Yesterday night, Thursday 6 August, the Trump administration announced new restrictions on Chinese-owned apps TikTok as well as WeChat, which would ban transactions by any person or property within US jurisdiction from 20 September 2020.
While the move against TikTok’s Chinese owner Bytedance was not a huge surprise at this point, action against WeChat’s owner, the Shenzhen-based tech giant Tencent Holdings Inc. was surprising and worrying for many. This sharp escalation of the US’ confrontation with China is likely to be met with retaliation. Why is Trump banning transactions with TikTok and WeChat and which implications could it have for US companies?
The two executive orders that were released late Thursday cited national security concerns. For TikTok, the order basically sets a 45-day deadline for the acquisition of TikTok, which Microsoft has already been in talks with to acquire.
In his announcement, Trump accused WeChat, made by Tencent, and TikTok, made by ByteDance, of providing a channel for the Chinese Communist Party to obtain Americans’ proprietary information and carry out disinformation campaigns to benefit China’s interest.
“The spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China continues to threaten the national security, foreign policy and economy of the United States,” the US president wrote.
While a ban against TikTok had already been announced by the president, his move against WeChat comes as a surprise for many. WeChat is used around the world but particularly by Chinese people to communicate with friends, read news and carry out business transactions. This means that such a ban could effectively cut off some communication between people in China and the US.
Speaking to The New York Times, Kirsten Martin, a professor on technology ethics at the University of Notre Dame’s business school explained: “While TikTok is being singled out in this executive order, their data collection and sharing practices are fairly standard in the industry. In fact, many fitness apps were banned from use in the military for tracking location data, but we did not ban them from all U.S. citizens.”
It remains unclear whether the new order will affect other businesses tied to Tencent, which is an investor in many popular American technology and gaming start-ups. The scope of the ban, including which transactions would be covered, still needs to be unveiled but it looks like it will have bigger consequences for WeChat than for TikTok, which could be ‘saved’ and bought by an American company such as Microsoft.
In a statement posted online, TikTok said it was “shocked” by the executive order. The US gaming industry—WeChat parent Tencent owns or has major stakes in popular games including League of Legends and Fortnite—could be collateral damage. Tencent is also widely invested in social media companies, including Snap. “We are reviewing the executive order to get a full understanding,” a Tencent representative said early Friday.
For weeks, Trump had been urged by a range of advisers to intervene with TikTok. Some of those advisers had counselled the president to follow the recommendations of a national security panel and allow Microsoft or another American company to buy the Chinese-owned app.
Other advisers pushed for bolder action. As the president flew back to Washington from Florida, he told reporters that he did not want TikTok to be acquired by an American company and that he would use his presidential authority to bar TikTok from operating in the US.
But that position didn’t last for more than two days. Officials implored people like Senator Lindsey Graham to explain to the president why the Microsoft deal was a good option. By Sunday, Trump had changed his mind but he had never truly seemed completely content with a specific approach.
It’s not yet clear how the ban will be enforced but users might end up looking for workarounds and other ways to download and use the apps. Or, many users may lack the patience and simply cease using both apps.
