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🇨🇳 The China Issue

Tim Cook in Hong Kong fray

Moving the Market: Apple chief Tim Cook decided last night to remove an app from the App Store that allowed protesters in Hong Kong to track police. The decision, which Apple says was based on public safety concerns, comes one day after Chinese state-run media accused the company of assisting "rioters."

• How to read it: Apple may have been responding to legitimate safety concerns, but the decision cannot be separated from the pressure Beijing has put on Apple and other U.S. companies to capitulate to its interests.

• This week alone, Beijing has tried to pressure the NBA and Activision Blizzard, the gaming company, to punish individuals who voiced support of the protesters. NBA did not, Activision did. (More on that in the item below).

The backstory: People’s Daily, a state-run paper, had accused Apple of helping “rioters engage in more violence" by providing the HKmap.life app, which allows users to track police movements.

• Last night, Apple said it was removing the app because it was allowing people "to target and ambush police" and allowing criminals "to victimize residents in areas where they know there is no law enforcement."

The big picture: Two things can be true. It's clear that China put pressure on Apple to abandon the app. It's also likely that Apple recognized that the app was facilitating threats to people's safety.

• The more salient issue: The dust-up highlights how overexposed Apple is in China due in large part to its dependence on Chinese manufacturing. That relationship is sure to bring greater headaches down the road.

Bloomberg/Getty

Bobby Kotick's 'scarcity' gap

Principles of business: Adam Silver and Bobby Kotick, leaders of two of America's biggest global entertainment franchises, are taking very different approaches to dealing with Beijing's extraterritorial censorship efforts this week. The contrast illustrates a larger truth about leverage in the media business.

• Silver, the NBA commissioner, refused to capitulate to China and did not punish a team manager who voiced support for the Hong Kong protests, saying the NBA will not regulate individuals' speech.

• Kotick, the chief of Activision Blizzard, one of the world's largest gaming companies, suspended an e-sports gamer who voiced support for the protests. Kotick did not respond to requests for comment.

• In a statement, Activision said the player had violated a rule that prohibits players from acts that bring them "into public disrepute," offend a group or damage the company’s image.

The big picture: Beyond the issues of moral leadership, this is really a story about "scarcity." Scarcity is the power MTV had when it was the only music channel, ESPN when it was the only sports channel and HBO when it was the only premium content channel.

• Like those networks in their heydays, the NBA is a unique product that Silver's competition ⁠— in this case China ⁠— can't replicate. There may be other basketball leagues, but 800 million people in China aren't going to watch the China's CBA or Spain's Liga ACB.

• Activision is one of the most popular gaming companies in the world, but its not the only one. Ultimately, gamers in China can play high-quality games from other companies, which means Kotick doesn't have Silver's leverage.

• To wit, Tim Sweeney's Epic Games, the creator of Fortnite, seized on Kotick's misfortune yesterday, saying it "supports everyone’s right to express their views" and "wouldn’t ban or punish a Fortnite player" for speaking out on issues like Hong Kong.

The upshot: Silver is the rare executive who may be able to stand up to China without jeopardizing his business interests. Kotick may have a harder decision to make: Capitulate to China and forego free speech or stand up for free speech and forego the Chinese market.

• That doesn't excuse Activision's decision, of course, but it might make it a little easier to understand his dilemma.

What's next: Activision's latest release, “Call of Duty: Mobile,” is still awaiting government approval in China, which is "the world’s largest market for mobile games," per The Wall Street Journal.

• Meanwhile, Bloomberg reports that Activision "is facing a fierce backlash and calls for a boycott" following its decision.

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Marco Rubio targets TikTok

Big in the Beltway, big in Beijing: Sen. Marco Rubio, R-Fla., has sent a letter to Treasury Secretary Steven Mnuchin requesting that the Committee on Foreign Investment in the United States (CFIUS) investigate ByteDance's 2017 acquisition of Musical.ly, now TikTok.

• Rubio said there is "ample and growing evidence that TikTok’s platform for Western markets, including the U.S., is censoring content that is not in line with the Chinese Government and Communist Party directives."

• The move follows revelations that TikTok has been instructing moderators to censor videos that are out of line with Beijing's worldview, particularly on issues of its sovereignty over Hong Kong, Tibet and Taiwan.

