TikTok faces a crucial vote

The House is set to vote on Wednesday on a bill that would ostensibly present ByteDance, the Chinese owner of TikTok, with an ultimatum: sell TikTok’s U.S. operations, or have the app barred.

But there’s a fight brewing over whether it’s actually possible for ByteDance to sell TikTok — or if the bill is effectively a ban disguised as a call for divestment. The bill itself never uses the word “ban,” but it frames the measure as a necessary effort “to protect the national security of the United States from the threat posed by foreign-adversary-controlled applications such as TikTok.”

TikTok sees it as a “shutdown,” a characterization that the lawmakers behind it have contested.

Here are the key questions in the debate.

Does the bill allow for a sale? It depends whom you ask. The proposal forbids any deal that allows TikTok’s U.S. and foreign operations to cooperate on a content recommendation algorithm or share data. While TikTok says it already walls off the data of U.S. users from its parent company, it’s not clear the company could operate without any foreign support.

“All TikTok would have to do is separate” from ByteDance, the bill’s authors wrote to TikTok’s C.E.O., Shou Chew, this week. They accused the parent company of being controlled by China and urged TikTok to “stop spreading false claims in its campaign to manipulate and mobilize American citizens on behalf of the Chinese Communist Party.”

A person close to the committee pointed to the forced sale of the dating app Grindr by its Chinese parent in 2020 over national security concerns (though in that case the whole company was sold, not just its U.S. operations).

Will China allow a sale? Probably not. In 2020, as TikTok was negotiating its first attempt at a sale to U.S. buyers, China updated its export control rules to give it an effective say in any deal. Last year, China’s commerce ministry said it would oppose U.S. efforts to force a sale.

A spokesman for Representative Raja Krishnamoorthi of Illinois, the top Democrat on the House committee that wrote the bill, told DealBook that ByteDance could potentially change its recommendation algorithm, which is covered by China’s new export controls. The company could also consider a licensing arrangement that works around Chinese concerns.

What does this mean for ByteDance’s Western investors? General Atlantic, Susquehanna Investment Group and others have collectively invested more than $8 billion in the company.

Regardless of whether the bill passes, if the Chinese government opposes a sale of ByteDance’s U.S. business, it would cut off the clearest path to liquidity. And if TikTok became unavailable in the U.S., it would be less valuable. Whatever pressures the investors are under, they are largely staying out of the political fray.

What are the bill’s chances of passing? The political stakes are mammoth with just months until the presidential election, and lobbyists are directing their energy at the Senate.

One idea insiders are whispering about is to fold the TikTok bill into the National Defense Authorization Act at the end of the year. That would allow President Biden to avoid signing off what might or might not be a TikTok ban until after the election.

• In other TikTok news: The company was blindsided by the new push against it; Donald Trump and his allies see little upside in supporting the bill in an election year, even though he signed an executive order on the same lines as president; and Keith Rabois, the tech investor and Republican donor, threatened to cut off funding to Republican lawmakers who don’t back the bill.

HERE’S WHAT’S HAPPENING

President Biden and Donald Trump are officially set for a rematch. Both clinched their parties’ nominations with primary wins on Tuesday, though they have been campaigning against each other for months. A wild card for the November elections: Robert Kennedy Jr. is considering Aaron Rodgers, the N.F.L. quarterback, as a potential running mate in his independent presidential bid.

The Alaska Airlines plane whose door plug blew out was due for a safety check. Engineers and technicians at Alaska were so concerned about a potential problem on the Boeing 737 Max 9 jet that they wanted it pulled out of service for maintenance, The Times reports. The airline instead kept it operating with restrictions.

Apple makes an App Store concession in Europe. The iPhone maker will let users in the E.U. download apps from the web, abandoning a longstanding prohibition. It’s another reversal in the face of the Digital Markets Act, a European regulation meant to open up dominant technology platforms.

Rethinking interest rates

The S&P 500 has continued to set records despite fresh warnings on inflation. But that run could be tested as more prominent commentators are calling on the Fed to go slow on cutting interest rates.

