TIKTOK RESPONDS TO TRUMP'S BAN
President Trump went forward his with threat to ban TikTok in the U.S.
On Thursday evening, he issued an executive order demanding ByteDance sell TikTok and Tencent sell their international messaging app, WeChat, to U.S. approved companies within the next 45 days, or the apps will be banned in the U.S.
TikTok has responded with a statement that says, in part: "We are shocked by the recent Executive Order, which was issued without any due process. 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. 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.”
In a White House press release, Trump cited national security, foreign policy and economic threats from mobile apps based in China as his reasoning for going after ByteDance's TikTok. Ironically, Trump targeted TikTok's disinformation campaigns, "such as when TikTok videos spread debunked conspiracy theories about the origins of the 2019 Novel Coronavirus."
Both apps, according to The White House, benefit the Chinese Communist Party and put U.S. users' data at risk.
TikTok says it intends to continue to operate and “will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly–if not by the Administration, then by the US courts.”
While the TikTok ban was expected, Trump threw a curveball by punishing Tencent's WeChat. Along with WeChat, Tencent owns all or a portions of many popular U.S. entities in the gaming and music space.
In the gaming world, Tencent owns majority or minority stake in the following: Riot Games (100%; League of Legends), Supercell (84%; Clash of Clans), Epic Games (40%; Fortnite), Activision Blizzard (5%; Call of Duty, World of Warcraft) and Ubisoft (5%; Assassin's Creed), among others.
In music, Tencent has a 10% share in Universal Music, a 4% stake in both Sony and WMG, along with a 9% stake in Spotify. Spotify also holds a 9% share in Tencent Music.
Will Trump and the U.S. government's lack of trust in Tencent affect the broader entertainment industry? Any further actions taken against Tencent could lead to digital and financial chaos, globally.
Meanwhile, Microsoft is reported to be having ongoing discussions to acquire TikTok from ByteDance and American tech monster Facebook launched their TikTok copycat app, Reels, through Instagram on Thursday.
UPDATE: The aftermath of Trump's executive order was felt immediately. Tencent's stock took a nose dive, plunging as much as 10% in the morning session in Hong Kong. The stock recovered slightly to a loss of 5% after U.S. officials clarified the order applies specifically to the WeChat app, not the parent company. But the impact was enough to garner a loss of over $30b for Tencent in value.
