Tag: Business and Economy

Onion exports: How Pakistan briefly won at India’s cost in unlikely matchup | Business and Economy News

Islamabad, Pakistan – Pakistani onion farmers and exporters are celebrating a windfall due to an unprecedented surge in exports over the past few months, an unlikely win at the cost of their counterparts across the border in India.

The South Asian nations, bitter rivals in myriad arenas, are also major onion producers. But India is also the world’s second-largest onion exporter after China, and is a dominant force in the global market for the vegetable, its produce often crowding out onions from smaller nations.

So, in December, when India imposed an export ban due to a decline in local onion production, ahead of national elections, Pakistani farmers and exporters jumped at what they recognised was a rare opportunity. In 2023, India exported nearly 2.5 million tonnes of onions. Suddenly the world onion market had a gap — one that Pakistan partly filled.

Pakistan managed to export more than 220,000 tonnes of onions between December and March this year, which was a little more than its usual annual onion export volume.

Waheed Ahmed, patron-in-chief of the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA), attributed this success to quick thinking — and a government willingness, at least for a while, to allow exports without placing a ban similar to India’s.

“When India placed the ban, we urged the government to allow us to avail the opportunity, and by our timely action, we managed to earn more than $200m in revenue for the country,” Ahmed told Al Jazeera.

The Pakistani government did eventually impose restrictions on onion exports, as the outward flood of the produce meant soaring domestic prices. But exports already under way through deals approved before the restrictions are expected to bring another $50m in revenue by the end of the fiscal year in June, said Ahmed.

By contrast, Ahmed said, the country typically earns between $110m and $150m from onion exports per year. Last year, the country was able to earn more than $235m in total from vegetable exports, with onion exports contributing about $90m.

Domestic shortage and price hike

For Pakistan, which has faced a desperate economic situation over the last two years, the export brought much-needed foreign reserves. The country’s central bank data showed that forex reserves, which were as low as $3bn last year, have recovered to $9bn this month, enough to cover imports for six weeks.

However, like onions, the feel-good story has multiple layers. The success of Pakistani onion exports resulted in a shortage of onions in the domestic market for a few months.

With more than 220,000 tonnes of the harvest being shipped overseas, the availability of onions for local consumption dwindled, pushing prices upwards between December and April, the duration when Indian onions were blocked from being exported, hitting ordinary Pakistanis hard.

The first four months of the year saw onion prices, typically 50 to 80 rupees ($0.18 to $0.29) per kilogramme, rise as high as 250 to 350 rupees ($0.90 to $1.26) per kilogramme, before gradually dropping in May.

“Onions are a staple in our daily meals,” Sumaira a housemaid in Islamabad who goes by one name, told Al Jazeera. “But with everything else getting more expensive, the rising onion price just adds to the burden,” she said.

Hamid Baloch, originally from Pasni in the southwestern province of Balochistan but currently working as a chef in a cafe in Islamabad, said the increase in onion prices impacted his business both in terms of production costs and sales.

“We buy in bulk, and one bag of 5 kilos of onions was going for 1500 rupees to 1800 rupees [$5.39 to $6.47] before it started coming down this month. Now it is available for close to 500 rupees [$1.50],” the 25-year-old told Al Jazeera while slicing onions for the chicken curry he was preparing.

Chef Hamid Baloch prepares chicken curry at his cafe in Islamabad [Abid Hussain/Al Jazeera]

According to the World Bank, more than 39 percent of Pakistanis earn less than $3.5 a day, and one of them is Muhammad Azam.

A daily wage worker in Islamabad, Azam said the rising cost of living meant people like him struggled to afford necessities.

“My children and I cannot even think about eating chicken more than once every two months. All we have are pulses and vegetables like onions or tomatoes, but in the last few months, even those were nearly impossible to buy,” he said.

However, he acknowledged that the last few weeks have seen a declining price trend in not only onions but other items as well.

Godsend opportunity

Inflation data and exporters both concur with the reduction in onion price.

Government figures showed that inflation, which had hit a record high of more than 38 percent May of last year, continued its downward trend, with the inflation figure for May 2024 recorded at 11.8 percent.

According to Imtiaz Hussain, a fruit and vegetable exporter in Karachi, the declining price of onions was due to the Indian government reversing its export ban.

