Is the Trump executive order intended for TikTok’s global business? The key is to see how to define the transaction.

U.S. President Donald Trump, citing the U.S. International Emergency Economic Powers Act, signed two executive orders saying that TikTok and WeChat pose a threat to U.S. national security and that any U.S. person or entity will be banned from doing any transactions with TikTok, WeChat and its Chinese parent company after 45 days. The executive order says u.S. individuals or entities that violate the order will face sanctions 45 days after they are issued. But for how to define so-called “transactions”, the COMMERCE Secretary should make it clear 45 days after the executive order is issued.

Is the Trump executive order intended for TikTok's global business? The key is to see how to define the transaction.

The executive order has not only sparked an outcry in China, but has also been widely debated overseas, with speculation about how the “deal ban” will be enforced, how widespread and how deep it will be.

Some analysts believe that Trump and the U.S. government could ban any U.S. affiliate from any business activity with Byte Dance.

More pessimisticly, under the presidential decree, the U.S. government would even be able to order Apple and Google’s global app stores to launch all of Byte Dance’s products. The command can even be covered by the App Store in China.

This means that the US is not only sniping at Byte Dance’s TikTok’s U.S. operations, but also trying to pressure all Of ByteDance’s products.

How widespread is the ban?

Specifically, what trump signed about the executive order against Tik Tok.

The executive order gave a pre-emption of TikTok’s background, saying that ByteDance’s short video app, TikTok, has been downloaded more than 175 million times in the United States and more than 1 billion worldwide, and that it has access to information from users, including location data, browsing and search history, and censors content on the platform.

The executive order also notes that the Indian government has recently banned TikTok and other Chinese applications nationwide, which it says are stealing user data from unauthorized means and distributing it to servers outside India.

As a result, the executive order “concluded” that the United States must take strong action against TikTok’s parent company to protect national security.

The executive order provides for prohibited acts by:

“The following acts will be prohibited 45 days after the signing of this Executive Order: any person subject to U.S. jurisdiction, or any entity, conducts any transaction (transaction) with ByteDance or its subsidiaries, and any company with an interest.”

“Forty-five days after the date of the order, the US secretary of commerce will make clear the ‘transaction’ referred to in the terms.”

“Any transaction sedituated or avoided by any Person in the United States who evades or avoids such prohibitions in the United States may result in a violation of the prohibition under this Order, and such transactions shall be prohibited.”

“U.S. persons are any U.S. citizen, a foreigner permanently resident in the United States, and organizations and individuals in the United States and within jurisdictions.”

In response to the allegations in the executive order, on the afternoon of August 7, Byte Dance responded in a statement that the “report” cited in the executive order was unknown or unsubstantiated, and that there was no substantive basis for concerns that the app “may” be used for false propaganda. In addition, TikTok’s questionable data collection practices have been the norm for thousands of mobile programs around the world.

“We have made it clear that TikTok has never shared user data with the Chinese government and has never censored content upon request.”

Byte Dance said that if the U.S. government does not treat justice, Byte Dance will go to U.S. courts.

Mr. Trump’s ban was not unexpected.

TikTok, which has gained notoriety in overseas markets, has been in the u.S. political scene since 2019.

In October 2019, Senate Democratic Leader Chuck Schumer and Republican Senator Tom Cotton announced that they had written to Joseph Maguire, the u.S. National Intelligence Agency’s executive, asking for a formal national security risk assessment of TikTok.

TikTok has done considerable efforts to address overseas challenges about the privacy of its user data, including setting up an external committee of experts to advise and advise on the platform’s content management policies; repeatedly promising that TikTok’s U.S. user data will be stored in the U.S. and backing up in Singapore; and bringing in a number of prominent overseas executives, including Kevin Mayer, a former senior executive vice president and chief strategy officer at Disney.

But in the eyes of American politicians, TikTok’s Chinese background means a threat.

In recent days, Mr. Trump has publicly said he is considering banning TikTok altogether in the United States.

After Microsoft stepped in to buy parts of The TikTok’s U.S. business, Mr. Trump threatened to ban the popular app in the U.S. if ByteDance doesn’t sell TikTok to Microsoft (or other U.S. companies) after 45 days.

Some analysts believe that Mr. Trump’s latest presidential decree shows that his core goal is to block the entire ByteDance company and prevent Byte Dance from becoming a global company, rather than simply blocking or aggressively selling TikTok’s U.S. business. Mr. Trump would not want ByteDance to preserve its global operations by selling its North American business to address its legal problems in the United States.

