US President Donald Trump signed two executive orders banning US transactions between the US and TikTok owner Bytedance and WeChat owner Tencent. The orders, which take effect in 45 days, require the two companies to comply with US regulations, failure to which, according to CNN, they will cease operations in the US.
The executive orders cite concerns over national security, alleging that TikTok captures location and browsing data that can be potentially used for blackmail and corporate espionage.
“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” reads the first executive order.
In response, Tiktok reiterated that it had not shared data with the Chinese government, arguing that the executive order undermines global business. The company says that it will pursue remedies to make sure the rule of law prevails, including going to court. Speaking on the executive order, a Tiktok statement says:
“…it sets a dangerous precedent for the concept of free expression and open markets. We will pursue all remedies available to us 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 US courts.”
Last week, Microsoft reported that it expects to close the TikTok deal by September 15th, a few days before the executive order takes effect. Then, Microsoft promised to purchase the service in the US, Canada, Australia and New Zealand and revamp security features. TikTok says that it agreed to the full sale of its US business.
“We even expressed our willingness to pursue a full sale of the US business to an American company,” TikTok says in a statement.
The backlash on the grounds of safety is not unprecedented, given a similar ban in India. However, the prohibition on transactions between the US and WeChat’s Tencent is shocking and might have unintended effects on US companies. While WeChat is mostly used by members of the Chinese diaspora, the parent company is heavily invested in the US. Tencent has various shareholding in US companies like Warner Music, Tesla, Spotify, Epic games and Riot games.