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Trump steps up Chinese tech war with new TikTok and WeChat executive order

Suban Abdulla
Trump told reporters on Air Force One he would use emergency powers to ban TikTok. Photo: Drew Angerer/Getty
Trump told reporters on Air Force One he would use emergency powers to ban TikTok. Photo: Drew Angerer/Getty

US president Donald Trump has signed executive orders that ban US businesses from doing any transactions with the Chinese owners of TikTok and WeChat.

The announcement comes as Microsoft (MSFT) is in talks to buy the US arm of TikTok owner Bytedance, ahead of the 15 September deadline set by the US president.

The new orders targeting TikTok owner, Bytedance and WeChat owner Tencent, where signed late on Thursday and will come into place in 45 days.

Trump’s orders cite legal authority from the National Emergencies Act and International Emergency Economic Powers Act.

The Trump administration said that WeChat and TikTok pose “significant” threats to US residents, and that TikTok in particular may spread disinformation beneficial to the Chinese Communist party.

READ MORE: What TikTok talks with Microsoft mean for UK and London HQ

In another showdown with Beijing, Trump said that the US “must take aggressive action” in the interest of “national security” in efforts to purge “untrusted” Chinese apps.

Under the orders, all transactions with WeChat involving the app are blocked, but it’s not yet clear whether this extends to a broader ban on dealings with owner, Tencent. The order against TikTok bans all transactions in which owner, ByteDance, or subsidiaries have an interest.

The text of the order alleges that TikTok’s data collection could allow China to track US government employees to carry out corporate espionage or gather information that can be used to blackmail them.

On Thursday, the US senate voted unanimously to approve a bill prohibiting federal workers from using TikTok on government-issued devices, amid fears of data collection.

WeChat’s parent, Tencent owns a 48% share of Epic Games, the maker of Fortnite, as well as investments in a number of US companies such as Spotify (SPOT), Tesla (TSL) and Reddit.

READ MORE: Microsoft reveals talks to buy TikTok US, Canada, Australia and New Zealand

Over the past couple of years, China has also banned major US tech companies, such as Facebook and Google (GOOG) from operating in the country.

China’s communist party maintains strict regulation on which US websites and social media sites are accessible in the country – blocking those it banned behind its wall of internet censorship.

Earlier this week, Trump said that he would support the sale of TikTok's US operations to Microsoft as long as the US government got a "substantial proportion" of the sale price.

ByteDance, whose last valuation of $78bn (£61bn) makes it the world's most valuable start-up, is behind the app that is dominating the lives of millennials and generation Z. It only launched in September 2016 but, outside China, it has already amassed 300 million active users and 1.4 billion total installs to date.

WeChat, which has over 1.2 billion active monthly users is the Chinese version of WhatsApp, Facebook, Instagram, PayPal (PYPL), Uber (UBER), and Tinder, under one ecosystem.

The tension between the US and China weighed on European stocks on Friday.