Abu Dhabi, UAEThursday 29 October 2020

Donald Trump to block US downloads of TikTok and WeChat

Ban on new US downloads comes as Beijing-based ByteDance is reportedly planning a TikTok IPO on a US stock exchange

US President Donald Trump onboard Air Force One on Thursday. AFP
US President Donald Trump onboard Air Force One on Thursday. AFP

The US Commerce Department said it will issue an order that will bar people in the US from downloading Chinese-owned video-sharing app TikTok and messaging app WeChat starting on Sunday.

Commerce officials said the ban on new US downloads of TikTok could be still rescinded by President Donald Trump before it takes effect late Sunday as TikTok owner ByteDance races to clinch an agreement over the fate of its US operations.

Commerce officials said they will not bar additional technical transactions for TikTok until November 12, which gives the company additional time to see if ByteDance can reach a deal for its US operations.

"The basic TikTok will stay intact until November 12," Commerce Secretary Wilbur Ross told Fox Business Network.

The department said the actions will "protect users in the US by eliminating access to these applications and significantly reducing their functionality."

TikTok was rolled out in the US in 2018 after ByteDance’s $1 billion purchase of lip-synching app Musical.ly. Reuters
TikTok was rolled out in the US in 2018 after ByteDance’s $1 billion purchase of lip-synching app Musical.ly. Reuters

The Commerce Department order will "deplatform" the two apps in the US and bar Apple’s app store, Alphabet's Google Play and others from offering the apps on any platform "that can be reached from within the US," a senior commerce official said.

The order will not ban US companies from doing businesses on WeChat outside the US, which will be welcome news to US firms like Walmart and Starbucks that use WeChat's embedded 'mini-app' programmes to facilitate transactions and engage consumers in China, officials said.

Meanwhile, Beijing-based ByteDance is reportedly planning a US initial public offering of TikTok Global, the new company that will operate the popular short video app, should its proposed deal be cleared by the US government, people familiar with the matter said.

An IPO of TikTok would be one of the technology sector's biggest-ever stock market debuts, given that the app was recently valued by ByteDance investors at more than $50 billion (Dh183.5bn).

It would further reduce ByteDance's stake in the company to appease US officials who want to see the Chinese firm loosen its grip on the video app.

The filing of the IPO would be on a US stock exchange and could come in about a year, the sources said.

ByteDance is racing to clinch an agreement with the White House that will stave off a US ban on TikTok that Mr Trump has threatened could happen as early as next week.

Mr Trump ordered ByteDance last month to divest TikTok amid US concerns that the personal data of as many as 100 million Americans who use the app is at risk.

This week, he reiterated he was opposed to ByteDance retaining majority ownership of TikTok.

The White House and ByteDance have agreed to a term sheet on some aspects of a deal, although Mr Trump has not yet approved it, one of the sources said.

Top ByteDance US investors, Oracle and potentially Walmart would hold at least a 60 per cent stake in TikTok's US operations, the source said.

White House Chief of Staff Mark Meadows said the situation was still fluid.

"There's no definite proposal that the president's being asked to consider or reject at this point," Mr Meadows told reporters.

The new company, dubbed TikTok Global, will have a majority of American directors, a US chief executive and a security expert on the board, the source added.

Oracle has agreed to eventually own a 20 per cent stake in the company, according to the source. If Walmart also successfully negotiates acquiring a stake, its chief executive, Doug McMillon, would get a seat on TikTok Global's board, the source said.

Mr Trump said that his administration talked with Walmart and Oracle on Thursday but "nothing much has changed" regarding a deal.

He added, without giving details, "I guess Microsoft is still involved." Microsoft said on Sunday its offer for TikTok was rejected.

"We'll make a decision soon," Mr Trump said.

There is no certainty over whether Mr Trump will sign off on the agreement. It was also not immediately clear what assets TikTok Global would own beyond the app's assets in the US.

ByteDance has also offered to create 25,000 new jobs in the US as it seeks to win Mr Trump's confidence for a deal.

Updated: September 18, 2020 05:10 PM

Editor's Picks
THE DAILY NEWSLETTER
Sign up to our daily email