Tuesday’s hotter-than-expected Consumer Price Index report added fuel to calls for caution. A consensus is forming that bringing down inflation to the Fed’s 2 percent target will be a long struggle, scrambling the central bank’s outlook on rate cuts.

Ken Griffin, the hedge fund mogul, became the latest to urge restraint. “If I’m them, I don’t want to cut too quickly,” he said of Fed leaders at an industry event in Florida. “The worst thing they could end up doing is cutting, pausing and then changing direction back towards higher rates quickly.”

There’s more doubt now about a rate cut in June, even as markets continue to bet on one. “We think it’s a coin flip as to whether the Fed cuts interest rates in June or if it takes a more conservative approach and waits until September,” Skyler Weinand, chief investment officer at Regan Capital, wrote to investors on Tuesday. “The last mile of price stability is proving to be the hardest.”

After the inflation report, Goldman Sachs, Nomura, Bank of America and RBS Capital Markets stuck with their June call. But RBS dialed back its full-year forecast from five cuts to three.

Some prices are cooling. Food inflation was essentially flat, a welcome sign for consumers (and for President Biden, whose poll ratings are weighed down by increased living costs).

But other categories haven’t followed suit. “Shelter” costs like rents, leases and new home prices, a huge component of C.P.I., remain above forecasts.

More data points will come on Thursday, with the release of retail sales data and the Producer Price Index report, a measure of how inflation affects businesses.

Europe’s carmakers split on China

European carmakers were early to warn about the threat of Chinese companies flooding their home markets with low-cost electric vehicles. But Volkswagen on Wednesday joined the growing chorus of big German brands that have rejected government-led attempts to fight back amid a European Union investigation into state subsidies for Chinese carmakers.

The divergent views show the complicated reality of Europe’s relations with China and how hard it may be to maintain a united front, even as the U.S. considers its own restrictions.

Volkswagen pushed against imposing trade barriers. “We stand for free trade. We stand for open markets,” Arno Antlitz, the company’s C.F.O., told Bloomberg Television. His comments follow a call by the head of Mercedes-Benz in The Financial Times to lower tariffs on Chinese carmakers just as the European Commission is looking at increasing duties.

The reality is that E.V. sales appear to be slowing everywhere, even in China. Some automakers fear that a trade war would make the outlook even more volatile.

Germany has been building trade ties with China for decades. The world’s second-biggest economy is Germany’s biggest trading partner, and the auto giants have benefited: Last year, Volkswagen sold more cars in China than any other company, and the market was a huge profit driver for BMW and Mercedes-Benz, too. (The French carmakers Stellantis and Renault, which called for E.U. intervention, have much smaller businesses there.)

Europe is finding it harder to balance ties with Beijing and Washington. The U.S. has pressed allies to prevent China from accessing sensitive technologies, such as high-end semiconductors. Cars are in the firing line, too, after President Biden declared Chinese E.V.s a national security threat and ordered an investigation into the tech behind them.

China will be watching the presidential election closely for any hint of a split. If Donald Trump wins, Beijing sees a potential opportunity to deepen ties with European markets, especially if he cuts backing for Ukraine.

“The estimate is that if Trump wins, Europe will be more inclined to talk to Beijing and hope it will help to end the war,” Yu Jie, a China expert at the think tank Chatham House, told DealBook.

“It sounds like he has a voice thing on.”

— An unnamed Goldman Sachs employee messaging with a colleague about a Zoom conversation that was supposed to include a YouTube executive. It was joined instead by an impersonator from Ozy Media, the news start-up they were discussing. The messages were disclosed by federal prosecutors as part of their fraud case against Carlos Watson, Ozy’s founder.

Venture capital’s generational shift

Reid Hoffman, Jim Jordan, Scott Shleifer — all have been in the top tier of the venture capital market, investing in some of the biggest technology companies over the past 15 years. Yet they and many of their peers are stepping back, making room for younger venture capitalists to find the next hot start-ups.

Silicon Valley has undergone generational shifts before. But this round of changes comes as companies are taking longer to go public and venture capital firms are becoming bigger and more corporate. That’s making it harder for investors to land the windfalls of previous years.