TikTok Pushes Back on Ban & The New Rules for Airline Refunds

0:26Race the rudders! Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, reservations are so scarce at fancy restaurants, they're going for thousands of dollars on the secondary market. Then the TikTok divestment bill has been signed by President Biden, but what comes next? It's Thursday, April 25th. Let's ride.

0:54You hear a lot about U.S. downtowns getting caught in the doom loop of falling foot traffic and commercial real estate values. You hear a lot less about the ones that have managed to escape it. Well, here's one. Detroit. Just over a decade ago, the Motor City was bankrupt in the biggest municipal bankruptcy in U.S. history. But tonight, it's hosting the NFL draft with a ton of momentum spurred by investments by rocket mortgage billionaire Dan Gilbert. Yeah, Detroit is so back. Detroit's home prices have jumped 40 % since 2020. That was the biggest increase of any U.S. metro area last fall. Big companies like Farm, they're redeveloping old buildings.

1:32There's even a Gucci store right now, Motor City, way back. Yeah, according to one exec there, you've got this post-bankruptcy kind of energy. So if anyone's looking for a little motivation or inspiration today, just channel that post-bankruptcy energy that Detroit has. Shout out Detroit. Now let's hear a word from our friends over at Robinhood. We've talked a lot about Robinhood Gold so far this month, with good reason. It might be the best deal in investing. For less than$7 a month, Robinhood Gold offers 5 % APY on uninvested cash, a 3 % match on retirement contributions in your IRA, and access to Morningstar stock reports and advanced data that will normally cost you over$35 a month.

2:13I'm no math guy, but it certainly seems like$35 a month is more than$7 a month. You're a whiz, Toby. Plus, if you grab the Robinhood Gold Card, you get 3 % cash back across the board. Give me that math, Toby. I'm seeing here that as long as you spend over$234 a month, you'll make your money back with the 3 % cash back. That's like three coffees in New York. Certainly feels like it. Learn more about the Robinhood app in the App Store or Google Play Store. Disclosures, investing is risky. Robinhood Gold is offered through Robinhood Financial LLC and is a subscription offering services for a fee.

2:48Terms apply to the APY and rate is subject to change. Limitations apply to the retirement match. Robinhood Gold Card is subject to credit approval. Terms apply to the card and the rewards program. More info in the description of this podcast. Change is always happening, but no matter what changes in five years, there's one thing that will stay the same. The price of your internet with the Xfinity five-year price guarantee. You get five years of the most reliable wifi with our best equipment included for a price that stays exactly the same. Restrictions apply new residential customers only taxes and fees, extra and subject to change.

3:24Most reliable wifi based on open signal awards, USA fixed broadband experience report, August 2024. So as expected, Congress passed a new bill that gives TikTok's Chinese parent company ByteDance nine months to sell the platform or face a ban in the U.S. Joe Biden also signed it into law yesterday. But now things do get complicated. TikTok CEO Sho Chu said in a video that, rest assured, we aren't going anywhere, showing that the app plans to put up a fight. Here are the hurdles the new bill faces. One, will it be able to withstand the incoming legal challenge from TikTok, arguing that the sale infringes on the free speech rights of TikTok's 107 million monthly U.S.

4:04users? And two, is there even a buyer that could feasibly afford to acquire TikTok's U.S. operations, which could cost upwards of$100 billion and face antitrust scrutiny? So the current state of the playing field is the bill is signed. ByteDance has less than a year to divest its stake before a ban would take effect. But before any kind of separation happens, We're going to see a challenge in the courts. Yeah, absolutely. TikTok and its parent, ByteDance, have every reason to fight this bill. This is kind of like the US government saying, hey, Zuck, we need you, Meta, to divest, to sell Instagram.

4:38Maybe your flagship platform, your fastest growing one, the one that makes the bulk of your profits. You have to sell that. And Zuck would absolutely go to the floor. He would do everything he can to stop this from happening. And that's exactly what TikTok's gonna do. TikTok already has a very strong track record of winning these similar First Amendment battles. Remember, Donald Trump trying to force a sale of the app back in 2020. Judges blocked that because it's basically a no-no under the First Amendment. And then Montana tried to ban TikTok in the state last year because of its Chinese ownership.

