The Executive Orders to ban TikTok and WeChat risk undermining global businesses’ trust in the United States

8 Aug, 2020 00:50
source: Singularity Financial

Singularity Financial Hong Kong August 8, 2020 – US President Donald Trump has escalated the tech war with China by signing executive orders banning two popular Chinese social media apps TikTok and WeChat in US starting Sept. 20.

TikTok is threatening legal action against the US after Trump ordered firms to stop doing business with the Chinese app within 45 days. Earlier this week, after giving permission for Microsoft to pursue the acquisition of TikTok, Trump had demanded that a significant chunk of the sale price should go to the US treasury.

TikTok also called on the “100 million Americans who love our platform… to express your opinions to your elected representatives, including the White House. You have the right to be heard,” it said.

In a stern response, TikTok said it was shocked “by the recent Executive Order, which was issued without any due process” and alleged that the US government has “paid no attention to facts presented by the company, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses”.

The Executive Order also took aim directly at WeChat, which has more than 1 billion users worldwide, and whose “data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,” the order said.

WeChat’s owner, Tencent, said: “We are reviewing the executive order to get a full understanding.”

Tencent is one of the world’s largest and most valuable companies, with ownership stakes in a number of U.S. videogame companies, including Riot Games, which makes “League of Legends”; Epic Games, which makes “Fortnite”; and Activision Blizzard , which makes “World of Warcraft.”

Tencent also has significant stakes in Tesla Inc. and Snap Inc., the maker of Snapchat, and the Chinese company has streaming deals in place with the NBA, the NFL and Major League Baseball. The order could potentially also affect Apple Inc.and Alphabet’s Google app stores, which feature Tencent-owned apps.

The company’s shares fell by as much as 10%, hours after the order, and later slightly recovered to end the day with a 5% decline.

Banning all business by U.S. companies with WeChat’s parent — if that is the case — could prove to have much farther-reaching effects than Trump may have anticipated.

Mark Zuckerberg told employees that the TikTok ban in the United States would set a “really bad long-term precedent” that could have “long-term consequences in other countries around the world”. He also indicated that while TikTok is currently the target, a Facebook product could become a similar target in any other country, according to a BuzzFeed News report.

Facebook did launch its own TikTok competitor within Instagram called Reels earlier this week.

With Facebook targeting TikTok’s users and Microsoft targeting TikTok the company, the worrying precedent this sets for America’s commercial dealings with overseas technology companies has intensified.

“This Executive Order risks undermining global businesses’ trust in the United States’ commitment to the rule of law,” TikTok said in its response, “and it sets a dangerous precedent… We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the Administration, then by the U.S. courts.”