With the US government pushing out a total ban on popular Chinese app TikTok till November 12, Wall Street analysts are interpreting the latest developments as a sign that the more hawkish voices on the Trump administration side are likely beginning to warm towards inking a TikTok-US partnership deal and that the US government wants to give the negotiating sides time to hammer out an agreement.A
The US Commerce Department announced on Friday that it will ban the download of Chinese apps TikTok and WeChat on Sunday, including a complete ban on the use of the latter, citing national security and data privacy concerns. For TikTok, though, a total ban will kick in only on November 12.
Chinese company ByteDance, which owns TikTok, is hoping to clinch a deal with the White House that would allow it to continue functioning in the US, where it has 100 million users, mostly posting goofy videos that capture the zeitgeist.
Earlier this week, Oracle had confirmed that it was the winning bidder for TikTok and chose to go with the description of TikTok’s “trusted technology provider” rather than sale or acquisition. Oracle was among the pool of bidders, including Microsoft and Walmart, to buy TikTok’s American operations. Details remain sketchy at this point in time.
Until Thursday evening, Trump continued to say that his administration had spoken to Walmart and Oracle Corp and that Microsoft “is still involved”. Microsoft on September 13 had announced that its bid was rejected by ByteDance.
Overall, there’s just a lot more “idiosyncratic risk”, Sean Darby, Jeffries Global Equity strategist, told Bloomberg Business in the context of the simmering US-China tensions across trade, 5G and now TikTok.
Commerce Secretary Wilbur Ross, during his remarks on Fox Business Network, left the door open to the prospect of a TikTok deal, saying that access to the app may be possible if safeguards are put into place.
The Commerce Department lists four broad categories of transactions that are “prohibited” for WeChat as of September 20 and and as of November 12 for TikTok: “Any provision of internet hosting services enabling the functioning or optimisation of the mobile application in the US; any provision of content delivery network services enabling the functioning or optimization of the mobile application in the US; any provision directly contracted or arranged internet transit or peering services enabling the function or optimization of the mobile application within the US; any utilisation of the mobile application’s constituent code, functions, or services in the functioning of software or services developed and/or accessible within the US.”
Earlier this week, Trump said he was stunned that the US Treasury could not get payment for signing off on the deal.
“Amazingly, I find that you’re not allowed to do that. If they’re willing to make big payments to the government they’re not allowed because… There’s no legal path to doing that… How foolish can we be,” Trump said.
Security experts have raised red flags that TikTok, even if it snags a US partner, would have information on 100 million TikTok users in the US, and therefore remains a risky player.
Trump said this week that he is opposed to ByteDance retaining a majority stake in TikTok.