The United States has passed two executive orders prohibiting American companies from doing business with WeChat and TikTok.
The order comes into effect in 45 days, after the deadline set by president Trump for Microsoft and TikTok-owner Bytedance to hammer out a deal for a takeover of the platform's US operations.
The proposed ban on Tencent-owned WeChat could be more significant. The super app boasts more than a billion users worldwide, including users inside the US that the service to communicate with their families back home in China.
Tencent is a investor in US firms like Tesla, Reddit and Spotify, and also owns a 48% share of Epic Games, maker of Fortnite. Shares in Tencent fell 9% in Hong Kong after the order was issued.
“Additional steps must be taken to deal with the national emergency with respect to the information and communications technology and services supply chain,” said Trump.
“The spread in the United States of mobile applications developed and owned by companies in the People‘s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States.“
In July, the US House of Representatives voted to ban federal employees from downloading TikTok on government-issued devices.
Why is this happening?
- TikTok’s US user data is stored in the US and its biggest investors come from the US, but the Trump government believes the platform is sharing information with the Chinese government, citing China’s establishment of a sweeping new national security law for Hong Kong.
- The US wants to follow the example of India; the country’s Ministry of Electronics and Information Technology has placed a blanket ban on 59 mobile apps from Chinese companies that it said “engaged in activities prejudicial to sovereignty and integrity of India, defence of India, the security of the state and public order”.
- Some believe the US is wary of the potential of Chinese tech giants such as TikTok, WeChat and Weibo, expanding beyond their borders.
- In China, the likes of Twitter, Facebook, Google and YouTube are banned.
- TikTok generated revenue of $5.6bn during the first quarter, growth of 130% year-on-year, and in April surpassed 2bn downloads across both iOS and Android devices, according to Sensor Tower.
- During Q1 alone, TikTok saw installation numbers of 315m – the largest download figure for any app to date in a single quarter. That surge was, in part, driven by the global Covid-19 lockdowns, but also by advertising – mainly through Snap – to build its young user base. It has caught the attention of older users, too.
- TikTok’s rival Facebook is under heavy pressure from its core advertisers to change its moderation policies on hate speech. Bytedance, on the other hand, has taken a more proactive approach; last year it was the first platform to ban political advertising.
- A group of TikTok users conspired to embarrass Trump on the re-election campaign trail, when thousands registered fake sign-ups for a rally in Tulsa, Oklahoma – a feat they attempted to repeat in New Hampshire – resulting in half-empty rallies.