In other words, even if ByteDance and Microsoft have a deal for TikTok’s U.S. business, TikTok’s operations in the rest of the world, and even ByteDance itself, will still face a hard time lifting the alarm.

This will require a clearer explanation of the “deal” in the ban.

In a letter to employees released on August 4th, ByteDance founder Zhang Yiming said the focus was not on CFIUS’s forced sale of TikTok’s U.S. business to a U.S. company on the grounds that the musical.ly merger and acquisition was a threat to national security (which is unreasonable, but still in a legal process, and as a business we have no choice but to comply with the law), but that’s not the other side’s purpose, or even the other doesn’t want to see it.

The real purpose is to hope for a full ban and more…

In India, the prohibited losses have exceeded $6 billion.

TikTok, which carries Byte Dance’s global layout ambitions, is almost the furthest internet product in recent years in overseas markets and is seen as a strong rival to US social giants such as Facebook.

According to a reporter, The two most important markets for TikTok overseas are India and the United States.

At the end of June, the Indian government took the lead in making a case against China’s Internet products, blocking 59 Chinese applications, including TikTok and WeChat, under the pretext of “security” considerations.

At the time, ByteDance, which has invested more than $1bn in India over the past few years, is now almost entirely sold out of the Indian market, resulting in losses of more than $6bn, according to People close to ByteDance.

If sold or banned in the United States, ByteDance’s globalization will inevitably enter a dark moment.

From a financial point of view, however, TikTok’s overseas commercialisation process is a little later than domestic, and it does not currently generate an over-represented share of revenue.

According to data released recently by Sensor Tower, a mobile app and Mobile game intelligence platform, in July 2020, The Voice and TikTok attracted more than $102 million in global App Store and Google Play, of which about 89% came from China, the second largest in the U.S. market but contributed only 6%.

It’s hard to predict what will happen in the future. New difficulties, tough games and willows are likely to emerge.

Before ByteDance, Chinese internet companies were treated similarly.

In March 2019, CFIUS (U.S. Foreign Investment Board) asked Kunlun Universal (25.380, -1.02, -3.86%) (300418) to sell the previously acquired U.S. gay dating app Grindr, citing “threats to U.S. national security.”

In May of that year, Kunlun Wanwei announced the signing of a National Security Agreement with the U.S., which will no longer have access to Grindr’s “sensitive data”, and Grindr’s board of directors will need to be approved by CFIUS to establish a security director and commit to selling Grindr by June 30, 2020.

In March 2020, the deal was finalized.

Now, Trump is “leaving” Byte Dance’s “window period” for a shorter period.

How to deal with it.

Byte Dance also has no intention of sitting on the bench.

On August 7, Byte Dance issued a statement saying, “This executive order undermines the trust of global businesses in The Rule of Law commitment in the United States.” For decades, it was it that attracted foreign investment and boosted U.S. economic growth. The order sets a dangerous precedent that is contrary to freedom of expression and open markets. We will do everything possible to ensure that the rule of law is not abandoned and that our companies and users are treated fairly. If the U.S. government fails to treat us fairly, we will go to U.S. courts. “

On the same day, Chinese Foreign Ministry spokesman Wang Wenbin said in response to a reporter’s question, get a lot of help, lost the way to help. The U.S. side will not hesitate to harm the interests of the vast number of users and companies in the United States, will be self-interest above market principles and international rules, wanton political manipulation and political repression, in exchange for their own moral decline, damage to the national image and international trust deficit, and ultimately will be self-inflicted results. We urge the U.S. side to listen carefully to the rational voice of the U.S. and the international community, correct the wrong practices, refrain from politicizing economic issues, stop cracking down on enterprises, and provide a fair, just and non-discriminatory environment for the normal operation and investment of enterprises in various countries.

On the afternoon of August 7, Xinhua published a signed article by Yang Jiechi, a member of the Political Bureau of the CPC Central Committee and head of the Office of the Foreign Affairs Work Committee of the CPC Central Committee.

Yang wrote that China-U.S. cooperation can be a major event for the benefit of both countries and the world, and that the confrontation between China and the U.S. will certainly be a disaster for both countries and the world. The two sides should rise to the top, strengthen cooperation, adhere to cooperation and avoid confrontation, which will benefit both countries as well as the world.