The Department of Justice filed an appeal with the Ninth Circuit challenging a preliminary injunction won by WeChat users, which stalls President Trump’s executive order effectively banning WeChat from U.S. app stores. Magistrate Judge Laura Beeler of the U.S. District Court for the Northern District of California temporarily blocked the executive order days before it was to take effect.

WeChat, a subsidiary of Chinese tech giant Tencent Holdings Ltd., is a messaging service with sprawling features. The app allows users to video chat, transfer money, make in-store payments, share photos, and access third-party services, such as ride-hailing and food delivery. WeChat is one of the few tech bridges between the U.S. and China, and it allows the Chinese diaspora to communicate with friends and family in China. Like other Chinese internet services, however, WeChat is subject to censorship and can serve as a vehicle for propaganda.

The executive order banning WeChat stems from a 2019 national emergency declared by President Trump with respect to the “information and communications technology and services supply chain.”  The President announced that foreign adversaries were creating and exploiting vulnerabilities in communications technology, constituting an unusual and extraordinary threat to national security.  President Trump’s August 2020 executive order targeting WeChat stated that the app’s data collection and censorship pose such a threat. The President cited his authority under the International Economic Emergency Powers Act (IEEPA) and the National Emergencies Act to implement the ban.

Judge Beeler granted the preliminary injunction halting WeChat’s ban because the plaintiffs raised significant First Amendment claims. The opinion reasoned that banning “an entire medium of public expression” could amount to restraint of free speech and is not “narrowly tailored to address the government’s significant interest in national security.”

TikTok, the Chinese-owned video-sharing app, won a preliminary injunction challenging its own ban from U.S. app stores on different grounds. TikTok successfully argued that the President likely exceeded his authority under the IEEPA in banning the app, which does not grant the authority to restrict “exchanges of information materials.”

While WeChat’s challenge to the executive order continues, WeChat will likely remain essential to many Chinese speakers in the U.S. In an interview with the New York Times, one WeChat user stated that if the app were banned, she would use a virtual private network (VPN) to access WeChat from the U.S. Chinese emigres are often familiar with VPNs, as they are commonly used to access websites like Google, Instagram, and Wikipedia from China.

Nearly one year later, the backlash from a tweet by the former Houston Rockets (“Rockets”) General Manager, Daryl Morey, seems to have finally subsided. In October 2019, one tweet caught Chinese and National Basketball Association (“NBA”) executives completely off-guard. At the time, Hong Kong’s pro-democracy protests were fueling anarchy and revolts, causing the government, backed by Beijing, to use emergency power measures for the first time in approximately fifty years. In an effort to support the protests, Morey tweeted “Fight for Freedom. Stand With Hong Kong.” Those seven words resulted in a massive economic downfall for the NBA and damaged the long-standing relationship between the league and China.

The NBA’s expansion efforts into China date back to 1979 when the Washington Bullets became the first team to play a game in China. Shortly after that, the NBA capitalized on the untapped market by airing games on China’s state-run CCTV, opening an office in Hong Kong, and playing over 20 NBA Preseason games in China. The NBA furthered its devotion to the Chinese fan-base in 2008 by creating NBA China, which is now estimated to be worth $5 billion. As a result, basketball continues to remain the most popular sport in China.

On October 4, 2019, the seemingly positive relationship between China and the NBA came to a screeching halt because of the words of one man. Immediately following Morey’s tweet (which he quickly deleted) the Rockets’ coverage on CCTV and Tencent Holding’s (“Tencent”) streaming platform ceased. Shops and online stores removed their merchandise and the existence of arguably the most popular team in China disappeared in a matter of days. The consequences of Morey’s actions continued on October 8, 2019 when CCTV suspended all NBA broadcasts. Additionally, tech giant Tencent—which had reached a $1.5 billion deal with the NBA in 2019—halted coverage of all NBA games. However, it quickly resumed live broadcasts by mid-October. Tencent’s decision to resume delivering limited coverage to approximately 500 million Chinese NBA fans may have mitigated some financial losses. But CCTV’s censorship of a large portion of the NBA’s viewership continued to pose major economic downfalls, though the extent was not initially clear.