The big picture: While the media's attention has focused on business leaders like Adam Silver and Bobby Kotick, CFIUS is actually the one body that truly has the power to deal with China's vise grip on U.S. businesses.

🏀 Rivalry week 🏀

Less than two weeks to go til the start of the NBA season, a colleague wryly observes that the league's biggest story has gone from "Lakers vs. Clippers" to "Washington vs. Beijing."

• Last night in Philly: "A fan was ejected from a Philadelphia 76ers preseason game on Tuesday after holding signs and shouting support for Hong Kong," per CNBC.

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Ronan Farrow vs. NBC News

Moving Manhattan: Journalist Ronan Farrow has once again accused NBC News executives of killing his exposé on Harvey Weinstein's alleged sexual misconduct, and now adds that Weinstein had threatened to expose the alleged sexual predations of the network's former star host, Matt Lauer.

• The big picture: The allegation, which NBC News vigorously denies, has brought new scrutiny onto the network's leadership and its handling of both the Weinstein and Lauer scandals.

The reax: In an email to staff, NBC News chairman Andy Lack disputed Farrow's account and said that his Weinstein story, as it was presented to NBC, did not meet the company's editorial standards.

• "It disappoints me to say that even with passage of time, Farrow’s account has become neither more accurate, nor more respectful of the dedicated colleagues he worked with here at NBC News. He uses a variety of tactics to paint a fundamentally untrue picture."

• "Here are the essential and indisputable facts: NBC News assigned the Harvey Weinstein story to Ronan, we completely supported it over many months with resources – both financial and editorial."

• "After seven months, without one victim or witness on the record, he simply didn’t have a story that met our standard for broadcast nor that of any major news organization."

Return fire: In an email to NPR, a Farrow spokesperson said "the claims by NBC’s senior management about Farrow’s reporting are simply not true, as his book will methodically demonstrate." The spokesperson said Farrow's book also shows that NBC executives sought to "thwart" his reporting efforts.

Top talker: Farrow also interviewed former NBC News colleague Brooke Nevils, who says she was raped by Lauer in 2014. Lauer denied the allegation in a lengthy public letter, saying in part that their relationship was "completely consensual."

• In a subsequent statement to NBC, Nevils said, in part, that Lauer was attempting "to bully a former colleague into silence." She called his letter "a case study in victim blaming," but said she was "not afraid of him now."

Market Links

• Americans don't know what Facebook owns (Mashable)

• Joe Biden takes media bias charge to New York Times (DB)

• Mike Reed will cut more than 10% of Gannett staff (Neiman)

• Randall Stephenson makes a sale to cut debt (Bloomberg)

• Hollywood's media giants wrestle with their debts (THR)

Alberto E. Rodriguez/Getty

Tom Rothman eyes Netflix

Talk of Tinseltown: Sony Pictures chairman Tom Rothman is "exploring the prospect of getting risk-free cash" for the He-Man movie 'Masters of the Universe' by making it for Netflix instead instead of taking it to the box office, THR's Kim Masters reports.

• "The deal would make Sony the next studio after Paramount to start making movies belonging exclusively or almost exclusively to the streamer."

The big picture: Hollywood studios are increasing starting to sell to streamers like Netflix, Masters writes. The calculus: Why risk a box office flop when you can just sell to Netflix for cash up front?

Jim Bennett/Getty

Eddy Cue lands Ferrel 'Carol'

The streaming wars: "Apple has emerged victorious after shelling out for 'A Christmas Carol,' a new live-action musical based on the Charles Dickens classic to star Ryan Reynolds and Will Ferrell," Variety's Matt Donnelly reports.

• "The tech giant is in final negotiations to acquire the film, beating out rivals that include Netflix, Warner Bros. and Paramount Pictures, with a lavish deal that blew away other offers."

• "Over the last weekend of September, Apple came in and 'blew everyone out of the water,' another person familiar with the bidding said. ... [though] the final numbers Apple paid are unclear."

The big picture, via Bloomberg's Lucas Shaw: "Apple outbidding Netflix on a Ryan Reynolds/Will Ferrell movie is in keeping with its strategy. They only make a handful of bets, but those bets are very, very big."

• What's next: Apple may have just convinced every "Elf" fan to sign up for Apple TV+. And who among us isn't an "Elf" fan?

🛬 What's next: Vacation. If I'm slow in responding to your calls, texts, DMs or emails, please forgive me.

See you Monday, October 21.