What just happened? Donald Trump has signed a pair of executive orders that prohibit any US transactions with ByteDance, the Chinese owner of TikTok, and the WeChat app. The ban, which will begin in 45 days, is an attempt to “address the national emergency with respect to the information and communication technology supply chain.”
President Trump has issued orders that would prohibit “any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States,” with the companies.
“The spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States,” Trump wrote in a letter to House Speaker Nancy Pelosi.
— Andrew Feinberg (@AndrewFeinberg) August 7, 2020
While incredibly popular, short-video-sharing app TikTok has long come under fire over privacy issues. It’s been banned by Joe Biden’s staff, the Navy, Army, departments of State and Homeland Security, and the TSA. A ban on federal employees downloading the app on government-issued devices may soon become law. Additionally, Reddit CEO Steve Huffman called it “fundamentally parasitic” and “spyware.” ByteDance denies the allegations and claims the data of US users is stored in the country, with backups in Singapore.
With over 800 million monthly active users, 30 million of whom are in the US, TikTok saw its userbase surge during the lockdowns. It’s now been downloaded more than 2 billion times.
ByteDance now has until September 20 to sell its US operations to Microsoft or another American firm or face a ban. The Windows maker said it would conclude discussions by September 15. TikTok executives value all of the company at more than $50 billion, though Microsoft is looking to acquiring the portions based in the US, Canada, Australia and New Zealand only.
While the ban against ByteDance covers transactions with the entire company and its subsidiaries, the order against WeChat blocks transactions involving the app and not a broader ban against owner Tencent, according to a US official. A similar prohibition against the Chinese conglomerate could have had far-reaching consequences; it has full ownership of Riot Games and 48 percent ownership of Fortnite maker Epic Games. It also has investments in Tesla, Reddit, and Spotify. Shares in the company fell 9 percent after the order was announced.
WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,” Trump said in the order.
The move marks an escalation in US-China tensions, and analysts are now expecting retaliation from Beijing. China already blocks many US tech companies, including Facebook and Google, from operating in the country.