track protestors’ locations and messages. But Yu, who’s also suing TikTok for wrongful termination in California, provided no physical evidence in his court filings, so you’ll literally have to take his word for it. Right now, the situation feels similar to ex-intelligence officer David Grusch claiming that the US government has a secret cache of alien spacecraft — I want to believe, but show me some proof:

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Yu claims he saw access logs that showed CCP officials using a “god credential” to go around security measures and retrieve TikTok data. He made the allegations under penalty of perjury. Information security experts told CNN that Yu’s claim appears to be the first to identify a specific circumstance where the CCP has actually accessed TikTok data.

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In a statement, ByteDance said the claims are nonsense and that Yu is just a clout chaser: “It’s curious that Mr. Yu has never raised these allegations in the five years since his employment for Flipagram (another ByteDance app) was terminated in July 2018. His actions are clearly intended to garner media attention.”

Drop It: China is planning more tech crackdowns in the name of national security as Beijing adds to restrictions on programs that allow short-range file-sharing without internet access like Apple’s AirDrop, a technology reportedly used by protestors at zero-Covid and anti-government demonstrations. You Yunting, a senior partner at Shanghai DeBund Law Offices, told The Wall Street Journal that under the proposed rules, if authorities request data on the grounds of security, file-sharing operators will likely have to hand over phone numbers and ID data of people who have sent information using the services. We have a pitch for Netflix: Black (Two-Way) Mirror.

– Griffin Kelly

International

Eurozone Slips into Mild Recession

It took a photo finish, but the EU economy is officially in recession.

According to revised data revealed on Thursday, the Eurozone economy shrank by 0.1% in the first quarter of the year — following a shrinkage in the final quarter of last year. That places the 20-nation economic bloc within its technical definition of a recession. But don’t worry, they don’t seem to be sweating it just yet.

‘Es tut mir Leid’

If 20th-century history taught us anything, it’s that when things go awry in Europe, blame Germany. The same applies to this week’s bad news. The country stands as the bloc’s largest economy, so where it goes, the rest often follow. While Italy, Spain, and France all carried their weight toward economic growth, Germany suffered a significant slowdown in factory output in March, as well as a drop off in government spending. Ireland also hurt the group cause with a 4.6% drop in first-quarter GDP — though that was mostly caused by ailing multinational companies that use the nation as a tax base.

Holger Schmieding, chief economist at German bank Berenberg, told the Financial Times that the recession would’ve been avoided if not for Ireland’s GDP dropoff and Germany’s stingy government. “The word ‘technical recession’ can have a bit of an impact on the tone of the debate,” Schmieding told the FT.

Still, there’s plenty of good data buried behind the bad headlines, and early indicators from the current quarter are presenting signs for optimism:

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Eurostat said employment rose 0.6% in the first quarter, while investment rose 0.6% and a 1.3% slide in imports outweighed a slight 0.1% dip in exports. Meanwhile, surveys say the 0.3% drop in household consumption can be explained as Europeans being cautious about burning through savings thanks to the uncertainty of the war raging in Ukraine.

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Economists are expecting the bloc to return to growth in the three-month quarter through June, according to The Wall Street Journal, while the OECD projected earlier this week that the eurozone economy would grow 0.9% overall this year and 1.5% next year.

Inflated Expectation: Though energy prices have normalized after crisis-level peaks in 2022, inflation continues to hit food prices at a rate double of what the US has seen so far this year. Still, inflation cooled more than most economists expected in the most recent quarter, a positive sign. Analysts don’t think the recession will cause the European Central Bank to halt its rate-raising campaign when it meets in Frankfurt next week, the WSJ reported, though a pause is likely after another hike in July.

– Brian Boyle

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The end result? Better focus, more deep sleep, and increased calm.

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Ridesharing

Uber is Getting into the Car Rental Business

First, they killed the taxi cab. Now, they’re setting their sights on rental cars.

On Thursday, Uber announced plans for a new peer-to-peer car-sharing service, Uber Carshare, meaning you can rent out your sedan while you’re at home working all day.

Hertz, Don’t It?

Uber’s been on a mission to evolve from a ride-hailing service into an all-in-one transportation app. That effort has included features like Uber Charter, a partnership with US Coachways buses, and Uber Travel, which helps users book everything from restaurant reservations to commercial flights. Now, Uber wants to help you rent a car once you arrive at your location — or help you rent out your own if you’re a homebody busy-bee or sitting on an extra vehicle or two in your personal fleet.

It’s a service the company technically first launched in Australia last year after acquiring peer-to-peer carsharing start-up Car Next Door. Now, it’s planning on expanding Uber Carshare to North America, and first in Boston and Toronto. But it’s certainly not the first company to enter the space:

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Zipcar, acquired by rental car company Avis in 2015, essentially created the space all the way back in 2000. Turo, a carsharing startup that has been majority-owned by IAC since 2019, had 320,000 cars for rent on its platform and 2.9 million active users worldwide at the end of 2022.

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Chief rival Lyft entered the car-rental game in 2019, though its service isn’t peer-to-peer carsharing, operating more akin to a traditional rental company with reservations made through its flagship app.

Uber says car owners can set their own daily and hourly rental rates, with fuel included in the cost. Time to monetize your old Jeep full of “lots of character.”

When in Barcelona: Uber also scored a major win across the pond on Thursday, when a top EU court struck down Barcelona’s restrictions on ride-hailing companies. How would one say “So, how long have you been driving Uber?” in Spanish?

– Brian Boyle

Extra Upside

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100 pennies: Billionaire radio host John Catsimatidis says he’d buy CNN and run it for $1 a year.

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Bitcoin bust: Crypto industry workers can’t find their next gig.

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Metatextual: Mark Zuckerberg isn’t too impressed with the Apple Vision Pro.

Just For Fun

Cat calculations.

Fly by.

Have a great weekend!

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