5:11But a different federal judge ruled against that for similar reasons. Only one narrower TikTok restriction has survived in the courts. And that was when governor of Texas announced a ban on state government devices back in 2022. And that has survived just because it is a much more narrow application of the law. So if you just go through the track record of how TikTok is done in the courts, they've done pretty well. Right. But here's what the Biden administration is going to say. We're not banning TikTok. We're just asking you to divest from it. And we're giving you nine to 12 months to do that.

5:45So we're not banning you at all. We're just regulating a commercial transaction. And we do it all the time. The FTC blocks MNA. We've blocked. We've tried to stop Microsoft from blocking Activision Blizzard. We also have this national security apparatus that blocks foreign companies from taking over American ones. And right now they're looking into Nippon Steel taking from a Japanese ally taking over U.S. Steel. This is just a part of doing business in America because we have to protect our national security interests. And that's exactly what we're doing with ByteDance and TikTok. So this is just par for the course.

6:16We have to protect our security first and foremost. Right. And TikTok's playbook two here is maybe they don't need to full out win in the courts. They just need to slow this down enough because if you can slow it enough, there's a chance a new administration comes in. Maybe Trump wins the election and he has been more receptive to keeping TikTok around. So it's not necessarily like we have to fall out win this legal case right now. We just need to drag it out long enough that maybe the landscape changes a little bit. There's also one other pretty interesting option, which is that ByteDance could potentially spin off TikTok into its own entity, its own business with its own stock through, say, an IPO or whatever.

6:55This is called a shotgun divorce. And then ByteDance and its other Chinese investing, the Chinese shareholders of TikTok could own 20 percent or less. So that is another business mechanism that could potentially happen. It's all very complicated. And the biggest wildcard here is the Chinese government, because they've said they're not going to allow ByteDance to sell TikTok. So we'll see what happens with Beijing. They could say, OK, you can sell it, but we're going to withhold the algorithm, which is really the moneymaker for TikTok to all anybody wants, because this algorithm keeps people engaged on the platform so you can sell ads on it and is really the secret sauce to everything TikTok does.

7:34So if your friend comes up to you today and says, hey, is TikTok getting really banned, what would you say to them? Say not in the foreseeable future, there's going to be a long protracted court battle. Absolutely. Flying at U.S. airports is about to get a little less frustrating. The Transportation Department released a set of rules yesterday that aims to make life easier for passengers, from mandating automatic refunds to more transparency around all the fees you get hit while booking. The headline rule here is a requirement that airlines provide automatic cash refunds within a few days for canceled flights and significant delays.

8:08Currently, it's up to the airline to define how long a delay must last before it triggers refunds. Four hours, five hours, until you say, screw this, I'm getting a$19 beer. The new rules remove that wiggle room with a clear timetable. A significant delay that leads to refunds lasts three hours on domestic flights and six hours on international ones. And when that happens, airlines must send you a refund within seven business days. Before, the burden was on passengers to secure a refund by filing paperwork or making that painfully long phone call to a customer service agent. Toby, this is unequivocally good news for consumers.

8:44It absolutely is. I saw a few TikTok edits yesterday saying like, apologies, Pete Buttigieg, the transportation secretary. I wasn't familiar with your game because this is a big win for consumers. Also under these new rules, the refunds don't just stop at the actual ticket prices. You also get refunds of check bag fees if they weren't delivered within a certain time frame. Also, if the internet connection on a plane isn't working, you'll get refunds based off of that. So it really went back to the drawing board and said, what are all the annoying fees that you have to deal with? What are all the annoying parts of flying, especially when you get delayed, that consumers are dealing with?

9:23And how can we make it less annoying? And it looks like they did that. So airlines, how are they responding to these rules? Mostly with saying, there's nothing wrong here. Like it's in our best interest to serve customers well because we're in a competitive market. And if we don't do that, they'll go to another airline. So they push back on the government saying these are unreasonable recommendations, unreasonable regulations. They're not necessary. We're doing all of this stuff already. It's not a big deal. You didn't see like heavy pushback because they're not going to really do much. This is not like TikTok.

