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The latest developments in the saga between the White House and TikTok include executive orders that could set a ‘dangerous precedent’ and reports that Microsoft is considering a major acquisition.
In just a week, US president Donald Trump announced plans to ban TikTok completely in the US, before easing his stance and giving Microsoft the green light to acquire the Chinese app’s US business.
Now, Trump has signed executive orders against TikTok and another of China’s most popular apps, WeChat. The orders state that these apps will be banned in the US in 45 days, unless they are sold by their Chinese parent companies.
In the orders, Trump said that this step was necessary to deal with the “national emergency” posed by the two apps, adding that the spread of mobile apps developed and owned by companies in China continues to “threaten the national security, foreign policy and economy” of the US.
He claimed that both apps automatically collect large amounts of user data, and that this data collection “threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information”.
“To protect our nation, I took action to address the threat posed by one mobile application, TikTok,” Trump’s order continued. “Further action is needed to address a similar threat posed by another mobile application, WeChat.” The orders will take effect on 20 September.
‘Sets a dangerous precedent’
In response, TikTok said it was “shocked” by the executive order and that it has tried to engage with the US government to provide a solution to the concerns that have been raised.
“What we encountered instead was that the administration paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses,” the company continued.
TikTok, which has 100m users in the US, said that collection of data is industry standard for thousands of mobile apps around the world and that it has never shared user data with the Chinese government.
“This executive order risks undermining global businesses’ trust in the United States’ commitment to the rule of law, which has served as a magnet for investment and spurred decades of American economic growth,” the company added. “And it sets a dangerous precedent for the concept of free expression and open markets.”
Legal details
The executive orders cite legal authority from the National Emergencies Act and the International Emergency Economic Powers Act.
Industry commentators have said that due to the unprecedented nature of the decision, it is likely that the legality of the orders will be challenged, while TikTok said it will pursue all remedies available to ensure the company is treated fairly – “if not by the administration, then by the US courts”.
In India, TikTok’s parent company ByteDance is currently disputing a decision made by the Indian government in July, which banned TikTok, WeChat and 57 other Chinese apps on the basis of national security concerns.
Earlier this week, ByteDance boss Zhang Yiming sent a letter to employees informing them that the company could face more difficulties as anti-Chinese sentiment increases abroad. Zhang said that the US government tends to lash out at Chinese companies with “harsh criticism”.
TechCrunch described Trump’s executive orders as “vague and confusing”, noting that US secretary of state Wilbur Ross will not identify what transactions are covered until the orders take effect in September.
The documents do not provide details on how the decision will affect the apps in the US or the impact it may have on Tencent, WeChat’s parent company. Tencent has many other holdings in the US; one of its best-known subsidiaries is Riot Games, the company behind Valorant and League of Legends. It has also taken stakes in Spotify, Reddit, Tesla, Warner Music, Universal Music and Epic Games.
TechCrunch warned that Trump may have “inadvertently dealt a blow to some of the biggest tech and entertainment companies in the US backed by Tencent”.
Vying for a bigger chunk
While Trump was busy with executive orders, the Financial Times reported leaked information suggesting that Microsoft might want to purchase TikTok’s global operations, instead of the US operations deal that was previously reported.
This week, Microsoft confirmed it was in negotiations with TikTok’s parent company, ByteDance, and that it “fully appreciates” the importance of addressing Trump’s security concerns.
According to the Financial Times, Microsoft is pursuing a plan that would include the acquisition of TikTok’s operations in all regions where the app is available, including India and Europe. Prior to the ban, TikTok’s biggest market was India – where the app had more than 600m downloads, according to Sensor Tower data.
The reports of a global acquisition come from a source at ByteDance, who said that Microsoft is interested in a larger acquisition after considering the difficulty of separating the Chinese firm’s back-office functions and to ensure that TikTok users in one country could still use the app if they travelled to another.
Earlier this week, Trump had suggested that it’s “probably easier to buy the whole thing than to buy 30pc of it”.
