Commentary on Political Economy

Thursday, 6 August 2020


Trump Executive Orders Target TikTok, WeChat Apps

Limitations on the Chinese apps are likely to increase tensions with Beijing

Both the Senate and House have passed legislation barring the use of popular video-sharing app TikTok on government issued devices amid national security concerns about the Chinese-owned social media platform. PHOTO: ANJUM NAVEED/ASSOCIATED PRESS
in Washington and
in Hong Kong
President Trump issued a pair of executive orders that would impose new limits on Chinese social-media apps TikTok and WeChat, escalating tensions with Beijing and effectively setting a 45-day deadline for an American company to purchase TikTok’s U.S. operations.
The orders bar people in the U.S. or subject to U.S. jurisdiction from transactions with the China-based owners of the apps, effective 45 days from Thursday. That raises the possibility that U.S. citizens would be prevented from downloading the apps in the Apple or Google app stores.
It also renews pressure on Microsoft Corp. and TikTok’s parent, Beijing-based ByteDance Ltd., to reach a deal for the app’s U.S. operations. The TikTok order formalizes Mr. Trump’s earlier calls for shutting down the app should no American buyer complete a deal within 45 days. Contracts agreed to before the 45-day period elapses aren’t subject to the prohibitions in the order.
ByteDance representatives couldn't be reached for comment.
Mr. Trump’s first order argues that TikTok poses an economic and national-security threat to U.S. interests. U.S. officials have expressed concern that China’s authoritarian government would have access to the data TikTok collects from users, including Americans. TikTok has said it would never hand over such data.
“This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information—potentially allowing China to track the locations of federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage,” the order says.
The Thursday orders are likely to be met with indignation in China, where talk of a TikTok sale has sparked anger and is hardening long-held suspicions that the U.S. aims to sabotage the country’s efforts to grow its technology. The orders come at a low point in U.S.-China relations, with an economic face-off between the two countries escalating.
For Beijing, the targeting of WeChat and its parent, Tencent Holdings Ltd., is likely to be a bigger concern than TikTok. WeChat is used by more than a billion people in China, is a key link between China and its overseas diaspora, and is widely used by foreigners who have professional or personal ties in China. Tencent is also a much more-established company with a history of cooperating with the Beijing government in a variety of areas, and boasts a market capitalization of nearly $700 billion. TikTok, which says it has about 100 million monthly users in the U.S., is valued at roughly in the tens of billions of dollars. It isn’t profitable globally.
In addition to WeChat, its do-everything app, Tencent also is a giant in the world of gaming. It wholly owns Riot Games Inc., creator of the popular videogame “League of Legends,” and has stakes in “World of Warcraft” maker Activision Blizzard Inc. and Epic Games Inc., developer of the popular game “Fortnite.”
It is unclear whether the executive order, which targets Tencent’s transactions related to WeChat, would affect Tencent’s other businesses. A spokesman for Tencent declined to comment.
Microsoft has said it hopes to acquire TikTok’s business in the U.S. and three other countries. The company, which said Sunday it aimed to complete the takeover discussions no later than Sept. 15, declined to comment on the order.
Mr. Trump said earlier this week that he was prepared to approve a purchase of TikTok’s U.S. operations, but he said a “very substantial portion” of the sale price should go to the U.S. government. Thursday’s TikTok order doesn’t mention this.
The executive order came hours after the Senate unanimously passed a bill prohibiting federal employees from using TikTok on government-issued devices, as U.S. national-security concerns mount. The measure passed through an expedited procedure that avoided a roll-call vote.
“In light of all we know, it is unthinkable to me that we should continue to permit federal employees, those workers entrusted with sensitive government data, to access this app on their work phones and computers,” Sen. Josh Hawley (R., Mo.), the sponsor of the measure, said in a statement. “If I have anything to say about it, we won’t be stopping here.”
The House has already approved a similar provision as part of a broad, must-pass measure authorizing military spending. Mr. Trump has threatened to veto the bill over his opposition to provisions renaming military bases that honor the Confederacy.
For the TikTok legislation to become law, both chambers would have to enact it in the same format.
The Senate bill also bans on government-issued devices any successor application developed by ByteDance or any entity it owns.
—Siobhan Hughes in Washington contributed to this article.

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