White House to Set Boundaries for WeChat, Bloomberg Crackdown on TikTok

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© Bloomberg. The TikTok app icons of Tencent Holdings Ltd. WeChat and ByteDance Ltd. residents of doing business with Chinese-owned TikTok and WeChat apps from 45 days, citing the national security risk of leaving Americans’ personal data exposed. Photographer: Andrew Harrer / Bloomberg

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(Bloomberg) – The Trump administration is debating the scope and effective date of its bans on Chinese social media apps WeChat and TikTok and will make its decisions public later this month, according to people close to it folder.

The Commerce Department, which will implement the bans for national security reasons, is drafting documents to clarify what specific transactions will be banned between Chinese companies and U.S. companies – and when those bans go into effect, the people said. .

The decisions will be made public in the Federal Register around Sept. 20, said one of those familiar with the discussions who asked not to be named because the deliberations are private. It is not known whether the bans will go into effect as soon as this publication or whether there will be a transition period to give companies time to comply.

Details on how the WeChat ban from Tencent Holdings (OTC 🙂 Ltd. will work are critical to the bottom line of US companies doing business with the Chinese company. At issue is whether the restrictions, which President Donald Trump first announced on August 6, will apply only to U.S. transactions or will also extend to operations globally, which could reduce sales in a wide range of US activities.

The date of September 20 comes at the end of the 45-day period defined in that initial order.

While some U.S. officials have signaled to the business community that their operations in China will not be affected, Bloomberg has signaled that there are conflicting views among members of Trump’s cabinet and that the end result is not certain.

Transition period

The companies have been pressing the administration to clarify whether they will be given a transition period before the ban takes effect or whether a September 20 announcement goes into effect immediately.

The scope and timing of the ban are linked, according to one of the people. For example, if the administration broadly enforced the restrictions on all Tencent transactions, including its games, companies would have a longer time frame to comply. If the ban is narrow, companies may have less time or no transition period at all, the person said.

Ultimately, the final decision to extend the ban outside the United States rests with Trump, according to people familiar with it. A Commerce Department official said the agency was not commenting on internal deliberations.

Company reaction

The administration is taking comments from companies into account and aims to develop clear guidance to avoid unintended consequences, one of the people said.

If the ordinance applies to U.S. businesses operating in China and U.S. citizens there in addition to transactions in the U.S., it will hurt U.S. businesses’ competitiveness and their ability to communicate in China, according to a survey. by the American Chamber on August 26 to members. trade in Shanghai.

Almost half of the member firms that participated said they would see lower revenues and 11.3% of them predicted the declines would be more than 30%.

Separately, Trump ordered TikTok owner ByteDance Ltd. to divest its U.S. business by mid-September to avoid being banned in the U.S. ByteDance is reviewing offers from U.S. companies, including Oracle Corp (NYSE :). and Microsoft Corp (NASDAQ :)., Which has partnered with Walmart (NYSE 🙂 Inc. Any sale must address the Trump administration’s national security concerns, including with respect to data collection and privacy.

The president has the option of not imposing a ban on Sept. 20 if TikTok addresses the national security risks outlined in the original executive order, one person said, which could include selling its U.S. operations to an approved buyer. .

White House trade adviser Peter Navarro this week reiterated that both apps pose threats to national security and said “there will be more” the administration will seek out.

On conference calls with major U.S. tech companies last week, Robert Blair, who leads the interagency effort for commerce, listened to their concerns about the scope of the order, but declined to provide details, people said. close to discussions.

Blair, who was special representative for international telecommunications policy to the White House before joining the Commerce Department in April, also said during the call with the companies that he could not say if there would be a period of transition, they said.

© 2020 Bloomberg L.P.

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