“In early May, the Indian government reopened its onion exports, and markets in the Gulf region and some countries in the Far East, where we were able to sell, went back to procuring their onions from India,” he told Al Jazeera.

Ahmed, the PFVA official, said that exporters and farmers showed “good sense and opportunism” to export as many onions as they could during the short time period, when the government curtailed onion exports in March.

“Our aim was to continue exporting without causing a significant shortage in the domestic market,” he said.

Countering the inflated onion prices, Ahmed said that the increase was due to retailers exploiting customers while blaming exporters.

“In our wholesale markets, onions were continuously available for less than 150 rupees ($0.54) per kilogramme, so why should we get the blame if retailers sell them for more than 300 rupees? This is for the government to address, not us,” he said.

For Ahmed, the opportunity to earn foreign exchange was a balancing act after 2022, when floods destroyed large crops, including onions, in Pakistan’s southern areas, causing immense devastation to farmers.

“We suffered due to the flood, but this opportunity was a godsend. If farmers earn from one crop, they will invest more in the next crop. We just need to work on training our farmers to learn better, modern agricultural practices to increase their yield and revenue.”

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India’s Modi urged to set ‘ambitious’ economic agenda after poll humbling | Business and Economy News

Indian Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) campaigned on India’s sizeable economic expansion in the lead-up to the country’s recent national elections.

Since Modi came to power in 2014, GDP per capita has risen from about $5,000 to more than $7,500.

India’s GDP growth hit 8.4 percent in the financial year ending March, making it by far the fastest-growing major economy.

At the same time, the economy is producing much far less impressive data, including a high unemployment rate, which rose to 8.1 percent in April from 7.4 percent in March.

It is this statistic, along with high inflation, that has been touted as a key reason for the weaker-than-expected performance of the BJP, which won 240 seats, well below its previous tally of 303 and fewer than the 273 needed to form a government on its own.

While Modi has formed a government with the help of his National Democratic Alliance partners, his reliance on smaller parties changes the equation for a leader who commanded outright majorities during his previous two stints as prime minister.

“This is going to be really unusual for Prime Minister Modi,” Vina Nadjibulla, vice president of research and strategy at the Asia Pacific Foundation of Canada, told Al Jazeera.

“It was partly why the markets reacted the way they did,” Nadjibulla added, referring to the sharp drop in Indian stocks following the election result.

Nadjibulla said investors are concerned Modi may be unable to push through reforms needed to tackle issues such as high unemployment.

Despite strong headline economic growth, nearly half of India’s population is still employed in the relatively unproductive agricultural sector – a share that rose during Modi’s second term, from 42.5 percent in 2018-19 to 45.8 percent in 2022-23, according to an Oxford Economics report.

Young people, in particular, suffer from a lack of employment – in 2022-23, the youth unemployment rate was about 10 times higher than the adult rate, according to the report.

It is “ironic” that India’s robust growth under the Modi government “has come at the cost of economic stability for the lower classes”, Michael Kugelman, director of the South Asia Institute at the Wilson Center, told Al Jazeera.

In its third term, the Modi government will have to find a way to help poorer Indians in a way that goes beyond building infrastructure, Kugelman said.

“Across the board, it’s going to be a very ambitious economic agenda,” he said.

Manufacturing vs services job

Much has been made of India’s push to boost manufacturing, create jobs and lure global brands looking to set up alternative supply chains in the face of trade tensions between the United States and China.

India’s “Make in India” drive, however, has done little to create jobs for the large segment of the population that is still employed in agriculture.

India wants to create a manufacturing powerhouse to create jobs [File: Amit Dave/Reuters]

One reason for this is that the government’s focus has largely been on promoting higher value-added yet less labour-intensive sectors such as electronics, Alexandra Hermann, Oxford Economics lead economist, told Al Jazeera, adding that this would probably not change.

Another oft-touted reason is the lack of “big bang” reforms to land and labour rules, experts say, which are needed to bring in the type of major investment needed to really expand manufacturing.

While the Modi government has failed to make serious headway in this area – despite large majorities in parliament – experts say its coalition partners may now help it pave the way for some of those measures as jobs will benefit all voters.

Coalition partners could also help the Modi government make some progress in its so far failed efforts for land and labour reform, which have been highlighted as a necessary step to attract more investment in manufacturing.