The standoff between China’s CCTV and the NBA continued until Game 5 of the NBA Finals on October 9, 2020, between the Miami Heat and the Los Angeles Lakers. For the first time in a year, the state-run television channel finally resumed its NBA coverage and the tension between the NBA and China seems to have eased. The final damage caused by the rift has yet to be determined. However, NBA Commissioner Adam Silver estimated that the loss would be in the hundreds of millions, even as much as $400 million—not a small figure compared to the league’s annual global revenue estimated at around $10 billion. 

With the emergence of COVID-19, the league faced even greater financial uncertainty. Before the NBA implemented the ‘bubble’ in Orlando, NBA Commissioner Silver advised players that roughly 40% of the NBA’s revenues come from arena sponsorships and ticket sales. The NBA’s restart on July 30 increased approximately 80% more prime-time viewership than before the lockdowns interrupted the season. Even though these numbers in the ‘bubble’ experience satisfied the league’s television contracts and provided revenue-sharing payouts to each team, the pandemic still crippled many teams financially. According to a confidential ESPN report, 14 of 30 NBA teams lost money this past season before the television payouts, and nine of those teams suffered losses even with the profit sharing. Amidst the unpredictability caused by COVID-19, the revenue loss that resulted from Morey’s tweet becomes even more prevalent. However, CCTV’s recent decision to resume coverage of the league certainly provides the NBA with an assurance that they may be able to salvage their relationship with China after all.

Under the Trump administration, our nation is experiencing a controversially populist policy approach towards foreign relations, inciting fear and aggression en masse with regards to the manufacturing sector abroad and international trade writ large. We have most recently seen the administration implement these outdated public policy ideologies via the, arguably illegal, imposition of tariffs on all goods imported from China under Section 301 of the Trade Act of 1974.

Recently, approximately 3,500 American companies filed lawsuits against the US Government in relation to these tariffs. First, with regard to domestic law, the Executive branch has discretion, as authorized by Congress, “to modify tariffs under certain circumstances.” The companies filed in the U.S. Court of International Trade, specifically claiming “the unlawful escalation of the US trade war with China through the imposition of a third and fourth round of tariffs,” that have drastically increased costs of goods imported from China into the US by American firms. The legal arguments encompassed the failure to “comply with administrative procedures,” specifically “timeliness of action”, as well as the broadening of the tariffs “for reasons untethered to” the intellectual property conflict with China.

Second, with regard to international trade law, the World Trade Organization (WTO) ruled the imposition of these tariffs violated their “most-favored nation principle.” The tariffs, which ultimately measured upwards of “$350 billion worth of Chinese goods,” were not uniformly applied to all members as per the WTO principle. Although the ruling may carry less weight than the WTO originally intended, due to China’s counter-tariffs and the various subsequent negotiations, the US administration is using this question of international law as support for its ill-advised attempt to revive exceptionalism.

The administration’s public policy arguments advocating for the tariffs center around protectionism, trade agreement renegotiation and national security concerns, most notably the risks surrounding China’s theft of American intellectual property. These motivations may seem illustrative, on their face, of forward-thinking policy and decision-making on the part of the Government. But their consequences on the American public are more reminiscent of an outdated political ideology and a superficial understanding of domestic and international relations, most notably international trade law.

The Brookings Institution elaborates on the various downfalls of each policy rationale. Most notably, the Institution addresses the concept of protectionism and the suggested beneficial economic impact. And for the purposes of this piece, it is also crucial to point to the further relationship between big business and both domestic and international law following the imposition of these tariffs. American firms importing Chinese goods realistically bear the brunt of the cost, which is in turn transferred to American households. Moreover, the promise of protecting and creating jobs within the manufacturing sector has only increased to a certain extent, given the negative impact of more expensive goods used as inputs in production lines. One could even argue that should the tariffs create more jobs than they destroy, this would likely remain a short-term alteration as the nature of America’s economy favors outsourcing of the production sector and internal investment in the services sector.

So, where does this leave us?

Most significantly, it leaves us with several questions surrounding the precedents related to a multitude of lawsuits brought by the private sector against the US Government. Specifically, how does the private sector pushback against the illegality of an international trade policy imposed by the US impact our global soft diplomacy positioning? Or the authority and credibility of the WTO and international trade law more broadly? Or the tendency of firms to flood the courts when financial and economic policies are imposed abroad that impact prices at home? Arguably, the escalation of the US trade war with China was an exponential and unnecessary “show of force” with a costly economic outcome for American businesses, and a contentious domestic and international legal discussion with outlying questions and answers. This brings us to experts who have thought-provokingly questioned the administration’s true motivations for imposing tariffs, namely, to encourage withdrawal from the WTO, and expressed concern for the national economic impact of that action. Ultimately, it seems likely the WTO’s ruling, and perhaps the American firms’ lawsuits, will negatively impact US diplomacy abroad as well as trust in international trade law and institutions by other countries.

