President Donald Trump has issued executive orders effectively banning Chinese video sharing app TikTok and messaging service WeChat in a dramatic escalation of tensions with Beijing that sent stocks tumbling worldwide overnight.
Using national emergency powers, Trump on Thursday night signed the orders, which give TikTok parent ByteDance 45 days to sell the app, and bar WeChat from the U.S. after the same time period.
The orders also banned any U.S. transactions with WeChat owner Tencent, a major Chinese company that owns significant shares in Tesla, Snap Inc, and Reddit. Tencent shares fell as much as 10 percent in Asian markets overnight, and it was not immediately clear whether the company would be forced to divest its U.S. holdings.
Coming days after the United States ordered China to vacate its consulate in Houston, the move looks set to trigger retaliatory action by Beijing, stoking fears that a ‘Silicon Curtain’ is descending between the two superpowers.
It raised the possibility that Beijing could retaliate by banning major U.S. tech companies from China, a major market for some of the top American firms.
‘China could block Apple or Microsoft from China. The information sector growingly looks divided into two camps. We could be seeing just the beginning of an information technology war,’ said Nana Otsuki, chief analyst at Monex Securities.
‘Investors in the West would have to hesitate to invest in China, missing growth opportunities there when there are not many investment opportunities except perhaps except for Nasdaq.’
Amid growing security and privacy concerns about the TikTok’s Chinese ownership, Microsoft has reportedly been in talks to acquire TikTok in a firesale, and Trump’s order only increases pressure on ByteDance to get the deal done quickly.
Any company still doing business with ByteDance in 45 days will be subject to sanctions, Trump said. If a sale does not go through before the September 20 deadline, the order would effectively bar the use of TikTok throughout the U.S.
In a separate executive order, Trump issued a similar ban on the Chinese-owned messaging service WeChat, accusing the app of funneling personal information to the Chinese Communist Party.
WeChat owner Tencent owns Tencent Pictures, a Chinese film distributor and production company which has two major movies set for release in 2021 – Paramount’s Top Gun: Maverick and Sony’s Monster Hunter.
It has also been involved in producing blockbusters such as Wonder Woman and Terminator: Dark Fate.
Tencent also has investments in gaming companies including a 40 percent investment in Fortnite maker Epic Games and five percent in Activision Blizzard which makes Call of Duty. It owns 100 percent of Riot Games which makes League of Legends.
Trump’s executive order claims that TikTok ‘may also be used for disinformation campaigns that benefit the Chinese Communist Party,’ and specifically cites TikTok videos that ‘spread debunked conspiracy theories about the origins of the 2019 Novel Coronavirus’.
The order states that Tik Tok has reportedly been downloaded over 175 million times in the United States and over one billion times globally.
The order also states ‘TikTok also reportedly censors content that the Chinese Communist Party deems politically sensitive, such as content concerning protests in Hong Kong and China’s treatment of Uyghurs and other Muslim minorities.’
‘The United States must take aggressive action against the owners of TikTok to protect our national security,’ it adds.
Along with the executive order, Trump sent a letter to the House speaker and Senate president explaining the move.
The letter states that TikTok ‘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 – potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage,’ it cont….