Morning Brew Daily - TikTok Pushes Back on Ban & The New Rules for Airline Refunds

Episode Date: April 25, 2024

Episode 309: Neal and Toby discuss the TikTok law passed by the government, but the battle is far from over. Then, the Department of Transportation sets clear rules for all airlines that aim to ease the headache from flight delays and cancellations with automatic refunds. Next, Neal shares his favorite numbers on restaurant reservations, the SF public toilet, and Taylor Swift’s vinyl record. Also, Reggie Bush gets his Heisman Trophy back thanks to NIL. Lastly, Cicadas are here… get ready for a noisy entrance.  00:00 - Intro 2:30 - TikTok fights US ban 6:45 - New DOT rules for airlines 11:15 - Reservation resale market 15:00 - SF’s expensive public toilet 17:45 - Taylor Swift does it again 19:15 - Reggie Bush gets his Heisman back 22:30 - Cicadas are here Get your Morning Brew Daily Merch HERE: https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Robinhood Gold Card is offered by Robinhood Credit, Inc., and is issued by Coastal Community Bank, pursuant to a license from Visa U.S.A. Inc. Terms apply to the Robinhood Gold Card rewards program and are available at http://robinhood.com/creditcard. Gold Card requires an annual Gold subscription and a Fee applies to Robinhood Gold subscription. Visit http://robinhood.com/gold for more information. Some limitations or conditions may apply. Must have Robinhood Financial brokerage account to redeem cash back. See rewards program terms for details. Rewards program terms are subject to change. Returns are not guaranteed. Interest is earned on uninvested cash swept from your brokerage account to program banks. The cash sweep program is offered through Robinhood Financial LLC. Terms apply. Robinhood is not a bank. Terms apply to the match and limitations apply to IRAs. 3% match requires Robinhood Gold for 1 year from the date of first 3% match. Must keep Robinhood IRA for 5 years. Visit robinhood.com/retirement for more information. Robinhood Financial LLC (member SIPC) is a registered broker dealer. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. I'm Neil Fryman. 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.

You 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 former, they're redeveloping old buildings. There's even a Gucci store right now, Motor City, way back. 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 Robin Hood. We've talked a lot about Robin Hood Gold so far this month with good reason.

It might be the best deal in investing. For less than $7 a month, Robin Hood Gold offers 5% APY on uninvested cash, a 3% match on retirement contributions in your IRA, and access to Morning Star stock reports and advanced data that will normally cost you over $35 a month. I'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 Robin Hood Gold card, you get 3% cashback 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% cashback.

That's like three coffees in New York. Certainly feels like it. Learn more about the Robin Hood app in the App Store or Google Play Store. Disclosures, investing is risky. Robin Hood Gold is offered through Robin Hood Financial LLC and is a subscription offering services for a fee. Terms applied to the APY and rate is subject to change. Limitations apply to the retirement match. Robin Hood Gold card is subject to credit approval. Terms applied to the card and the rewards program. More info in the description of this podcast. So as expected, Congress passed a new bill that gives TikTok's Chinese parent company by dance nine months to sell a 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, Show 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. users? 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 assigned, bite dance 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 bite dance have every reason to fight this bill. This is kind of like the U.S. government saying, hey, Zuck, we need to. you meta to divest to sell Instagram, maybe 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 going to 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. But 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. So 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 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 the part of doing business in America because

we have to protect our national security interests. And that's exactly what we're doing with Bight Dance and TikTok. So this is just part for the course. We 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 bite dance could potentially

spin off TikTok into its own entity, its own business with its own stock through, say, an IPO, whatever. This is called a shotgun divorce and then bite dance and its other Chinese investment. investing the Chinese shareholders of TikTok could own 20% 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 Biden to sell TikTok. So we'll see what happens with Beijing.

They could say, okay, 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 has keeps people engaged. on the platform so you can sell ads on it and is really the secret sauce to everything TikTok does. So 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. Currently, 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 last 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. It absolutely is. I saw a few TikTok edits yesterday saying like apologies, Pete Buttigieg's 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 to the 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 and how can we make it less annoying and it looks like they did that. So airlines have like how are they responding to these rules? Mostly with saying there's nothing wrong here. 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. 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.

They're not going to sue the government. It doesn't appear. But they are just like, oh, this is freaking annoying. 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. Remember, Epic Games got in trouble for making it seem like, or making it too easy to buy 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. Some 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 the 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 are stuck in security line. You 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 corn, 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. I don't mess with clear. I don't need to go in the regular line. I don't need to pay whatever $200 a year for clear.

TSA pre-check. That's a sweet spot right there. Up next, who I can't even contain myself. It's Neal's No. numbers. Welcome to another edition of Neal'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 entrepaneurs, so sorry, 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. He 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 a pletrolet. 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. Toby, a side hustle where you hustle for sides.