On October 7th, in the United States District Court for the Northern District of California, Judge Yvonne Gonzalez Rogers ruled that Apple may continue its ban on the popular battle royale game, Fortnite, from the App Store. Judge Rogers claimed that the tech giant was well within its rights to do so after the gaming company violated their contract agreement. The jury trial between Epic Games, the developer of Fortnite, and Apple is slated for May 2021. In order to win the antitrust suit, the gaming developer must “prove [that] Apple has monopoly power in the relevant market and that it willfully acquire[d] or maintain[ed] that power.” Fortnite has reportedly brought over 133 million downloads on Apple products and generated $1.2 billion in revenue, with $360 million of that going to Apple. Meanwhile, the Apple App Store brings in about $15 billion in revenue from its $50 billion in annual sales, which would place the App Store at 64th on the Fortune 500 list if it were an independent company.

The lawsuit began when tech giants Apple and Google removed Fortnite from their app stores back in August of 2020. Both Apple and Google take a 30% commission on all digital app purchases. This includes all purchases of Fortnite’s in-game currency, “V-bucks.” Fortnite is a free-to-play game, meaning that it makes nearly all of its revenue from players purchasing “V-bucks” in order to access certain in-game content. To avoid paying the 30% commission, Epic Games enabled an unapproved feature that encouraged mobile players to make payments directly to the Epic Games Store, which offered a 20% discount. In response, both Apple and Google banned Fortnite from their app stores for intentionally violating their policies. Almost immediately after the ban, Fortnite filed antitrust lawsuits against the two tech giants in federal court.

But Epic isn’t the first developer to challenge Apple’s App Store policies. Just last year, Spotify, the largest music streaming service in the U.S., filed an antitrust complaint with European Union regulators against Apple. Spotify has to pay Apple 30% of all in-app purchases while also competing against Apple Music, its number one music streaming rival. The CLO of Spotify contends that Apple acts as a gatekeeper to companies seeking to reach consumers and violates competition laws because it “tilts the playing field in favor of its own services.” Spotify’s complaint resulted in an official antitrust investigation by the European Commission that is currently ongoing.

Apple defends its policies stating that the App Store’s commission is similar to other marketplaces. Apple also claims that the commission is necessary to maintain its security and safeguard user privacy, an argument that Google, who has dealt with its own antitrust scrutiny, makes as well.

Google, however, has requested not to be included in the same lawsuit as Apple. Google’s Android phones allow users to download apps from other sources, whereas Apple users must use Apple’s App Store to download any apps, making Epic’s antitrust claim against Apple slightly different. In the 30 days leading up to the lawsuit filings, Fortnite players using Apple devices spent $43.4 million while Google Play only saw $3.3 million spent on the same game.

Fortnite has made it clear that things are much more personal with Apple and that the courtroom is only half the battle. On the same day Fortnite was banned from the mobile marketplaces, the game’s Twitter account tweeted a video parodying Apple’s famous “1984” ad. But this time, Apple was playing the role of “Big Brother.” The account also promoted the hashtag #FreeFortnite which topped the trending charts just hours after it was posted. Epic even drew attention from other tech behemoths who were quick to jump on the bandwagon of criticizing Apple’s App Store policies. Only a day after the Fortnite ban and subsequent lawsuit filings, Facebook announced that it had asked Apple to lower its commission fees, citing that its policies were hurting struggling businesses in the wake of Covid-19. Then, later that month, Microsoft filed a declaration in support of Epic Games requesting that Apple allow Epic to keep its Unreal Engine on the App Store. The engine is “a widely used set of technologies that provides a framework for the creation of three dimensional graphics” for third party game developers, including Microsoft. Judge Rogers eventually ruled in favor of keeping Unreal Engine in the App Store, due to the reliance on the software by gaming developers. Proving in federal court that Apple is a monopolist may be an uphill battle for the creator of Fortnite, but with momentum and PR on its side, Epic has shown that it may have just what it takes to force Apple to change its policies.