“There will have to be some coordination with state governments… and coalition partners are regional parties that will have a lot of sway in some parts of the country and that is where a coalition government will be very helpful for Modi and the BJP,” Kugelman said.

For now, rather than relying on manufacturing, India’s growth story has largely been driven by services, which experts say will only be able to continue over the longer term and create sustainable and inclusive growth if human capital levels increase.

“Raising human capital levels on a broad basis will be crucial to create inclusive and sustainable growth over the medium-to-long-term,” Hermann said.

“Although India is home to some top technology and management universities nurturing global business leaders, it is the quality of primary and secondary education that still leave the Indian population, on average, relatively low-skilled. [But in its manifesto] the BJP fell short of committing to the higher spending goal,” Kugelman said.

Kugelman agreed. 

“Some of the fastest growing sectors are in services but the labour force is not equipped for those jobs and there’s a complete mismatch,” he said.

India’s labour force is not equipped with skills for the services sector [File: Bhumika Saraswati/AP Photo]

‘Conditions for private investment’

Ultimately, though, GDP growth and job creation are driven primarily by private investment, said Ajay Shah, an economist in Mumbai.

Private investment has not fared well in India since 2009 or 2011, depending on which measure you use, so “the organising principle for economic policy should be to create conditions for private investment”, Shah told Al Jazeera.

Part of the reason for the lack of success in this area has been excessive central planning in economic policy, Shah said.

“This,” he said, “creates policy risk. Arms of the government behave in unpredictable and personalised ways. This creates risk for private persons.”

Shah expressed hope that the incoming coalition will be better positioned to address such problems.

“There are more checks and balances,” he said.

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Samsung workers in South Korea take industrial action for first time | Business and Economy News

National Samsung Electronics Union, which represents tens of thousands of people, is pushing for better wages.

Staff at Samsung Electronics, one of the world’s largest smartphone manufacturers and also one of the only companies producing high-end semiconductors, have taken industrial action for the first time as part of a six-month campaign for better pay.

Son Woo-mok, head of the National Samsung Electronics Union (NSEU), which represents tens of thousands of people, said that employees were taking their paid leave entitlements simultaneously on Friday.

“It’s difficult to provide an exact number, but from what I’ve seen of the workplace attendance in the morning, there is a significant difference from the usual,” he said.

Samsung has been locked in negotiations with the unions over pay since January. The company has offered a 5.1 percent pay rise this year, while the union has said that it wants an additional day of annual leave as well as transparent performance-based bonuses.

On Friday, Samsung said it had been “diligently engaging in negotiations and will continue to do so”, and that there had been no impact on production. The company’s chips are used for generative AI, including AI hardware from industry leaders including Nvidia.

“The paid leave usage rate on June 7 is lower than that of June 5 last year,” which, like Friday, was sandwiched between a public holiday and a weekend, the company said in a statement.

About 10 workers held a protest in front of Samsung’s major office in Seoul on Friday, chanting: “Respect labour! We are not wanting a 6.5 percent raise or a 200 percent bonus!”

The NSEU has been negotiating over pay since January, and some workers took to the streets last month [Kim Soo-hyeon/Reuters]

Samsung Electronics is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy.

At the end of April, it reported a nearly 10-fold jump in first-quarter operating profit to 6.61 trillion won ($4.85bn) thanks to strong sales of its flagship Galaxy S24 smartphone and higher prices for its semiconductors.

Taiwan-based market research firm TrendForce said that while the firm accounts for a significant chunk of the global output of high-end chips, the strike would not affect production because it involves headquarters employees rather than those on the production lines.

Even so, the strike has historical importance, “since Samsung resisted unionisation and engaged in union-busting for so long”, Vladimir Tikhonov, professor of Korean studies at the University of Oslo, told the AFP news agency.

He said the collective action showed that “there is a gradual tendency towards empowerment of labour in South Korea”.

Samsung Electronics prevented the unionisation of its employees for almost 50 years, sometimes adopting ferocious tactics, according to critics, as it turned itself into a global electronics giant.

But in the late 2010s, organisers seized the opportunity presented by the left-leaning government of former President Moon Jae-in, a former rights lawyer who represented trade unions, and controversy around the bribery trial of the company’s then-vice-chairman Lee Jae-yong, the founder’s grandson, to set up a union.

