Updated: August 9, 2020 10:33:00 am
US President Donald Trump on Thursday (August 6) signed an executive order banning any transactions by the US or by US citizens on the Chinese apps TikTok and WeChat. The order will be effective 45 days from August 6.
Trump said that the Ministry of Electronics and Information Technology in India had, while announcing the ban on 59 Chinese apps “asserted that they were stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers which have locations outside India”, and that the US too, therefore, needed to ban any transactions on such apps as a protective measure.
What does the order mean in practical terms?
The order states that 45 days from now, no US citizen or any citizen on whom US laws apply, will be allowed to carry out any transactions with either ByteDance or any of its subsidiaries, which include TikTok, or with Tencent Holdings, which owns WeChat. The executive order also bans any transactions with the owners of these apps.
This means that users of TikTok and WeChat will not be able to spend any money on or through the app to purchase anything. Although users will be able to use the app and still upload their videos on it, companies will not be able to use it for brand promotions or use influencers to advertise their products.
The executive order could be a blow for TikTok. The US has been a big market for the app, from where it has been generating a lot of revenue. According to reports, ByteDance had expected a revenue of $500 million in 2020 from the US alone.
WeChat, which is a ‘super app’ that allows users to do just about everything from chatting to hailing rides to buying things online, is not very popular in the US. However, Tencent Holdings had recently planned to expand its presence in the US and had set up a new office in the country. The executive order can put paid to those plans of the company.
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Why were transactions on the two apps banned?
Citing India’s decision to ban 59 Chinese apps, President Trump in his order said that “mobile applications developed and owned by companies in the People’s Republic of China” continued to threaten the national security of the country, and therefore it was important to take swift action.
Trump said that the Ministry of Electronics and Information Technology in India had, while announcing the ban on 59 Chinese apps “asserted that they were stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers which have locations outside India.” The US too, therefore must ban any transactions on such apps to protect itself.
In his executive order, Trump also took on China for its aggression against Uyghurs and other Muslim minorities, and the apps from that country censoring any news on these.
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What happens to the Microsoft-TikTok deal now?
Global software giant Microsoft was reportedly in talks to buy TikTok’s operations in the US, Australia, Canada, and New Zealand. The company’s Chief Executive Officer Satya Nadella had even met Trump to discuss the plan. Later, executives from the US administration hinted that Microsoft had time until September 15, after which the app in its current form would be banned from the United States.
With the executive order giving a window of 45 days, Microsoft, if still interested in buying TikTok either wholly or partially, will have to complete the deal by September 22. WeChat could also look to hive off its US operations to another company, and exit the country.
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