Last November, the French conglomerate LVMH, which owns Louis Vuitton and dozens of other fashion and lifestyle brands, struck a deal to acquire jewelry retailer Tiffany & Co. for $16.2 billion. Bernard Arnault, the CEO of LVMH, described Tiffany as an “American icon” that would “thrive for centuries to come” in the LVMH portfolio. If the deal had gone through, it would have been the biggest ever in the luxury sector. In an unfortunate turn of events, however, the deal went sour. Now, the French government is involved, and LVMH and Tiffany are planning to head to court.

So, what went wrong? Last month, LVMH announced that it received  an unsolicited letter signed by French Foreign Minister Jean-Yves Le Drian. The letter recommended that LVMH attempt to delay the acquisition until January 2021, as France and the U.S. were bickering over trade tariffs on luxury goods. Although the French government is not an LVMH stakeholder, a source from the French government described the letter as having “political value” and a goal to alert LVMH before the November 24^th closing date. The letter could have been intended to protect LVMH’s business interests— an unusual move from the French government. However, some speculate that the letter was an attempt to discourage the U.S. from imposing retaliatory tariffs in response to French taxes on American technology companies.

LVMH may have had other motivations for pulling out of the deal: the pandemic and subsequent global recession has hit luxury retailers hard. In fact, speculation began in April that LVMH might try to back out of the acquisition because of COVID-19 after a private equity player tried to abandon its deal to buy Victoria’s Secret. At that time, Tiffany shares were only down 6% year to date–$9 lower than the LVMH bid–even though its U.S. and Canada stores were closed. After LVMH announced its plan to back out, Tiffany stock plunged 10%.

Now, LVMH and Tiffany are gearing up for an acrimonious court battle, with the trial date set for January in Delaware’s Chancery Court. Both companies are asserting claims against the other: Tiffany is suing LVMH for breach of the merger deal and failure to secure regulatory clearance for the deal in Europe or Taiwan, while LVMH is countersuing for Tiffany’s alleged mismanagement during the pandemic. If LVMH can show that Tiffany had suffered a “material adverse effect” due to COVID-19, then it will be able to walk away from the contract without any obligations. Tiffany wants to force LVMH to move forward with the acquisitions in accordance with the originally agreed-upon terms.

While Tiffany originally sought to have the trial start next month — before the acquisition contract’s “drop-dead” deadline of November 24^th — the Delaware court agreed to fast-track legal proceedings in a four-day trial starting on January 4^th. In the meantime, Joseph Slights, a Vice Chancellor of the Delaware Court of Chancery, has urged both sides to engage in “productive discussions to avoid the need for litigation.”

Lufax Holding Ltd., a leading tech-enabled retail borrowing and wealth management platform in China, filed on October 7 with the SEC to raise up to $100 million in an IPO on the NYSE, aiming to raise about $3 billion soon. This news comes in the shadow of the ongoing U.S.-China trade war and increasing hostility from the U.S. administration toward Chinese companies.

Why did Lufax choose to pursue an IPO during such an extremely uncertain period? Typically, the direct answer would be either economic or non-economic, and given the current climate, it’s difficult to say that this is a compelling economic decision.

President Donald Trump has recently threatened to delist Chinese companies from U.S. stock exchanges. Thus, all Chinese based public companies in America will likely face heightened compliance costs. To make matters worse, recent scandals have caused investors to feel uneasy about betting on Chinese companies. China-based Luckin Coffee Inc., announced a huge scandal in April, acknowledging its chief operating officer had fabricated the company’s 2019 sales by around $310 million. Consequently, investors in the U.S. are increasingly reluctant to purchase stocks of Chinese companies without significant discounts. In fact, after the “Huawei Ban” & Tiktok disturbance, many Chinese companies, like JD.com, NetEase, and Jack Ma’s Ant Group, have given up on the idea of listing in the U.S., instead seeking to list in Hong Kong or Shanghai.

While LuFax’s IPO is a bold attempt, the motivations behind it are thoroughly considered. Regardless of the performance of Lufax, several factors may affect its long-term benefits from a U.S. IPO.

First, LuFax’s executives may not believe that financial ties between China and the United States will decouple in the long run. Conversely, such a connection will probably strengthen since the two countries have almost touched each other’s bottom line and settled unnecessary conflict.

