President Donald Trump signed executive orders on Thursday that will prohibit U.S. transactions with Chinese technology giants Tencent and ByteDance. The orders, which go into effect in 45 days, will effectively ban Tencent's WeChat app and ByteDance's TikTok app. The executive order escalates the already-tense tech war between the U.S. and China.
President Trump invoked the International Emergency Economic Powers Act and the National Emergencies Act to ban the social media apps from China.
The Trump administration argues that a ban of the apps is necessary because of security concerns with TikTok, a short-form video app, as well as WeChat, a social media and mobile payment app.
The executive order says, "The spread in the United States of mobile applications developed and owned by companies in the People's Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States."
"TikTok automatically captures vast swaths of information from its users, including Internet and other network activity information such as location data and browsing and search histories," the executive order states. "This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.
"Like TikTok, WeChat automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information," the second executive order says. "In addition, the application captures the personal and proprietary information of Chinese nationals visiting the United States, thereby allowing the Chinese Communist Party a mechanism for keeping tabs on Chinese citizens who may be enjoying the benefits of a free society for the first time in their lives.
"The United States must take aggressive action against the owner of WeChat to protect our national security," the executive order stated.
The owner of WeChat is Tencent Holdings, an internet, artificial intelligence, and entertainment behemoth. Tencent is the largest video game publisher in the world.
Before Trump signed the executive order, Tencent was valued at $686 billion, making it the world's eighth-largest company by market capitalization. However, WeChat's potential loss of the U.S. market erased $34.6 billion from Tencent's value.
The executive orders did not specify what kinds of transactions would be prohibited. The executive order noted that after 45 days, Secretary of Commerce Wilbur Ross "shall identify the transactions" that will be banned.
Transactions could include American companies advertising with the two Chinese companies, or it could mean that app stores, such as the Apple App Store and Google Play, are prohibited from offering the apps.
TikTok was the second-most popular free app in the world in 2019. More than 100 million Americans have already downloaded the TikTok app, and there are 80 million daily active TikTok users in the United States.
The executive order did not stipulate what penalties will be levied out to any person or company that violates the order.
TikTok said it was "shocked" by Trump's executive order, and claimed it was "issued without any due process." The Chinese tech company declared that it would take legal action.
"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," TikTok's statement said. "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."
"And it sets a dangerous precedent for the concept of free expression and open markets," TikTok added. "We 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."
China's foreign ministry said it firmly opposed the executive orders against the Chinese companies, according to Reuters.
Ministry spokesman Wang Wenbin told reporters during a press briefing on Friday that Beijing will defend the legitimate rights and interests of Chinese businesses. He warned that the U.S. would have to bear the consequences of its actions.
"The U.S. is using national security as an excuse and using state power to oppress non-American businesses. That's just a hegemonic practice. China is firmly opposed to that," Wang said.
On Thursday, the Senate unanimously passed a bill to ban TikTok on government-issued devices. Earlier this year, the Transportation Security Administration, U.S. Navy, and Army prohibited TikTok from being used on government-issued phones.
Last Friday night, President Trump said that he was going to ban TikTok. That declaration sparked rumors that Microsoft was interested in purchasing the Beijing-based social media platform's U.S. operations.
On Sunday, Microsoft confirmed the rumors and admitted they were not only interested in U.S. operations, but also TikTok's platforms in Canada, Australia, and New Zealand. The Financial Times reported that Microsoft has discussed the possibility of acquiring TikTok's business in Europe and India as well.
Microsoft, a company valued at $1.6 trillion, owns the Xbox video game brand, networking site LinkedIn, and messaging service Skype.
Trump's executive order comes on the same day that Instagram launched Reels, a new feature that gives users augmented reality effects and audio on videos, much like TikTok already does. Facebook, which bought Instagram for $1 billion in 2012, saw its shares rise 6% on Thursday following the launch of Instagram's TikTok alternative.