9:55They're not going to sue the government. It doesn't appear. But they are just like, oh, this is freaking annoying. The also other thing that this reminded me of, too, is that when you are checking out and you're going through the process of buying an airline ticket, there's usually this prompt where pick a seat or and these airlines make it seem like if you don't buy a seat, you won't have a seat available. But this new rule will also make airlines tell passengers that they do have a guaranteed seat that they are not required to pay extra for. These are some of those dark patterns that we've talked about in checkout flows.

10:27Remember, Epic Games got in trouble for making it seem like or making it too easy to buy these these big packages when you're checking out online. So airlines have been guilty of doing this. And it looks like these new regulations are targeting those checkout flows as well. And while we're on the subject of airports, you got to hear about this new law proposed in California that targets security line skippers. This week, lawmakers advanced a bill, which is the first of its kind in the U.S., that would ban Clear and other third-party screening services from state airports unless they establish their own security line.

11:01Some politicians think it's unfair for people who have Clear to cut passengers waiting in the regular security line, creating an environment of have-and-have-nots. If you haven't heard of Clear, it's this service costing$189 a year that whisks you through security at airports and other event venues with just a biometric scan. It's probably best known for its aggressive agents at airports that try to get you signed up. If there's a long TSA line and you're feeling nervous, you're going to miss your flight. Toby, line skipping at airports. Is this an actual problem? Yeah, it's a bad vibe when you're stuck in security line.

11:34You see someone with clear get ushered through. Although I have been seeing clear lines that almost rival the length of TSA pre-check or something like that. On the other side of the coin, the Chamber of Commerce and other industry groups within California came out against the bill saying like, hey, this is one government overreach. And then two, there's potential harm to California's image as this tourist hub. Like, do we really want to be the only state in the nation that has these restrictions on clear? So there's always two sides of the coin here. In general, though, I'm a TSA pre-check guy.

12:04I don't I don't mess with clear. I don't need to go in the regular line. I don't need to pay whatever, two hundred dollars a year for clear. TSA PreCheck. That's the sweet spot right there. Up next, I can't even contain myself. It's Neil's numbers. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about four in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

13:06receive a live vaccine when treated with Epglis. Before starting Epglis, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about Epglis and visit epglis.lily.com or call 1-800-LILY-RX or 1-800-545-5979. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

13:50Welcome to another edition of Neil's Numbers, the segment where I share three stats from the week's news that will have you talking as eloquently as an Aaron Sorkin character. My first number is$80 ,000 a year, which is how much some people are making selling restaurant reservations on the secondary market, according to this article from The New Yorker. Yes, there really is a seat geek for everything. Restaurants, especially the super fancy ones, are in such high demand these days that an ecosystem of entrepreneurs has formed to create an economy around dinner reservations. One of them is a sophomore at Brown University who regularly uses fake phone numbers and email addresses to make reservations.

14:33He says that sometimes the person picking up the phone at the restaurant recognizes his voice, so he switches into falsetto to sound like a girl. He made$70 ,000 last year doing this, by the way. Lubricating the secondary market for reservations is a site called Appointment Trader, which allows people to buy and sell reservations for everything from doctor's appointments in Beverly Hills to private shopping experiences at the Hermes store in Paris. And business is booming. Appointment Trader cleared almost$6 million in reservation sales during the past 12 months, more than double from the last year.

15:06Toby, a side hustle where you hustle for sides. Can't get any more poetic. That was very well done. And I do think that there are some holes in this story because this was being passed around a lot of my group chats yesterday saying, one, how is this person who is calling these restaurants, this sophomore from Brown University, getting those reservations in the first place? Because, for instance, like Polo Bar, which is one of the ones that he says he calls so many times that they started to recognize his voice. They don't have reservations available to just call up. So I don't know how he's necessarily, maybe he's posing as a famous person because a lot of these reservations get picked up by bots, which are these just very high frequency things that check and refresh websites and then buy them themselves.

