Trump moves to ban TikTok, WeChat with executive orders

President Trump has issued executive orders that could ban TikTok and WeChat within 45 days. Yahoo Finance’s Akiko Fujita discusses with Alexis Christoforous and Brian Sozzi.

Video Transcript

ALEXIS CHRISTOFOROUS: The other big story in addition to jobs today, the US and China. President Donald Trump issuing an executive order that would ban TikTok and WeChat within the US. This ban would take place in 45 days if these companies are not sold by their Chinese-owned parent companies. We've got Akiko Fujita, joining us now. Good morning, Akiko. What else can you tell us about this Executive Order?

AKIKO FUJITA: Yeah, good morning to you. This executive order essentially renews pressure on TikTok and Microsoft to get a deal done, as you point out, within the 45 days because we now have that clock officially ticking. The president and that executive order specifically pointing to TikTok's data collection and reported censorship of politically sensitive information as the key reasons behind the Executive Order.

He says the data collection threatens to allow the Chinese communist party access to American's personal information and proprietary information, potentially allowing China to track the location of federal employees and contractors, [INAUDIBLE] dossiers of personal information for blackmail and corporate espionage. TikTok hitting back strongly today saying, that in their words, they will pursue all remedies possible, including the US courts, to ensure that the rule of law is not discarded and that the company and users, in their words, are treated fairly.

Here's part of this statement here from TikTok. They say this Executive Order risks undermining global business trust in the US commitment to the rule of law, which has served as a magnet for investment and spurred decades of American economic growth. And it sets a dangerous precedent for the concept of free expression and open markets. Now in addition to this Executive Order against TikTok, the White House also issuing an Executive Order against Tencent's WeChat.

This is a messaging app, or a do everything app, if you will, that has 1.2 billion users largely in China, but there is a potential here to have a more significant impact than that ban on TikTok, largely because the app is really the key line of communication for millions of Chinese expats that live abroad. Unlike TikTok, WeChat has not been subject to a review from CFIUS, or the Committee on Foreign Investment into the US, as far as we know.

It's still unclear this morning if the Executive Order only applies to Tencentt's WeChat, the social media app itself, or the games that Tencent also owns, because remember, Tencent not only owns Riot Games, but also has stakes in Activision, Blizzard, and Epic Games. But we're talking about a 45 day timeline right now for both of these apps, and certainly more pressure and more tension between the US and China.

ALEXIS CHRISTOFOROUS: And we saw, Akiko, Tencent holdings a stock down 10% in Asia overnight. Before we let you go, it looks like the White House also going after Chinese listed companies here on US exchanges. They're going to have to agree to extensive audits or get delisted, right?

AKIKO FUJITA: Yeah, and this is something we've been expecting for some time. The Senate's already passed a bipartisan bill and this White House now recommending this. Essentially this would subject US listed Chinese companies to an audit from the public accounting oversight board. This is something that every company has to go through, but Chinese companies have been able to skirt this audit because they operate as foreign private insurers that are subject to regulation in their home countries.

Now Chinese law requires financial records to remain within the country, but this recommendation essentially says that they will be subject to the same laws, the same rules. It would allow currently listed companies three years to comply, but companies that are now coming to market would be immediately subject to the rule. And the expectation here is that this could lead to a potential exit of these companies.

We've already seen those secondary listings from Alibaba, NetEase, JD.com, all doing the secondary listing in Hong Kong. And no question, a lot of companies that are looking to come to market are now potentially looking at listings that are closer to home and potentially a little more friendly.