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Trump Targets Chinese Apps with Executive Orders
President Trump issued two executive orders targeting Chinese apps on Thursday. This comes in a move that will likely further inflame tensions between the U.S. and Beijing.
The executive orders will impose new restrictions on two of China’s biggest social media apps, including WeChat and TikTok. Effective in 45 days, the orders would bar U.S. persons and persons subject to U.S. jurisdiction from transacting with the Chinese owners of the apps. The restrictions could ultimately prevent U.S. citizens from downloading either application from Apple or Google’s app stores.
A Threat?
Trump issued the edicts via two separate executive orders. The first targeted TikTok, claiming the app poses an economic and national-security threat to U.S. interests. China’s authoritarian government has a major ownership stake in ByteDance, TikTok’s owner. With this, federal officials believe the communist regime has carte blanche access to user data.
The order reads, “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.”
TikTok has stated publicly that it would never surrender U.S. user data, but Trump is understandably skeptical. After all, the firm is dealing with a totalitarian communist regime. Therefore, it would have little to no legal recourse if Chinese authorities demanded user data. In fact, reports the Chinese Communist Party is firmly entrenched in the top tiers of ByteDance management.
A recent investigative report from the Epoch Times found 138 CCP members are employed at ByteDance’s headquarters office, and most of them are in management positions or technological roles. If the CCP decided it wanted to breach TikTok’s’ user data, it’s unclear how the company would stop it. Beijing has never hesitated to take an underhanded route to get what it wants.
A Problem for China
Wall Street declines in premarket trading after Trump targets Chinese apps with executive orders#stocks #futures $DJIhttps://t.co/8beSm1TApj
— baha (@bahabusiness) August 7, 2020
The TikTok order is getting most of the limelight due to its U.S. popularity. However, the order against WeChat and its parent company, Tencent Holdings Ltd, could be an even bigger concern for Beijing. Most of WeChat’s 1.2 billion users are in China, but it’s also a key communication tool for many foreigners with personal and professional contacts in China. Plus, Tencent is a much more established company with a long track record of towing the CCP party line. The order could deal a major blow to the Tencent and its global growth ambitions.
For comparison, Tencent is worth nearly $700 billion in terms of market capitalization. Additionally, the firm generated more than $54 billion in revenues in 2019. On the other hand, privately-held TikTok is valued in the tens of billions range and is not profitable globally. However, TikTok says it has about 100 million monthly users in the U.S., and the app has developed a cult following in the U.S.
Tencent also has a vast mobile gaming portfolio in the U.S. which includes favorites like “League of Legends.” It also has significant stakes in leading U.S. game developers Activision-Blizzard and Epic Games Inc. At this point, it’s unclear whether the order, which particularly targets WeChat transactions, would impact Tencent’s other businesses.
Actions and Security Concerns
The president isn’t the only one taking aim at Chinese apps. The Senate unanimously passed a bill banning federal employees from using TikTok on their government-issued devices due to national security concerns, and the House is exploring a similar measure. However, both chambers must approve the legislation before it can become law.
The U.S. is beginning to realize that China can’t be trusted. Any promise they make can’t be taken on face value. The Chinese government’s actions in Hong Kong and the South China Sea are proof of the CCP’s disingenuous stance on foreign affairs. America can’t allow the Chinese government to have open access to U.S. user data, and TikTok’s promise that it would never hand over such information amounts to nothing. Trump’s order hits the nail on the head and, hopefully, undermines China’s digital expansionism.
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