Hashtag challenges vs geo-politics, 'positive' stagflation, unnecessary news tantrums, the rise of YIMBY-ism, the end of tipping, beer bums out.
The big news this week is…the Canadian Government has decided to ban TikTok on government devices.
Now - hold up! Before we dig into the details, let’s just go and presume you don’t know what TikTok is, because - hey - not everyone is up to speed on GenZ social media LOLz.
TikTok is a social media app, focused on short-form video (10-15 seconds), which was founded in 2016 in Beijing. Like other Chinese social apps (such as WeChat) it became big in China, but failed to ‘cross-over’ to western markets - that is until TikTok bought Musical.ly in 2017. Musical.ly was also started in the Beijing tech scene, but was designed to be a way for educators to share short 3 minute videos with students - an educational social app of sorts - until it’s popularity exploded when tweens randomly started using it to lip-sync to their favourite songs and then post them online. Specifically Musical.ly amassed 120 million users who were largely under 21, and most unusually half of those users were not in China - but in the US and Europe - so TikTok bought Musical.ly for $1B USD, took their users and immediately moved into the global market. TikTok now has over 1 Billion daily active users globally.
The reason TikTok is now so big is because of its algorithm which is eerily powerful. It’s ‘for you’ page (which is kind of like a ‘home page’) focuses on sending you sticky content you’re likely to engage with from it’s vast network - but with less focus on ‘following’ people and more focus on ‘random discovery’. So it’s a bit like flicking through TV channels to see what’s on, but TikTok somehow always knows the programmes you want to watch, with each programme being around 15 seconds long.
So what’s the big controversy? To be honest, it’s actually quite hard to navigate that question properly. TikTok is, well, Chinese - and Sino-US (and Sino-Canadian) relations are at something of an all time low right now - to the point whereby the phrase ‘new Cold War’ is being used by politicians with a strong nationalist bent and a very short memory. TikTok was under pressure during the Trump administration to sell its US operation to a (dubious) US entity siting ‘national security concerns’ and since then, TikTok has been found to be recording keystrokes of users, and ‘spying’ on journalists. Now…if that sounds a little like - I don’t know - the general-ish behaviour of someone like Twitter or Facebook - then you’d…not be wrong. But TikTok is Chinese, and its relation to the Chinese Communist Party is, as you’d expect - opaque at best.
So is this just a US nationalist knee-jerk spilling out into international geo-politics? Perhaps. But with social media giants, everything is opaque. As they say - if the product is free, then you are the product - which is to say that the data you provide to them is what makes them money. Yet there maybe something in all of this, given that Canada’s electronic spy agency (the CSE) has been watching TikTok ‘very closely’ since 2022. Acting on that unknown intelligence, Justin Trudeau yesterday announced a federal employee ban on using TikTok, stopping short of a consumer ban:
"This may be a first step, it may be the only step we need to take, but every step of the way we're going to be making sure we're keeping Canadians safe"
But then…did provide a weird sort of pseudo-political-PSA-thing:
"Certainly, I suspect that as government takes the significant step of telling all federal employees they can no longer use TikTok on their work phones, many Canadians … will reflect on the security of their own data and perhaps make choices in consequence."
There is a sense in all of this that Facebook, Instagram and Twitter gobbling up your data is fine because they’re American - but maybe TikTok doing it isn’t because they’re…Chinese. But then we’re certainly in a new era of murky data politics anyway as our everyday businesses become increasingly reliant on digital platforms with blurred geographical boundaries and dubious (or unknown) intentions - be that the whims of eccentric billionaires, short sellers - or the suspicious strategies of unknown governments.
So - is this a storm-in-a-political-teacup - or should you take it all seriously? Well, it’s all complicated, and politicians typically don’t like complicated. The daily reality is that most modern mobile platforms like iOS and Android have such rigid data security built into them (thanks to the EU), that there’s not really any risk in terms of the device itself spilling your secrets to a foreign power - but the content shown on these apps? THAT is something we know can be controlled, and not just by government propagandists. Generally speaking however; if this makes you stop and think about how the data economy works, and what your data can be used for - how secure it is and how it can be used against you - then it’s a good thing.
We may not have all the facts needed to make our own decisions relating specifically to TikTok, but a healthy amount of suspicion (rather than just rabid conspiracy) around all data and networks is always the right attitude to adopt when navigating this new digital war zone we’ve all apparently found ourselves living in.