The NSEU now has about 28,000 members, or more than a fifth of Samsung’s total workforce, and is the biggest of the five unions at the company.

Lee Hyun-kook, the union’s vice president, said the strike would not create disruption in production and nor was that the intention.

“We just want Samsung to hear our voice,” he told AFP.

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Rahul Gandhi seeks probe into stock market moves during India elections | India Election 2024 News

Exit poll projections of big wins by Modi’s alliance sent stock markets surging a day before votes were counted.

Opposition Indian National Congress leader Rahul Gandhi has demanded a parliamentary investigation into sharp stock market moves towards the end of the just-ended national elections, alleging that Prime Minister Narendra Modi gave misleading investment advice.

Gandhi made his comments on Thursday.

Modi’s alliance won the vote with a surprisingly slim majority, well below the landslide forecast by the weekend exit polls.

Projections made by Saturday’s exit polls sent stock markets surging on Monday with the NSE Nifty 50 and S&P BSE Sensex jumping 3.3 percent and 3.4 percent, respectively, a day before the Election Commission declared the results.

Modi and some of his ministers had said during campaigning that the markets would surge when results were declared on June 4 with Home Minister Amit Shah saying in a television interview, “Buy before June 4. They will shoot up.”

Stock markets, however, crashed to a four-year low on Tuesday – down nearly 6 percent – after election results showed Modi’s Bharatiya Janata Party (BJP) lost its outright majority in the Lok Sabha, the lower house of parliament, and the BJP-led National Democratic Alliance (NDA) won a narrow majority to give Modi a third term.

“We are interested in having a JPC [joint parliamentary committee] to investigate the role of the prime minister, home minister, BJP members,” Gandhi told reporters.

“We want to understand who are the foreign investors who did these trades,” he said.

Modi’s outgoing trade minister, Piyush Goyal, returned the accusation, saying it was Gandhi who was misleading investors.

“He is worried that Modi is coming back to power. … He is pressuring foreign investors to not invest in the country,” he said. “We know equities markets undergo changes according to various estimates presented from time to time.”

The NDA won 293 of the 543 Lok Sabha seats, much lower than projected. Gandhi’s Congress-led opposition INDIA alliance won 232, higher than projected.

The Securities and Exchange Board of India (SEBI), the markets regulator, did not immediately respond to a Reuters news agency email requesting comment.

A source familiar with the developments said SEBI was examining share trade patterns before the exit polls and general election results for any suspicious transactions.

Modi’s office, an aide of Shah and a BJP spokesperson did not immediately respond to messages seeking comment.

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Bank of Canada cuts rates for first time in four years as inflation eases | Inflation News

After keeping rates at a more than two-decade high of five percent, the BoC said indicators for underlying inflation improved.

The Bank of Canada has trimmed its key policy rate by 25 basis points to 4.75 percent, in a widely expected move that marked its first cut in four years, and said more easing was likely if inflation continued to ease.

After keeping interest rates at a more than two-decade high of 5 percent for almost a year, on Wednesday the BoC said the indicators for underlying inflation looked increasingly positive.

“With further and more sustained evidence underlying inflation is easing, monetary policy no longer needs to be as restrictive,” Governor Tiff Macklem said in his remarks after the announcement.

Financial markets immediately priced in a 42 percent chance of a cut to 4.5 percent next month, and a cut in September was fully priced in. A majority of economists polled by Reuters had expected Wednesday’s cut.

The Canadian dollar pared its early gains and weakened by 0.4 percent to 1.3733 to the United States dollar, or 72.98 US cents after the decision.

The BoC joins Sweden’s Riksbank and the Swiss National Bank in bringing down rates that have burdened households and businesses alike, and muted economic growth amid easing price pressures.

The European Central Bank is most likely to follow suit on Thursday, financial markets foresee.

Inflation in Canada has slowed this year to hit a three-year low of 2.7 percent in April. While inflation has stayed below 3 percent for four months in a row, it is still higher than the BoC’s 2 percent target.

“If inflation continues to ease, and our confidence that inflation is headed sustainably to the 2 percent target continues to increase, it is reasonable to expect further cuts to our policy interest rate,” Macklem said in an indication of what future reductions could look like.

“But we are taking our interest rate decisions one meeting at a time,” he added.

Macklem, who has repeatedly cautioned Canadians that rates will not fall as fast as they rose, said further progress in combating inflation was likely to be uneven and risks remained.

