Messenger app WeChat and short-video app TikTok have been taken on August 7, 2020 in this picture picture near the flag of China and America. REUTERS / Florence Lou / Illustration
Executive Orders Announced Thursday and Effective 45 Days After Trump Administration Raises Efforts to Flag This Week “Unbelievable” Chinese Apps from US Digital Network, Calling Tencent Holdings Limited (0700.HK) WeChat and Byktens’ popular Tiktok “significant danger.”
China on Friday said the companies comply with US laws and regulations and warned that the United States “must bear the consequences” of its action.
“The US is using national security as an excuse and using state power to persecute non-American businesses. This is just a propaganda. “Foreign Ministry spokesman Wang Wenbin told in a media briefing.
Tiktok has come under attack from US lawmakers over national security concerns over data collection in the form of mistrust between Washington and Beijing. On Sunday, Reuters reported that Trump had Microsoft Corp. (MSFT.O) 45 days to complete the purchase of Tickcock’s US operations.
“We are surprised by the recent executive order,” Tikotok said in a statement on Friday. “.
The ban on US transactions with Tencent, one of the world’s largest Internet companies, further fractures the global Internet and dissects long-lasting relationships between tech industries in the United States and China.
“It’s a breakdown in the digital world between the US and China,” said James Lewis, a technology expert at the Center for Strategic and International Studies, a Washington-based think-tank.
“Of course, China will retaliate.”
On Wednesday, US Secretary of State Mike Pompeo expanded a program called “Clean Network” to prevent various Chinese app and telecom companies from accessing sensitive information on US citizens and businesses.
Trump’s new orders appeared in sync with Pompeo’s announcement, Lewis said.
A spokesperson for Tencent said, “We are reviewing the executive order to get a full understanding.”
Bytdance declined to comment.
WeChat has been downloaded relatively 19 million times in the United States, data from the sensor tower showed. In China, however, application is as ubiquitous as a medium for services as diverse as games and payments. It is also a common platform to communicate with individuals and businesses outside China.
America’s social media and messaging services are like Facebook Inc.FB.O) WhatsApp and Messenger are blocked in China, where a “great firewall” prevents citizens from freely accessing the worldwide web, and where online communications are routinely monitored and censored.
US concerns about China’s tech industry recently focused on telecommunications equipment vendor Huawei Technologies Co. Ltd. [HWT.UL]. As relations have soured on economic and human rights issues, it has approved several other Chinese tech firms.
Tencent is the biggest target yet. It is the second most valuable company in Asia after Alibaba Group Holding Limited (BABA.N) With a market capitalization of $ 686 billion, and is one of the largest social media and video game companies in the world. It opened the California Gaming Studio in the summer and owns minority bets at several gaming and Internet firms worldwide, including US messaging app operator Snap Inc. ()SNAP.N).
Trump’s order narrowed the Asian stock markets on Friday, with Tencent shares falling to 10.1% to compensate for some of its losses in afternoon trade. [MKTS/GLOB]
Yuan CNH = a barometer of Sino-US relations since its biggest decline since the United States expelled China from its consulate two weeks before Houston. [CNY/]
Trump issued orders under the International Emergency Economic Powers Act, a law that gives the administration broad power to allow US firms or citizens to repeatedly trade or conduct financial transactions with accepted parties.
Commerce Secretary Wilbur Ross will identify the covered transactions after the orders go into effect in mid-September.
Tensions have been brewing between the two powers for months, with the United States taking issue with China to combat the outbreak of the novel Coronavirus and curb independence in Hong Kong. The increasingly aggressive posture towards China comes as Trump bids for re-election in November.
Trump said that this week he would support Microsoft’s efforts to buy Tiktok’s US operations if the US government received a “substantial portion” of the proceeds. Still he said he would ban the popular app on September 15, though some Republicans have raised concerns about a possible political collapse.
The app can be used for disruptive campaigns that benefit the Chinese Communist Party, and the United States must “take aggressive action against the owners of TikTok to protect our national security,” Trump said in an order said.
In another, Trump stated that WeChat “automatically receives vast swats of information from its users.” This data collection threatens to allow the Chinese Communist Party access to Americans’ private and proprietary information. ”
The United States is not alone in its concern about Chinese Internet apps: WeChat and TikTok were mostly Chinese apps out of 59 that became a threat to “sovereignty and integrity” in India in June.
The WeChat order would effectively prohibit the United States “to the extent permitted under applicable law” by any person in relation to any transaction related to WeChat, or any property subject to the jurisdiction of the United States, Tencent Holdings With limited ”
It was not clear whether the approval would affect Tencent’s other holdings in the country.
Meanwhile, WeChat users in the United States were increasingly evaluating alternatives.
“Banning WeChat Is Against America’s Liberal Principles,” a 33-year-old Jenson Ma in Los Angeles obtained US citizenship in November. “Most of our family and friends are in China. This will cause significant inconvenience to our lives. ”
Ma is sharing her account information for WhatsApp and messaging rival Line Corp (3938.T) With friends and family, fearing that he may lose access to WeChat.
The order “calls TikTok a national security threat,” said Derek Scissor, an expert on Sino-American economic relations at the American Enterprise Institute think-tank. “Either we have missed the threat for three years or it has become just one and as of now we are waiting for 45 days.”
Reporting by David Sheperdason and Alexandra Elper; Additional reporting by Mohammed Jargam, Echo Wang, Nandita Bose, David Shepperson, Jane Lee, Colin Qian, Tom Westbrook and Kate Cadell; Writing by Jonathan Weber; Editing by Muralikumar Anantharaman and Christopher Cushing