Trump's TikTok, WeChat ban can cause problems to US tech firms: Here's how

The wording of the first order effectively puts Microsoft and ByteDance on the clock to finish their deal negotiations for TikTok's US operations by the already stipulated Sept 15 target date

It finally happened. After a month of threatening to do so, President Donald Trump issued executive orders that will ban the popular Chinese-owned social media apps TikTok and WeChat in the U.S. on national security concerns. There are still some unknowns around the language and implementation of the decrees, and there’s a chance they get dialed back later during trade negotiations between the U.S. and China. Whatever happens, there will likely be lasting negative ramifications — and not just for Chinese firms, but for American technology companies as well.

Trump’s orders, signed late Thursday, have a 45-day lag. They prohibit any person subject to U.S. jurisdiction from dealing with TikTok’s Beijing-based owner ByteDance Ltd. and Chinese internet giant Tencent Holdings Ltd. in transactions related to its WeChat app. The wording of the first order effectively puts Microsoft Corp. and ByteDance on the clock to finish their deal negotiations for TikTok’s U.S. operations by the already stipulated Sept. 15 target date. But the WeChat ban order may be a bigger threat as there doesn’t seem to be an obvious way out before the deadline.

The threat to the Chinese apps is clear. But the details cited inside the orders may cause future headaches for the biggest U.S. tech firms, too. For example, Trump noted how TikTok captures location data and user-activity information that could “potentially” be used for blackmail and corporate spying. This pertains to all U.S. social media apps, too. Further, the president cited how TikTok videos spread “debunked conspiracy theories about the origins of the 2019 Novel Coronavirus” as one of his reasons to ban the app. Similar conspiracy videos also sprout up often on Facebook Inc. and Google’s YouTube platforms. The problem is, the use of such justification opens the door for other countries around the world to use similar rationale to ban U.S. apps within their borders. After all this time and nearly a year of investigation, where is the compelling evidence against these apps? It isn’t in these orders.

Big Tech’s leaders are worried about these implications. According to a BuzzFeed News report, Facebook CEO Mark Zuckerberg said a TikTok ban would be “a really bad long-term precedent,” adding “it could very well have long-term consequences in other countries around the world.” Earlier this week, Microsoft founder Bill Gates told Bloomberg News that businesses need to know the rule set for commerce when they make investments in the U.S. and wondered about the timing of the TikTok ban threats. “If this is such a clear thing why wasn't it clear three months ago, six months ago?,” he said.

In addition to governmental risk, there may be a consumer backlash in foreign countries. By going after ByteDance and Tencent, two of the most respected Chinese internet success stories, Trump’s actions may spark a nationalistic backlash against buying American products and services in the Asian country. Obviously, Apple Inc.’s iPhone and App Store businesses in China are top of mind, along with Starbucks Corp. and Intel Corp. that have large operations in China.

The restrictions, if implemented, will also impose mental and financial hardship on vast swath of Americans who rely on the apps to communicate and make their livelihoods. Many e-commerce entrepreneurs, aspiring musicians and influencers rely on TikTok as their most effective marketing channel amid this pandemic. And WeChat is a critical messaging tool for Chinese immigrants to communicate with their families overseas. The numbers are massive: TikTok says 100 million Americans use their app, while WeChat has 19 million daily active users in the U.S., according to Apptopia. For a White House that has repeatedly complained in recent months about the censorship of conservative voices, it seems pretty hypocritical to shutter the access of millions of Americans, many of them Trump supporters with large followings.

That is not to say there aren’t legitimate national security issues with TikTok and WeChat. But there is a better way to hold China accountable for concerns over its intellectual property and data-privacy practices. The U.S. should pursue a multi-lateral partnership with its allies based on strong legal frameworks and build a clear compelling evidence-based case against China.

Unfortunately, this administration’s strategy is the opposite, using haphazard, seemingly arbitrary decision-making and preying on people’s fears and paranoia, and in the months leading up to an election. A policy that lashes out without a well-thought-out end game will not be as effective, leading to unintended consequences. The U.S. needs to do better.