15:50So there's a little bit of holes. I don't understand how it's getting from that person to the secondary market because it's still hard to snag that reservation. It is, but they open up, you know, two weeks in advance. They'll say we're going to allow reservations two weeks in advance at 10 a.m. And there is, you know, it's not a Taylor Swift Airs tour ticket. Like there is like five to six minutes where you can get on the phone with somebody or go on their website and get a reservation. But to me, this story just speaks about how hot like dinner is as just a cultural activity. Now, there was one poll during COVID that people responded saying they missed going out to dinner more than they missed hanging with friends and family.

16:27And so you've got this huge surge in demand for just going out to eat, enjoying this experience economy, especially at super fancy places. And it's really the scarcity of it all that makes it even more appealing to be able to get into this exclusive club has created this insane secondary market where certain reservations, not just dinner, but just getting the reservations are going for over$1 ,000. Paul Graham, the founder of Y Combinator, famous investor and founder, he quote tweeted the snippet from this article and said, there is a missing startup here. Restaurants should be making this money, not scalpers.

16:59He was saying you could use paid reservations as a way to almost displace the resis and the open tables of the world because clearly there is intense demand. But resi actually initially rolled out a system where they were charging reservations. They would charge about 10 percent of a diner's check for reservations, got immediate pushback. A lot of people said, like, listen, not everything should be purchasable. Like sometimes it shouldn't be like a pay to play system wherever you go. So I do think some enterprising young person read this article and said, all right, I'm going to make a multimillion dollar company based off this exact system right here.

17:36My second number is one point seven million dollars, which is what a single public restroom in San Francisco was projected to cost. Heard about this back in twenty twenty two. San Francisco was endlessly mocked when news broke that a project to build a public restroom in Noe Valley's town square would cost one point seven million dollars. For many, it symbolized the Byzantine bureaucracy and suffocating red tape of San Francisco, the most expensive city in the world to build in. Even Governor Gavin Newsom chimed in, saying a single small bathroom should not cost$1.7 million. Well, fast forward to last Sunday, and the bathroom was finally opened.

18:14The good news is that it ended up costing a lot less than$1.7 million, and that's because private companies stepped up to the plate. One donated a modular bathroom while another covered the architecture and engineering work. The total cost of this bathroom wound up being$200 ,000, mostly in labor, which is encouraging news, Toby, because$1.7 million, that's a lot of waste for a little waste. That's a lot of toilet paper. So you become a laughingstock for spending$1.7 million on a toilet. But then you get in and the pricing actually comes out to$200 ,000. What do you do? Obviously, you throw a big party in celebration.

18:50you have a party with brown cupcakes local librarians handing out free copies of children's book called everyone poops and an emcee that calls himself the grand pooba telling jokes he said he got from his seven-year-old nephew so i really do like how san francisco ended up embracing the negative headlines saying like hey we got this bathroom done let's throw a party for it yeah but i don't think it resolves any of the problem because companies kind of stepped in the actual public initiative here, the proposal of the 1.7 million bathroom was still a thing. And if these companies had not stepped up and essentially donated the bathroom and just paid a few workers to construct it, then it still would have cost a lot of money.

19:31So this permitting, this agency approval is still there. So yeah, you can celebrate a little bit, but I would still say there hasn't been much change in what led to this in the first place. So I'd be very skeptical that this might not happen in the future. For my final number, Taylor Swift's latest album, The Tortured Poets Department, has been out for just about one week. And what it lacks in musical variety, it makes up for in listenership records. Because here's some breaking news. Taylor Swift is very popular. On Spotify, Tortured Poets became its most streamed album in a single day in history, in less than 12 hours after its release.

20:09It also became the first album on the platform to receive more than 300 million streams in a single day ever. For comparison, Spotify's previous single-day record holder was Beyonce's Cowboy Carter, which got 300 million streams in its first full week of release. Now on to vinyl, where Taylor truly has no peer. She broke her own record for the most sales of a vinyl album in a week with 700 ,000 LP copies sold, and she did it in just three days. Maddie Healy could never. I know everyone has their take on whether this album is good, Toby, but what's not debatable is that it's a blockbuster commercial success.

