TikTok's story is getting more challenging, adding WeChat to the mix
posted Sunday Aug 9, 2020 by Scott Ertz
Last week, President Trump told a group of reporters that he was looking to ban TikTok in the coming days. The ban is over national security issues after it was revealed the company was copying data from users without letting users know. This comes after months of companies and governments around the world banning the app in various forms. Many companies have banned the app from corporate phones. The US and others banned its use on government phones and, in some cases, banning employees and the military from using it entirely.
This week, the Executive Order, which comes under the International Emergency Economic Powers Act, was signed. It gives ByteDance, the owner, 15 days (until September 15) to sell at least their US operations to a US company or face an outright ban in the country. This will obviously affect Google and Apple, who both distribute the app through their mobile stores. Both stores would likely be forced to remove the apps from the store, and access would be closed.
In an unexpected twist, President Trump also wrote a similar order against WeChat, another Chinese-owned communication platform. While not particularly popular in the US, the service does feature an option to transfer money between users. Unfortunately for WeChat, and parent company Tencent, money transfer in the US is highly regulated and WeChat falls outside of that regulation. As a result, the company is in a similar position to ByteDance - sell the brand or get out.
That is a noticeably short period of time for such a big deal to be finalized, especially for WeChat, who likely did not see this coming and had no time to prepare. For TikTok and ByteDance, they have been in discussions for a short while, trying to decide what their future might look like. They've been actively in discussion with Microsoft, but also Twitter, according to The Wall Street Journal. While Twitter has more experience with consumer-facing social media, Microsoft has done great things with LinkedIn.
The interesting aspect of all of this is on the WeChat side of things. The surprise of including WeChat in the ban has likely been even stronger for the company itself. However, this could be a bigger issue than it looks Tencent is a controversial investor with its fingers in a lot of pots. These include Epic Games, Activision, Universal Music, and Tesla. As tensions heat up with China, shining a spotlight onto Tencent through WeChat could be the beginning of the company's troubles in the US.
If Tencent is forced to divest from its US holdings that could potentially involve national security, there could be massive results. For example, Tesla has a large hand in artificial reality, which could potentially come under fire.