Caixin
Sep 18, 2020 09:45 PM
BUSINESS & TECH

Update: U.S. to Block Downloads of WeChat, TikTok Starting Sunday

The Tencent Holdings Ltd. WeChat app is displayed in the App Store on a smartphone in an arranged photograph taken in Arlington
The Tencent Holdings Ltd. WeChat app is displayed in the App Store on a smartphone in an arranged photograph taken in Arlington

The U.S. will block new downloads and updates of Chinese-owned social apps WeChat and TikTok as of Sunday while banning cash transfers through WeChat in the U.S., the Commerce Department said Friday in a statement.

All business transactions related to WeChat and its parent company Tencent Holdings Ltd. within the U.S. will be prohibited starting Sunday, according to the statement. TikTok was given a Nov. 12 deadline for a complete ban as the company is negotiating a deal with Oracle Corp. to satisfy the Trump administration.

If the national security concerns are resolved by Nov. 12, the prohibitions on TikTok may be lifted, the Commerce Department said.

The Trump administration has accused the two popular apps of posing national security risks and passing user data to China, allegations that the companies and the Chinese government denied.

ByteDance’s TikTok said it was “disappointed” by the order and disagreed with the Commerce Department. The company has already committed to “unprecedented levels of additional transparency and accountability well beyond what other apps are willing to do,” it said in a statement.

“We will continue to challenge the unjust executive order, which was enacted without due process and threatens to deprive the American people and small businesses across the U.S. of a significant platform for both a voice and livelihoods,” TikTok said. The short-video platform has sued the Trump administration challenging the order.

In an emailed statement, Tencent said it will continue communicating with the U.S. government seeking a long-term solution. The company said WeChat has complied with local laws and rules in its overseas operations and met the strictest standards for privacy protection.

The Commerce Department cited President Donald Trump’s Aug. 6 executive order to restrict the two companies. Trump said details would come at the end of the 45-day timeframe laid out in his initial order.

The order doesn’t apply to operations or cash transfers outside the U.S., which had been a concern of some U.S. tech companies, the department said.

“WeChat U.S., for all practical purposes, will be shut down,” Commerce Secretary Wilbur Ross said on Fox Business. Americans will still be able to use WeChat for payments in China, he said.

“The basic TikTok will stay intact until Nov. 12,” although users won’t be able access upgrades starting Sunday night, he said.

The Commerce restrictions place the onus on Apple Inc. and on Alphabet Inc.’s Google to delete the TikTok and WeChat apps from their U.S. app stores by Sept. 20. While people who already have the app on their phones won’t be affected, the apps will be degraded over time if users can’t get access to updates.

The ban could also affect U.S. companies that allow payment via WeChat as the restrictions prohibit services through the WeChat mobile app for transferring funds or processing payments within the U.S.

Additionally, the ban could impact the looming deal between ByteDance and Oracle as it will prohibit internet hosting services from assisting with the “functioning or optimization” of TikTok in the U.S. from Nov. 12, if national security concerns are not resolved.

Oracle said Monday it would serve as the “trusted technology provider” to TikTok according to the proposal submitted by ByteDance to the U.S. Department of the Treasury. The American software giant would help TikTok localize its data processing and offer security solutions to ensure business compliance, a person close to ByteDance previously told Caixin.

In its statement, TikTok said that the proposal included commitments allowing American government oversight of U.S. data security. “An American technology provider would be responsible for maintaining and operating the TikTok network in the US, which would include all services and data serving US consumers,” it said.

The Commerce Department held a number of briefings in late August with companies and lobbying groups seeking to determine what the potential ban could mean to their companies, according to people familiar with the matter. Some American tech companies pressed the Trump administration to let them continue to do business with the Chinese business through their operations in Asia and to allow American citizens to use the apps there.

Bloomberg contributed to this story.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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