“We have increasing confidence that the Bank of Canada will move again in July,” Royce Mendes, head of macro strategy for Desjardins Group, wrote in a note.

Andrew Grantham, senior economist at CIBC, also said he expected a cut in July, adding that he foresees a total of four reductions this year.

The next rate announcement is due on July 24, when the bank will also release its latest quarterly forecasts.

Economic growth in the first quarter was slower than expected at 1.7 percent, helping boost market anticipation of a rate cut.

Macklem said the economy was operating in excess supply, leaving room for growth even as the overall inflation rate continued to drop.

He reiterated that the bank would remain focused on demand and supply mismatch, inflation expectations, wage growth and corporate pricing behaviour.

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What’s next for the European Green Deal? | Business and Economy

The makeup of the EU’s next parliament could affect the future of the bloc’s climate policies.

European Commission President Ursula von der Leyen unveiled the bloc’s climate plan in 2019, calling it “Europe’s man on the moon moment”.

That landing of the so-called European Green Deal is now in question. The package costs more than $1 trillion in investments every year.

The next European Commission will have to raise more funds for the package. But support for the deal among voters is declining as the energy crisis bites.

The possible rise of right-wing parties after parliamentary elections could see the bloc back-pedal on some measures.

Plus, power sharing in South Africa, what is next for the economy?

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What’s the root cause of Nigeria’s economic crisis? | Business and Economy

A general strike demanding higher wages brings Nigeria to a standstill.

Nigeria has Africa’s largest population and it’s one of the world’s top oil producers.

Yet the nation of more than 200 million people has struggled with corruption, economic mismanagement and a weak currency.

A general strike this week is drawing attention to these challenges.

Union leaders want a higher minimum wage and blame recent reforms by President Bola Tinubu for worsening the situation.

But can a general strike that’s shut down the national electric grid and several airports force the government to change course on this issue?

Presenter: Cyril Vanier

Guests:

Khalil Halilu – Chief executive officer of Nigeria’s National Agency for Science and Engineering Infrastructure

Amaka Anku – Head of the Africa practice of the Eurasia Group

Hamzat Lawal – Anti-corruption activist and founder of Connected Development, a civil society organisation

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India shares plunge on concerns of a narrower win for India’s Modi | India Election 2024 News

Indian stocks have suffered their worst intraday fall since March 2020 and foreign investors sold the most on record, as vote-counting trends in the general election suggested Prime Minister Narendra Modi’s alliance was unlikely to win the overwhelming majority predicted by exit polls.

With over half the votes counted on Tuesday, Modi’s Bharatiya Janata Party (BJP) looked unlikely to secure a majority on its own in the 543-member lower house of parliament and likely to need allies in the National Democratic Alliance (NDA) to form the government.

That could lead to some uncertainty over economic policies, such as the push for investment-led growth, which has been the cornerstone of the Modi government’s rule. The Indian economy grew 8.2 percent in the financial year ended March 2024.

“The key question is whether BJP can retain a single-party majority,” said Ken Peng, head of investment strategy for Asia at Citi Global Wealth. “If not, then would its coalition be able to deliver economic development, particularly infrastructure?”

The NSE Nifty 50 index closed down 5.93 percent at 21,884.5 points, and the S&P BSE Sensex fell 5.74 percent to 72,079.05. The indexes fell as much as 8.5 percent earlier in the day, after hitting record highs on Monday.

At the day’s low, the indexes saw their biggest intraday fall since March 2020, when stocks were battered by the first lockdown during the COVID-19 pandemic.

“Due to the dependency on coalition partners, the upcoming NDA government may shift its focus towards a welfare-oriented approach rather than concentrating on reforms during the July budget,” said Puneet Sharma, CEO and fund manager at Whitespace Alpha.

Indian markets are likely to now derate due to higher risk perception, said analysts at brokerage Emkay Global, which believes that difficult reforms like changes to land and labour policies, along with privatisation of state-run enterprises, were “off the table”.

Exit polls over the weekend had projected a big win for Modi’s NDA, catapulting markets to all-time highs on Monday as investors were buoyed by expectations of sustained economic growth.

‘Policy continuity’

Benchmark indexes had more than tripled in value since Modi became prime minister in May 2014, as of Monday’s close.