Can't get any more poetic. That was very well done. 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, his 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. So 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 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 Aerist 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. And 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 quotes, we did the snippet from this article and said, there is a missing startup here. Restaurants should be making this money, not scalpers. He 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 Rezi actually initially rolled out a system where they were charging reservations. They would charge about 10% of a diners check for reservations. Got immediate pushback.

A lot of people said, like, listen, not everything should be purchasable. Like, sometimes you just, 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. My second number is $1.7 million, which is what a single public restroom in San Francisco was projected to cost. Heard about this. Back in 2022,

San Francisco was endlessly mocked when news broke that a project to build a public restroom in Noe Valley's Town Square would cost $1.7 million. 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.

The 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 laughing stock 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. You have a party with brown cupcakes, local librarians handing out free copies of children's book called Everyone Poops and an MC that calls himself the grand poobah 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. So 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 it 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. It 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 onto 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 couldn't. 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. Can 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 Stiles 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 final sales in one week, and he sold 40,000 copies. It 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. So 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 Brony 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. Yeah, there was a huge campaign to get Reggie Bush back this Heisman. It's just crazy to look back at when he was playing in 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 Golki of Oakland University is literally filming turbo.

tax 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 lot of, there's a big push by Reggie Bush and a bunch of other Heisman trophy winners. And he had this big campaign to get him his Hisman trophy back because he said, look what happened in college athletics. We are in a new paradigm. In 2021, athletes were allowed to be compensated for their name image and likeness. There was also the Supreme Court ruling that will open the door for student athlete, compensation. So those two things, NIL in 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. And yet Reggie was kind of the only one truly punished. He had his award script for him. So even if you just look anecdotally at that time, it was, 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. So you can kind of see where the Heisman trusts 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 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 quarterback. 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. Some South Carolina counties have become so overrun with their mating calls that residents

are calling the sheriff's office wondering where the unexpected sirens or roars are coming from and complaints are only going to grow. This year, the U.S. is getting hit with a double whammy of the pests. Brewed XIX and Brood XI are emerging together for the first time since 1803. The once in Millennium double-brewed event means trillions of the bugs are emerging underground along the eastern seaboard this month. The collective might of their songs has been likened to jet engines firing. Anyone who gets too close often needs to wear earmuffs to protect their hearing. Neil, they don't pose a threat to humans other than being super loud, but that is a threat to humans, if you ask me. I can't help but think about the eclipse as well, another natural

phenomenon that had a particular path of totality. That path of totality you wanted to be in because you can make a lot of money on Airbnb. There was a lot of stuff going on where the cicadas are coming, that is a path of totality. You do not want to be in. And I wouldn't be surprised to see a similar outmigration of people from these areas to places that don't have cicadas. I've heard anecdotally that people are moving from Chicago, out of Chicago during the summer to other cities to escape the noise of the cicadas. Because, I know, we can laugh about it, but I think it's pretty loud. I haven't really been in a hotspot, but they are extremely loud and extremely annoying to, I'll just say, like, where this

path of totality is. So these two broods are emerging. There's one that goes across the south from around Nashville, Atlanta, Georgia, South Carolina, North Carolina. And then there's this Illinois one, so it really puts the noise in Illinois. And it's going to be in the upper Midwest. So those areas across the south and then through the Midwest up to Illinois are going to be absolutely smacked. I was also digging into how do these broods work? Like, what is the natural explanation for why they emerged from the ground. And no one really knows. It's been a mystery for so long figuring out how they all seem to know when is the right time to emerge. There's around 15 cicada broods that at any given time are incubating underground. And scientists always try to figure out

what is it that sets them off and decides that they're going to emerge right now. Some of it has to do with temperature. It needs to be above 64 degrees underground in order for them to emerge. But a lot of people are just saying, like, this is just part of the essence of life. A ton of animals flocked together, birds, wildebeest, whatever you want to call them. They make these decisions based on these kind of unreliable signals that scientists don't really understand. Even cells and embryos, developing embryos coordinate their growth. So a lot of scientists just stand back and say, hey, this is part of the essence of life. We don't have a full explanation for them. So just take it in. It's a sight to behold. Yeah. If you learn, if you want to remember one thing about Cicadas is that

They pee so hard. They have a velocity of up to three meters per second, which is the strongest pee in the animal kingdom. That's because they drink 300 times their body weight in Xylem, which is a plant sap when they come out. I don't think anyone wanted to know that, Neil, but now a lot of people do. So thank you for that. All right. I think it's time to wrap it up. Thanks so much for listening and have a great Thursday or almost there to the weekend.

If you have any feedback on the show or any exclusive dinner reservations you want to offer us, send an email to Morning Brew Daily at MorningBrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Loo is our producer. Euchenua Ogu is our technical director. Billy Minino is on audio. Hair and makeup is stuck in line at airport security. Devin Emery is our chief content officer and our show is the production of Morning Brew.

Great. Show you a day, Neil. Let's run it back tomorrow.