Second, LuFax’s parent company, Ping An Group, has a highly dispersed share ownership–no single shareholder, or affiliated group of shareholders, has control over the firm. The board of directors of Ping An Group is also highly diverse compared to many other companies listed on the Shanghai or Hong Kong stock exchanges. This could offset the discount on LuFax’s stock price and reduce compliance costs.

Third, like LuFax, many Chinese companies are encountering the problem of local capital scarcity. The Shanghai and Hongkong stock markets have never been the primary source of financing for most Chinese companies–the government and banks are. However, to control the banking system’s recent debt risk, the Chinese government has restricted banks from lending money to companies. Thus, access to a securities market as mature as NYSE will still be a huge advantage for the company.

In conclusion, Lufax’s IPO has shown strong economic and strategic motivations for the Chinese companies to list on the U.S. securities market and may indicate an upcoming contra-flow. If the U.S.-China relationship moves toward cooperation rather than all-out confrontation or national isolation, the SEC and China’s regulators, the SEC and China’s regulators will likely need to coordinate in the regulation of these types of cross border flotations.

Last Tuesday, President Donald Trump seemingly ended negotiations with Democrats over a new coronavirus relief bill. Stocks fell after the President’s tweet, with the Dow Jones Industrial Average ending down 376 points. Facing mounting political and public pressure to strike a deal before the election, the President changed his tune hours later, suggesting he was willing to negotiate if the massive relief bill was broken into smaller stand-alone bills, including airline relief and stimulus checks.

On Friday, the President once again changed his stance, this time offering a $1.8 trillion proposal to Speaker Nancy Pelosi, the most substantial offer yet from Republicans. Both parties plan to work throughout the weekend to try and reach a deal.

Republican and Democratic lawmakers have been negotiating an additional economic stimulus for months, both agreeing that the bill should include aid for unemployed workers, small businesses, schools, and public-health efforts, among other measures. But they have remained at odds over the amount necessary to provide relief.

Many Republicans are opposed to a large new round of deficit spending and expressed more confidence that the economy is recovering. Thus, they were originally unwilling to spend more than $1.6 trillion on a coronavirus relief bill. Democrats, on the other hand, believe a larger package is necessary to provide relief to American households and businesses still experiencing the economic impact of the pandemic. Last week, House democrats passed a $2.2 trillion coronavirus relief package, down from their initial $3.4 trillion proposal. Their bill proposed widespread financial support to those affected by the pandemic, including restaurants, airlines, and the postal service, and an additional round of direct checks to Americans of $1,200 per taxpayer and $500 per dependent. The bill would also renew the $600 in supplemental unemployment aid.

While the Trump Administration’s latest offer brings the parties closer than ever on the additional stimulus, they remain divided over substantial differences in the allocation of funds. The Trump Administration’s offer allegedly includes $300 billion of federal aid to state and local governments, up from the $250 billion they proposed last week. Democrats, however, included $436 billion for state and local governments in the bill they passed last week. This was already a substantial drop from the more than $900 billion Democrats initially sought.

Economists have expressed fears regarding our economic recovery if no coronavirus relief bill passes. They point to stalling job growth and the need to prevent a drop in household spending, and they are worried that temporary layoffs will become permanent as businesses remain shuttered for good. Federal Reserve Chairman Jerome Powell said this week that too little economic support from Congress would lead to a weak recovery, outweighing the risks of providing too much.

Even if the parties are able to reach a deal on coronavirus relief, it is unknown how soon the American people would benefit, with Senate Majority Leader Mitch McConnell expressing he plans on prioritizing the confirmation of Judge Amy Coney Barrett to the Supreme Court.

After the murder of George Floyd, the Internet saw an upheaval on their social media timelines like never before—Black squares, hashtags demanding justice, and guides on how to support the Black community. Shortly after, we saw releases of employee memos, donation matching programs, and official statements by Big Tech about their stances on fighting racial injustice. Apple CEO, Tim Cook, condemned Floyd’s killing and acknowledged racial injustice in America, saying the company will “reexamine our own views and actions in light of a pain that is deeply felt but too often ignored.” Other tech giants released statements echoing that sentiment. Facebook and Amazon each donated a whopping $10 million to organizations working towards racial justice. Microsoft and Airbnb matched employee donations to eligible organizations, while Lyft donated $500,000 in ride credits to Lake Street Council in Minneapolis to help volunteers in rebuilding efforts as protests ensued. But what more can the Silicon Valley do to sustainably support Black Americans now that timelines have settled, and what changes have these companies implemented since their official statements?