Foreign investors, who poured a net $20.7bn into Indian equities last year but pulled back ahead of the election, had been widely expected to turn buyers if the Modi alliance secured a decisive mandate.

On Tuesday, foreign institutional investors (FIIs) sold a record 124.36 billion rupees (about $1.5bn) worth of Indian shares, according to provisional data released Tuesday evening.

They had bought shares worth a net 68.51 billion rupees ($824.4m) on Monday.

“In our view, the important thing is that the NDA returns to form the next government, which represents policy continuity,” said Mike Sell, head of global emerging market equities at Alquity in London.

“Whether they win by 20 or 120 impacts the amount of structural reform that can take place, but ultimately a win is a win and the increasing positivity around the Indian structural growth story will be undiminished.”

The lack of clarity on the margin of victory for the NDA saw intraday volatility on the share index rise to its highest level in 26 months.

Traders said that selling by high-frequency traders accelerated the drop and the sharp fall triggered margin calls.

The market is witnessing a significant correction due to margin calls as retail investors were carrying heavily leveraged positions, said Rupak De, senior technical analyst at LKP Securities.

Some investors saw the decline as a buying opportunity.

“Regardless of the final election count, the India economy will continue to benefit from longer-term tailwinds of favourable population demographics and the ongoing geopolitical tensions between China and the US,” said Gary Tan, portfolio manager at Allspring Global Investments.

Investors expect the Modi government to continue focusing on turning the country into a manufacturing hub – a project that has courted foreign companies including Apple and Tesla to set up production as they diversify beyond China.

The rupee ended at 83.53 against the United States dollar, down 0.5 percent on the day, marking its worst single-day fall in 16 months. The benchmark 10-year bond yield rose 10 basis points on the day, its biggest on-day rise in eight months, ending at 7.03 percent.

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GameStop stock jumps as ‘Roaring Kitty’ shows big bet in Reddit post | Financial Markets News

Keith Gill, or ‘Roaring Kitty’, shared a screenshot on Reddit that showed he may hold five million shares of GameStop.

Shares of GameStop soared once again following speculation that the man at the centre of the pandemic meme stock craze owns a large number of shares of the video game retailer that may be worth millions.

GameStock’s stock jumped more than 37 percent in Monday morning trading.

Keith Gill, better known as “Roaring Kitty” on social media platforms YouTube and X, also goes by the name Deep F****** Value on Reddit. Late Sunday, the Reddit account shared a screenshot in the r/SuperStonk forum that people are speculating could be an image of the shares and call options Gill holds in GameStop.

The image showed that Gill may hold five million shares of GameStop that were worth $115.7m as of the closing price on Friday. The screenshot also showed 120,000 call options in GameStop with a $20 strike price that expires on June 21. The call options were bought at around $5.68 a piece.

In addition, Gill’s account on X posted a picture of a reverse card from the popular game Uno on Sunday night. There was no text accompanying the image.

This latest activity comes about three weeks after Gill appeared online for the first time in three years, spiking the price of GameStop at the time. In May, the “Roaring Kitty” account posted an image on X of a man sitting forward in his chair, a meme used by gamers when things are getting serious.

The post on X was followed by a YouTube video from years before when Gill championed the beleaguered company GameStop, saying, “That’s all for now cuz I’m out of breath. FYI here’s a quick 4min video I put together to summarize the $GME bull case.”

GameStop in 2021 was a video game retailer struggling to survive as consumers switched rapidly from discs to digital downloads. Big Wall Street hedge funds and major investors were betting against it, or shorting its stock, believing that its shares would continue on a drastically downward trend.

Gill and those who agreed with him changed the trajectory of a company that appeared to be headed for bankruptcy by buying up thousands of GameStop shares in the face of almost any accepted metrics that told investors that the company was in serious trouble.

That began what is known as a “short squeeze,” when those big investors that had bet against GameStop were forced to buy its rapidly rising stock to offset their massive losses.

Others that joined the meme surge on Monday include movie theatre chain AMC Entertainment Holdings, which is up more than 12 percent. Koss Corp, a headphone manufacturer, rose nearly 6 percent and BlackBerry, the one-time dominant smartphone maker, climbed more than 2 percent.



