The case being made for the RESTRICT act is that it's needed because of "Chinese communist control" over TikTok.
Whether that's true or not, my reading of the actual proposed law is that it allows basically any U.S. tech company to fall under direct U.S. government control.
The reason I'm saying this is that companies that fall under this act are any in which any person in any foreign country that is now or is ever declared to be "foreign adversary" owns even one share of stock, at least by my reading.
From the bill:
A "holding" is defined as:
(i) an equity interest;
(ii) a stock;
(iii) a security;
(iv) a share;
(v) a partnership interest;
(vi) an interest in a limited liability company;
(vii) a membership interest; or
(viii) any participation, right, or other equivalent, however designated and of any character; and
(B) includes, without limitation, any security convertible into an ownership interest and right, warrant, or option to acquire ownership interests.
===
In other words, if the company is public and someone from China owns a share, or if the company accepts VC money and anyone from any country that is declared an "adversary" was an investor in the fund, that company now is fair game for falling under government control.
I'm not a lawyer or legislative expert so it would be great to hear from people who are who can confirm or deny that this bill is actually a giant power grab, either intentionally or by sloppy drafting.
If this bill has the effect that I'm afraid it might, everyone in tech should be very concerned.
What I think we need instead of a bill like this is to institute privacy restrictions in the USA like GDPR, and to enforce those against every company, not just foreign ones. There's a good case to be made that Facebook and others are at least as bad as TikTok, not because they are owned by a foreign entity, but because their policies allowed and allow them to be used by propagandists inside and outside the country.
With the rise of GPT and other LLMs that can generate propaganda at scale, we need these protections more than ever.
No this interpretation is negated by sec 2-2, it has to be a "controlling holding" to count as a "covered holding":
> (2) CONTROLLING HOLDING.—The term “controlling holding” means a holding with the power, whether direct or indirect and whether exercised or not exercised, to determine, direct, or decide important matters affecting an entity.
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[ 3.3 ms ] story [ 14.6 ms ] threadWhether that's true or not, my reading of the actual proposed law is that it allows basically any U.S. tech company to fall under direct U.S. government control.
The reason I'm saying this is that companies that fall under this act are any in which any person in any foreign country that is now or is ever declared to be "foreign adversary" owns even one share of stock, at least by my reading.
From the bill:
A "holding" is defined as:
(i) an equity interest;
(ii) a stock;
(iii) a security;
(iv) a share;
(v) a partnership interest;
(vi) an interest in a limited liability company;
(vii) a membership interest; or
(viii) any participation, right, or other equivalent, however designated and of any character; and
(B) includes, without limitation, any security convertible into an ownership interest and right, warrant, or option to acquire ownership interests.
===
In other words, if the company is public and someone from China owns a share, or if the company accepts VC money and anyone from any country that is declared an "adversary" was an investor in the fund, that company now is fair game for falling under government control.
I'm not a lawyer or legislative expert so it would be great to hear from people who are who can confirm or deny that this bill is actually a giant power grab, either intentionally or by sloppy drafting.
If this bill has the effect that I'm afraid it might, everyone in tech should be very concerned.
What I think we need instead of a bill like this is to institute privacy restrictions in the USA like GDPR, and to enforce those against every company, not just foreign ones. There's a good case to be made that Facebook and others are at least as bad as TikTok, not because they are owned by a foreign entity, but because their policies allowed and allow them to be used by propagandists inside and outside the country.
With the rise of GPT and other LLMs that can generate propaganda at scale, we need these protections more than ever.
> (2) CONTROLLING HOLDING.—The term “controlling holding” means a holding with the power, whether direct or indirect and whether exercised or not exercised, to determine, direct, or decide important matters affecting an entity.