TikTok: First Banned, then Sold

In the technology dispute with China, the White House had planned to ban the TikTok and WeChat apps. Beijing’s initial response came promptly: the Chinese government sought to counter the bans with its own sanctions list. However, on Sunday, the situation changed dramatically.

China’s Initial Reaction

China announced its punitive measures in the dispute over US sanctions against Chinese companies. The government in Beijing put a mechanism for sanctions that they claimed threaten “the People’s Republic’s national security.”

According to the Ministry of Commerce, these sanctions were directed against “foreign companies, organizations, and individuals.” In addition to security concerns, China cited violations of “internationally recognized economic and trade rules” as possible triggers.

Accordingly, fines, import, export restrictions, and investment and entry bans can be imposed. The planned list of sanctioned companies will help “safeguard national sovereignty and security and development interests, uphold a fair and free international economic and trade order, and protect the legitimate rights and interests of Chinese companies, other organizations or individuals,” so the Chinese government. Company names were not mentioned. However, the state-run Chinese newspaper Global Times reported in May that such sanctions could affect US companies such as Boeing, Cisco, Apple, and Qualcomm.

Beijing’s move is aimed at US companies after the US government announced that the download of the Chinese apps TikTok and WeChat would be banned in the US. The ban was initially supposed to come into force on Sunday The US move was justified by threats to national security according to the Department of Commerce in Washington.

For the more than one hundred million TikTok users in the US, the move means that they will no longer receive any updates, although they should still be able to use the app until November 12. For WeChat, the ban applies immediately when the ruling comes into force.

The TikTok Grace Period

The grace period for TikTok was supposed to enable the app to be sold to a US company. Corresponding negotiations with the technology group Microsoft have dragged on. Twitter is said to have been interested in a purchase. Most recently, the software company Oracle was considered a possible buyer. As a compromise, a takeover of 60 percent of TikTok by Microsoft, Walmart, and Oracle had been under discussion.

US Secretary of Commerce Wilbur Ross said if there was no sale by November 12, TikTok would be shut down. However, if concerns about TikTok could be dispelled by then, the order could be lifted again.

TikTok initially sought legal action against this and has lodged a complaint with a federal court in Washington to block the download lock. In it, she accuses Trump of having exceeded his powers. His actions have political reasons; TikTok did not pose a threat to national security.

‘China Will Take the Necessary Steps’

The Chinese government called the procedure harassment and immediately threatened the countermeasures it has now announced. “If the US insists on going its own way, China will take the necessary steps to protect Chinese companies’ legitimate rights and interests firmly,” she said.

The United States also has a list of sanctioned companies. In this way, the US government has, for example, excluded the Chinese mobile phone company Huawei from setting up 5G networks in the US and put it in a difficult position by banning the use of Google software.

A Dramatic Turn of Events

On Sunday, however, the situation changed drastically because of an agreement between TikTok and the United States was reached.

Shortly before an announced download stop for the app came into effect, President Trump agreed to a new agreement. The US government, therefore, postponed the download ban planned for Sunday by at least a week. The Secretary of Commerce announced that the decision was made “in view of the recent positive developments.”

TikTok could thus continue to be operated in the USA. The app’s global business should be located in the United States and employ 25,000 people, Trump said. “It will be a brand new company,” Trump said, adding “it will have nothing to do with China.”

The New American TikTok

According to Trump, two American companies will play a leading role at TikTok Global: Oracle and the supermarket giant Walmart. Accordingly, it is planned that Oracle will become a technology partner for the Chinese company’s US branch, and Walmart will become a trading partner.

“We are pleased that TikTok, Oracle, and Walmart’s proposal will resolve the US government’s security concerns and clarify questions about TikTok’s future in the US,” said a TikTok spokeswoman.

As for WeChat, a US Judge temporarily halted the administration’s WeChat ban on Sunday. The Commerce Department has yet to respond to the injunction.