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US activists worry about ‘losing major asset’ TikTok as potential ban looms | Social Media

Michael Mezzatesta is a climate educator based in Los Angeles, California. For the last two years, he’s used TikTok and Instagram as a means to spread the word about climate marches and real-life ways people can get involved and fight to take on climate change.

In September 2023, he helped generate interest in the climate march in New York.

“We were expecting maybe 5,000 to 10,000 people there. I’m pretty sure more than 50,000 people showed up,” Mezzatesta told Al Jazeera.

He says that is largely thanks to TikTok.

“I had folks coming up to me that I didn’t even know during the march that said I saw your video and that’s why I’m here,” he added.

But Mezzatesta’s ability to use social media platforms like TikTok to organise is coming increasingly under threat.

A slew of recent decisions from Washington and from social media giants like X, Meta (owner of Facebook and Instagram), and ByteDance (owner of Tiktok) has made organising on key social and political issues much more difficult before a consequential election cycle in the United States.

TikTok is fighting against a ban that President Joe Biden, citing data privacy concerns, signed into law. It requires ByteDance to completely spin off TikTok for the US audience or the platform will be banned. It could be at least a year before the ban ultimately takes effect pending legal challenges. The social media platform has filed a lawsuit against the US government amid allegations that the legislation violates the First Amendment of the US Constitution, which protects the right to free speech.

But the dispute between the federal government and ByteDance leaves activists like Mezzatesta in a tough spot as they explore the future of organising protests and demonstrations for the masses.

That sentiment is echoed by organisations like Gen-Z for Change — a collective of young activists.

“Rather than trying to impose universal data privacy legislation to protect Americans from the very real data privacy crisis that we have in this country, Congress has chosen to ban an app that has been one of the most powerful platforms for youth organising,” founder Aidan Kohn-Murphy told Al Jazeera.

Michael Mezzatesta has used apps like TikTok and Instagram to spread the word about climate-related activism that took place in New York City in September 2023 [File: Justin Lane/EPA]

This is in addition to some state level challenges. Earlier this year, a federal judge struck down the state of Montana’s bill that banned the app. The state appealed the decision and the case is continuing. 

This month, two Native American tribes joined in the fight to bar the state from banning the app, claiming that the move oversteps tribal sovereignty and that states should instead work on closing the digital divide on Native American lands.

The federal ban, if ultimately not stopped by the courts, will not take effect until after the November elections. But the implications could be immediate.

“TikTok may be incentivised to change some of its moderation practices in an attempt to appease some elected leaders that are behind the ban,” Kate Ruane, director of the Free Expression Project at the Center for Democracy & Technology, told Al Jazeera.

Accusations of manipulation

While TikTok is a powerful tool for organising, there are accusations that the social media app is itself putting a thumb on the scale – and that it has been manipulating public discourse on a myriad of social issues and political matters in recent years.

TikTok has been blamed for suppressing notable creators who promoted Hindu-Muslim unity in India (TikTok has been banned in India since 2020), some views on women’s reproductive health, and content about China’s oppression of Uighur Muslims. It has even been accused of suppressing content from people it deemed “ugly”.

Conversely, it has been accused of promoting and pushing users towards disinformation in the early days of the war between Russia and Ukraine. Recently, the app was charged with promoting pro-Palestine content more frequently than pro-Israel content.

“There’s a lot of speculation about what is or isn’t being promoted on the platform. But the truth is, we often don’t really know. There is a strong need for transparency,” Ruane said.

US legislators overwhelmingly called the decision to ban TikTok a national security issue having to do with how the company uses customer data. But this has been a wide-ranging problem for years and is far from limited to TikTok. Infamously, in the 2016 election, digital analytics firm Cambridge Analytica used personal Facebook data to create voter profiles which it then sold to campaigns.

However, social media has long played an important role in social mobilisation, such as Twitter and Facebook during the first Arab Spring uprisings in early 2011 — because the platforms became key tools to get the word out about protests that took place in Bahrain, Egypt, Libya, Syria, Tunisia and Yemen. The movement ultimately led to the downfall of several leaders including Libya’s Muammar Gaddafi and Egypt’s Hosni Mubarak.

The use of TikTok for grassroots organising and access to information in the last four years has been similar.