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Top story this week☝️
Canada’s economy didn’t grow in the last quarter of 2022 and it actually shrank in December. Part of that is because business spending fell by 7.8%, part of that is because housing investment fell again by 2.3% (for 2022 as a whole, housing investment fell in total by 11%). The bad news here - obviously - is that the Canadian economy is in a worse state than it was hoped. The good news here is that with employment and spending still up, inflation - while coming down - was still volatile, and this stagnation will hopefully remove the need for the Bank of Canada to put up the rates again. So - a mixed bag - but probably good longer term as borrowing becomes cheaper and the cost of living keeps on dropping. Link
No news for you
Government policy vs technology companies is not limited to geo-politics. Bill C-18 is being proposed by the Canadian Government currently and Google is having a little tantrum about it. Bill C-18 is a proposed bill known as the Online News Act, and it’s aim is to allow Canadian media companies - big and small - to charge Google for republishing their content on Facebook, Google and beyond. This doesn’t mean if you share something on Facebook with a friend people get paid - it’s more those ‘discover’ tabs in Facebook and the ‘News’ tab in Google. The Government is arguing that Facebook and Google are profiting from distributing news without permission. So Google being Google, they got political and started limiting news access to 4% of its Canadian users ‘to test what it might look like’. Sabre rattling indeed. The problem is, Australia did the same thing in March 2021 - and despite Facebook having a brief tantrum - it all worked out nicely for everyone. Link
A new Chapter in the hacking saga
Indigo (aka Chapters) have confirmed that a ransomware attack compromised (i.e stole) current and former employee data. While consumer data was untouched, it’s unclear why the employee data was the focus. Nevertheless it caused Indigo’s e-commerce site to shutter for a week, before they managed to put up a ‘browse’ only version of the site with payment links available for ‘select books only’. Timeline wise, this started on Feb 8th, so we’re over two weeks into it and and at one point Indigo were only able to take cash payments in store. The takeaway from this story really is - an attack doesn’t have to completely take down your website or business to be massively disruptive. The simple knock-on effect from even a single compromised email inbox can have massive revenue complications for any business, (I think we can probably say that Indigo wasn’t really a company that anyone thought would be an prime ‘hack’ target). Link
Black-owned businesses are still being held back. Link
To tip or not to tip. Link
Bing’s AI is trained in harassment. Link
NIMBYs and YIMBYs are fighting it out over commercial property zoning. Link
The Data Room 🤖
The Data Room provides some insight into Small Business data, and each month(ish) you’ll get a deeper dive in your inbox. Here’s this weeks quick insight:
Sobering up by the numbers
What can be up and down at the same time? Liquor, apparently. Social change is coming to the beverage industry, and no inflationary pumped numbers can hide that fact.
Canadian alcohol sales are up, but drinking is hitting all-time lows - in Canada’s last fiscal year we saw the sales of liquor reach just over $26 billion with an increase of 2.4% from the year prior - but this growth just isn’t being driven by consumers. Inflation for alcoholic drinks climbed 2.8% in 2022, but those revenues apparently just didn’t keep pace - simply due to lower demand.
A big part of this might be because of the recent high-visibility reports stating that ‘no amount of alcohol is safe’ - with an increased risk for developing various cancers related to daily alcohol consumption. Despite the Canadian Centre on Substance Use and Addiction’s new guidelines being criticized in the opinion columns for using poor data interpretation - Canadians do seem to be taking the scientific message to heart.
Since Statistics Canada first began tracking alcohol consumption per-person in 1949, Canadians have never drank less beer. Beer has consistently been the country’s drink of choice and accounts for almost 35% of all alcohol sales YOY, but in 2022 consumption fell for the first time - by 2.4% by volume per-person. Even wine, Canada’s second favourite alcoholic drink, saw first-time historic declines in 2022 - with a 4% by volume per-person decrease.
Aside from general alcohol moderation, we’re seeing other drinking behaviours change as well. Beer sales have been mostly declining over the past decade, giving up ground to ciders and coolers which have increased in popularity. While beer has lost 8.8% of its market share over the last 10 years, ciders and coolers have picked up 5% of the slack. The early pandemic saw a rise in drinking behaviours in Canada, and many experts saw this as a worrying trend, with new information from 2022 we’re now seeing that, by average, many Canadians have taken something of a severe course correction.
Looking ahead, the decline of alcohol won’t be the nail in the coffin for the beverage industry, but it will inevitably force some social change. And for those beverage businesses that get ahead of the numbers, it could be the chance to offer their unique socially-led services to a much wider range of customers than they did before.
Market at-a-glance 📈
BOC Indicators (Link):
BOC Prime Rate: 6.70%
BOC Unemployment Rate: 5.0%
BOC CPI Inflation Rate: 6.3%
BOC $USD Exchange Rate (Link):
Low: 1.3516 CAD [0.7399 USD]
Average: 1.3560 CAD [0.7375 USD]
High: 1.3622 CAD [0.7341 USD]
Best GIC Rates (Link):
1-year GIC: 5.30%
3-year GIC: 5.08%
5-year GIC: 5.08%
Best 5Y Mortgage Rates (Link):
Prime Rates (Link):
TD Bank: 6.70%
National Bank: 6.70%
CRA Canadian Pension Plan Rate: 5.95%
CRA Employment Insurance Rate: 1.63%
CRA Minimum Wage per Province: Link
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