20:44Can you imagine if the album was good? How big it would be? Yeah, I mean, part of the reason I think she got so many streams is it's a double album. There's 34 songs on it, so there's just a lot to stream. The vinyl stuff, though, you cannot ignore her presence in that industry. You have to go all the way back to early 2022 to find someone not named Taylor Swift who was breaking vinyl records. Harry's house from Harry Styles throw sold 372 ,000 vinyl copies in his first week. Then if you go back to kind of what vinyl used to be back in the mid 2014s, it was rockers who were making these headlines for their crazy vinyl sales, which there was this rocker Jack White who made headlines for setting a new record of most vinyl sales in one week and he sold 40 ,000 copies.

21:30It is crazy how much bigger the industry has become now that Taylor Swift has kind of put her stamp on it. Yesterday was a massive day for college football fans. Reggie Bush got his 2005 Heisman Trophy reinstated more than a decade after it was rescinded by the NCAA. The iconic running back had the iconic trophy stripped for him more than a decade ago after an investigation found he received impermissible benefits during his time playing for USC. But now the landscape of college athletics has shifted considerably. NIL deals mean that players can be compensated for their name, image and likeness.

22:06So the Heisman Trust re-evaluated their decision and realized that the, quote, compensation of student-athletes is an accepted practice now and so decided that now was the right time to return the trophy to Bush. It's pretty wild to look back at the state of college football when Bush was in college compared to now. Archie Manning and Bronny James, two of the more marketable NCAA athletes, had NIL deals lined up in the millions before they even stepped foot on campus and all top athletes are compensated in some way at major football or basketball schools. It just feels right that Reggie has this award back now.

22:40Yeah, there was a huge campaign to get Reggie Bush back this Heisman. It's just crazy to look back at when he was playing and the very tight sensitivity around athletes getting any money. And now we're in a new era, 2024, where, yeah, people are getting millions of dollars before even entering college. Jack Golke of Oakland University is literally filming TurboTax commercials hours after he finished a game in March Madness. It's just unrecognizable to the college landscape that Reggie Bush played in. So there was a big push by Reggie Bush and a bunch of other Heisman Trophy winners, and he had this big campaign to get him his Heisman Trophy back because he said, look what happened in college athletics.

23:21We are in a new paradigm. In 2021, athletes were allowed to be compensated for their name, image, and likeness. There was also this Supreme Court ruling that opened the door for student-athlete compensation. So those two things, NIL and the Supreme Court ruling, has just changed college sports forever. And I don't think you can say this is a particularly amateur sport anymore, at least at the college football level. Even if you look back at 2005 when Reggie Bush was in college, this kind of stuff was happening. Just anecdotally, you heard stories and whispers that a lot of other people were getting money under the table.

23:55And yet Reggie was kind of the only one truly punished. He had his award stripped for him. So even if you just look anecdotally at that time, it seemed unfair. And then also I've been seeing some people saying, is this just symbolic that he gets his trophy back? It is, but there was a joke in the Morning Brew newsletter that comes out this morning saying that this is great news for Nissan's Heisman house commercials. It actually is great news because Reggie Bush is one of the more recognizable college athletes of all time. They get him back in the Heisman fold. It does lead to a nice boost in marketability.

24:26So you can kind of see where the Heisman trust head at too was in reinstating his trophy. And while we're talking about Reggie Bush college football, we should mention the NFL draft is tonight. So number one, another USC player, Caleb Williams is expected to go number one overall to the Chicago bears. And what's interesting about this draft, it's very top loaded with quarterbacks. So it's not inconceivable that the first four picks could be all quarterbacks. And they're all four quarterbacks are going to go over the Gucci store that we know is in Detroit now and load up on Gucci bags. Let's finish up by saying, if you're listening to Morning Brew Daily in South Carolina right now, you probably need to crank the volume because the cicadas are emerging and it's likely getting loud.