Social media has long played a role in social protests like the ones for Black Lives Matter [File: Noah Berger/AP Photo]

During the Black Lives Matter (BLM) protests in the wake of the killing of George Floyd in May 2020 by Minneapolis police officers, 94 percent of TikTok users believe that the app “generated meaningful action” for the social justice movement, according to a study from the Reach3 Insights — a consumer insight consultancy. That’s largely driven by protest turnout. The same report found that 26 percent of TikTok users attended a BLM protest – double that of their peers who were not on TikTok at the time.

“TikTok plays an especially important and outsized role for minority communities seeking to foster solidarity online and to highlight issues vital to them,” Patrick Toomey, deputy director of the National Security Project at the American Civil Liberties Union (ACLU), told Al Jazeera.

“Many of the calls to completely ban TikTok in the United States are about scoring political points and rooted in anti-China sentiment,” Toomey claimed, adding that the government had yet to produce evidence that many of its concerns about TikTok were justified.

TikTok did not respond to Al Jazeera’s request for comment by press time.

The US government’s move against TikTok is not the only recently erected hurdle in the social media landscape that is making organising much more challenging for activists.

Meta’s Instagram has a history of not only failing to combat misinformation on the platform, but of suppressing content about certain hot-button subjects.

In 2020, Instagram was accused of blocking posts about the Black Lives Matter movement. In 2021, it was blamed for recommending misinformation about COVID-19, and in 2022, for restricting some content pertaining to women’s reproductive rights. Late last year, Human Rights Watch charged Meta with censoring Pro-Palestinian voices.

In February, Instagram rolled out a change to its platform limiting access to political content.

“This change does not impact posts from accounts people choose to follow; it impacts what the system recommends. We have been working for years to show people less political content based on what they told us they want, and what posts they told us are political. And now, people are going to be able to control whether they would like to have these types of posts recommended to them,” a spokesperson for Meta said in a statement to Al Jazeera, providing no data that showed whether or not users wanted more or less political content and not specifying what the company defines as “political content”.

Instagram broadly refers to political content as posts that may mention “laws, elections, or social topics” that affect a group of people and/or society at large.

Ruane said “That in and of itself is a concern to me because that could include all kinds of content like that related to the LGBTQ community, for example. Is content related to reproductive rights, politics? There are a lot of really important issues that relate to elections that aren’t necessarily about a particular candidate.”

Not long after the change took effect, hundreds of activists and journalists penned an open letter urging the social media giant to backtrack on the move. For now, users are pushing back in outrage against Instagram’s move and have posted videos across social media platforms that show how to circumnavigate the change.

Meta also said that it would introduce a similar feature that would limit political content on Facebook, but did not specify when or give any further details.

Changes at X, too, have proven a problem. Since it was bought by Tesla and SpaceX CEO Elon Musk — who claimed to be a free speech absolutist – people who do not share Musk’s worldview or stance on particular issues have struggled with the app.

In the last year, Musk— who is increasingly aligning himself with far-right talking points — banned left-leaning activists, and allegedly shadow-banned journalists critical of him like then Intercept reporter Ken Klippenstein amid his reporting of problems with Tesla’s self-driving feature. At the same time, he has also reinstated right-wing conspiracy theorists and white nationalists, such as Nick Fuentes.

“What you see with Twitter is that ownership of a particular platform matters … It has become harder for many activists and many journalists to engage on the platform,” Ruane said.

When Al Jazeera reached out for comment from Twitter or X, we received the auto-reply “Busy now, please check back later”. Since Musk’s takeover, the platform has generally declined to respond to press queries and relied upon dismissive auto-reply messages.

Twitter had been a bastion of political organising. In 2011, counterculture magazine Adbusters used the platform as a way to organise one of the biggest sit-ins in modern American history – Occupy Wall Street – which inspired tens of thousands to take part in the non-violent movement. That later spurred comparable movements around the globe including the recent sit-ins on college campuses in response to the continuing conflict between Israel and Gaza, climate protests, women’s reproductive rights marches, among other movements in the last several years.

Musk’s moves to limit freedom of expression for those who he disagrees with is the antithesis of Twitter’s previous role as the global public square.

However, it is especially the limits for TikTok and Instagram that are driving the most concerns for organisers.

“There are all sorts of ways to message people, but I’d say when it comes to pure reach, Instagram and TikTok are impossible to beat,” said Mezzatesta, the climate educator. “They’re the top two. Those are major assets that we’re losing.”



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