With Americans feeling the brunt of COVID-19, the political unrest over systematic police brutality, and the upcoming November election, activists are urging eligible voters to show up to the polls. From Tik Tok dance videos to Instagram infographics explaining what’s on the ballot, people are using their social media to encourage their followers to vote—not just for the next President of the United States—but also for their equally important local and state representatives. Big Tech has jumped onto this trend. Yelp and Instagram are using their platforms to integrate features promoting civic engagement, such as voter registration portals and ads.

While it is no dispute that voting has the power to yield dramatic change, reversing decades of deeply embedded structural inequality often takes decades. For this reason, activists are also encouraging everyone to contribute to the economic enrichment of Black Americans by supporting Black-owned businesses.

Although we’re seeing an upward trend in Black-owned businesses, they face a number of obstacles stemming from centuries of enslavement, Jim Crow laws, and historical divestment. A Brookings and Gallup study found that Black people represent 12.7% of the U.S. population but only 4.3% of the nation’s 22.2 million business owners. Of that 4.3%, only 1% of Black business owners obtained loans in their founding year compared to 7% of white business owners. This equates to a loss in annual business revenue of approximately $3.9 billion.

To address systemic underinvestment in Black businesses, Silicon Valley needs to step up with actionable change that directly influences the economic mobility of Black entrepreneurs, and some important players are taking noticeable action. SoftBank announced a $100 million investment vehicle, the Opportunity Growth Fund, which will invest in companies led by founders and entrepreneurs of color. This is a step forward in rectifying the economic imbalance for Black entrepreneurs, as just 1% of VC-backed founders are Black. Facebook initiated similar efforts, and pledged to invest “over $1 billion to support Black and diverse suppliers and communities” in the U.S. through grant programs and to direct commerce with Black-owned small businesses. Facebook also created Lift Black Voices—a space curated to amplify Black-owned businesses, fundraisers, community voices, criminal justice reform, and more. These types of investment in Black-owned business and communities, among many other initiatives, are essential in Silicon Valley’s duty to fight racial justice.

Nothing can undo the lost lives of the countless Black Americans due to police brutality.

George Floyd. Breonna Taylor. Sandra Bland. Tamir Rice. Oscar Grant.

What the country must do to move forward is not only contingent on grassroots organizers, Americans’ civic engagement, or our elected officials, but also sustainable change from Big Tech. This requires change beyond corporate outrage and donations; the movers and shakers in Silicon Valley can and should work towards remedying the economic disparity of Black Americans through meaningful action.

To directly support racial justice organizations working towards the social and economic mobility of Black Americans in the Bay Area, consider getting involved and setting up a monthly donation to OCCUR and East Oakland Collective.

Nikola Corp., the rising green vehicle company lauded as “the next big thing” in the automotive industry, has been monopolizing headlines lately for all the wrong reasons. After a report was published by Hindenburg Research  accusing the company of lying about its products and deals, the Securities and Exchange Commission (SEC) launched a probe to investigate Nikola for potential fraudulent representations of “its business prospects” to investors. This led the company founder and executive chairman Trevor Milton to step down from his role and BP to rescind their deal regarding the construction of hydrogen refueling stations. This sequence of events drove Nikola shares down 45%.

But what gave rise to suspicions about the company’s intentions and practices in the first place was the sale of 7 million shares by Milton right after the IPO at a price of $10 per share. This indicated to investors that the founder and chairman deemed the stock price inherently overvalued. Early short sellers supported this notion noting that the innovations and technology that would support the market’s predictions of the firm’s inherent value and stock price were neither secured by patents nor supported by research papers. However, the fraud allegations came after Nikola published a promotional video showing one of their hydrogen trucks moving “under its own propulsion,” which the short-sellers claimed to be a truck rolling downhill. Nikola later admitted the truck was not in motion on its own propulsion, but rather rolling downhill.

