President Donald Trump signed an executive order Thursday blocking all transactions with ByteDance, the China-based company that owns TikTok, in 45 days.
Trump cited a “national emergency with respect to the information and communications technology and services supply chain” as the reason for the moratorium, escalating a dispute with TikTok that could force an acquisition of some or all of the social app by Microsoft or another company.
BREAKING: President Trump just issued an executive order "on Addressing the Threat Posed by TikTok." It takes effect in 45 days, prohibits "any transaction" with ByteDance, the Chinese company that owns TikTok, and will almost certainly face legal challenges. pic.twitter.com/Ma9XOfYgOB
— Hunter Walker (@hunterw) August 7, 2020
Trump initially announced his intention to ban TikTok last week but backed off of the plan after speaking with Microsoft CEO Satya Nadella about the American software giant’s plan to acquire TikTok’s business in the U.S. and a handful of other countries. Nadella and Trump agreed that acquisition talks would conclude by Sept. 15.
The new executive order, set to take place five days after that deadline, adds pressure to the negotiation talks. It also indicates that the president, who does not always follow through on bold propositions, means business.
The unusual executive order will almost certainly face legal challenges, however.
Update: In a statement Friday, TikTok said it was “shocked” by the executive order.
“For nearly a year, we have sought to engage with the US government in good faith to provide a constructive solution to the concerns that have been expressed,” the company said. “What we encountered instead was that the Administration paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses.”
TikTok warned the move by Trump “sets a dangerous precedent for the concept of free expression and open markets.”
Trump also signed an executive order related to WeChat, owned by China-based tech giant Tencent.
Trump also signed an EO related to WeChat, saying: “WeChat automatically captures vast swaths of information from its users —threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information.“
— Jennifer Jacobs (@JenniferJJacobs) August 7, 2020
Incredible to see this unfolding. To me WeChat is a much bigger deal. TikTok was made because the Great Firewall cut China off, but WeChat is one of the few apps that actually spans the filters and links communities within and outside China. Of course there will be workarounds… https://t.co/kDgPjAy9hS
— Paul Mozur 孟建国 (@paulmozur) August 7, 2020
Trump's WeChat ban prohibits transactions with owner Tencent Holdings and its subsidiaries. Tencent owns @riotgames (@LeagueOfLegends) and 40% of @EpicGames (@FortniteGame). And lot of other very popular game makers. This ban just became a LOT larger (if actually implemented). https://t.co/xXq1cbwth2
— Kurt Opsahl (@kurtopsahl) August 7, 2020
Initially, Microsoft expressed an interest in taking over the app in the U.S., Canada, New Zealand, and Australia but The Financial Times reported Thursday that the company has discussed the possibility of buying TikTok’s business in Europe and India as well.
Microsoft has acknowledged Trump’s concerns that ByteDance could be sharing information about users with the Chinese government, and said it would address the issue as part of the process. ByteDance and TikTok have denied the allegations.
Mergers and acquisition experts are debating TikTok’s price tag, estimating it could sell for anywhere from $10 billion to $50 billion.
Microsoft is well-positioned to pay top dollar for the coveted app. Its market value is at $1.6 trillion, and its cash, short-term investments stood at $136 billion as of June 30. The company’s largest acquisition to date was the $26.2 billion purchase of professional social media network LinkedIn in 2016.