Despite the allegations by Hindenburg Research, Nikola’s strategic partner General Motors (GM) reported that they are not backing out of the deal. GM CEO Mary Barra informed the public that it was a “partnership made in heaven” as GM would receive $2 billion worth of stock (11% of Nikola)in exchange for Nikola using GM’s battery and fuel cell technology as well as producing Nikola’s first product, the Badger pickup truck. After Milton’s resignation analysts suggested that GM could increase their stake in Nikola in order to mitigate Nikola’s stock price drop. This news led to a 15% increase in Nikola’s stock while also increasing GM’s stock by 2%.

Analysts also predict that Nikola is here to stay. JP Morgan analysts have rated the company as a strong “buy,” predicting that  shares will reach $41 within one year. This rating comes even after some analysts have pointed out that Nikola’s inherent value is zero as the company lacks product and revenue and the share price has tumbled more than 52% since drawdown. However, JP Morgan’s rating has been backed by other industry heavyweights such as Deutsche Bank and Cowen, supporting that Nikola is a “story” stock for future gains. Pointedly, JP Morgan analysts predicted that by 2027 Nikola has an earning potential of approximately $1.6B EBITDA, with subsequent upside on the company’s stock.

One question remains to be answered. How did a company with zero revenue become public and manage to reach a $34B market cap? Nikola did not have the listing requirements for a traditional IPO. To overcome this, Nikola went public through a special purpose acquisition company (SPAC), effectively having the requirements for listing waived. This fact, combined with the market frenzy for environmentally friendly automotive stories, led a company with zero revenue and no product to reach a market cap of $34B. The market might be heading in the right direction by supporting these stock market stories, but it should not forget where similar stories led during the rise of the internet in 1999.

Reports of forced labor camps – not unlike those widely used by the Nazi regime throughout the Second World War – in the Xinjiang region of China have become increasingly widespread in recent years. Images from these detention camps and reports coming out of the region indicate that the Chinese government has detained approximately one-million Uighurs, a Muslim minority living primarily in the Northwestern region of China, since 2018. Although Chinese officials insist that these camps are mere vocational-training camps aimed at eradicating violent extremism among the Muslim population, the United States and other foreign entities remain unconvinced.

After months of President Trump refusing to acknowledge the human rights violations taking place within these labor camps, opting instead to preserve favorable trade relations with the Chinese government, his administration has finally adopted a new approach marked by sanctions, memos, and Withhold Release Orders (WRO). Likely sparked by a downturn in trade relations with China, President Trump and his senior officials, including Secretary of State Mike Pompeo, now have taken to the media to publicly condemn the Chinese government for its mistreatment of the Uighur population, warning CEOs of U.S. corporations to “be aware of the reputation, economic and legal risks of supporting such assaults on human dignity.”

The Trump administration, however, has gone much further than mere public statements. Three recent developments stand out. First, the Commerce, Treasury, Homeland Security, and State departments released a (nonbinding) nineteen-page memo urging U.S. companies to refrain from sourcing goods traceable to human-rights abuses in the Xinjian region. Second, the Treasury and State departments imposed sanctions on senior officials in China’s Xinjiang region for their roles in the state-sponsored violence under the Uyghur Human Rights Policy Act of 2020. And third, most recently, the U.S. Customs and Border Protection (CBP) issued five WROs on goods and materials produced in labor and mass detention camps in the Xinjiang region. Mark A. Morgan, the Acting CBP Commissioner, urges the public to view these WROs as a “clear message … that [the U.S.] will not tolerate the illicit, inhumane, and exploitative practices of forced labor in U.S. supply chains.”

Mr. Morgan is entirely correct to presume that the effects of these WROs will implicate U.S. corporations’ supply chains. In fact, because the Xinjiang region produces approximately 85% of all cotton produced in China, those companies forced – for legal and/or reputational reasons – to find suppliers elsewhere will see their global supply chains greatly disrupted. This possibility has only become increasingly likely as several prominent, international auditors have released statements that they will no longer provide labor-audit or inspection services in the Xinjiang region.

With international concern mounting in response to global media coverage of these forced labor and mass detention camps, companies who source materials from Xinjiang, like Gap Inc. and Kraft Heinz Co., find themselves facing a serious dilemma. Ethical, legal, and public relations considerations weigh in favor of, at the very least, not sourcing materials from forced labor camps in Xinjiang. However, the economic effects of such production upheaval and redirection could harm or even bankrupt some companies. It remains to be seen how many of these multinational enterprises will respond to this growing public pressure.