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US to ban transactions with ByteDance and WeChat in 45 days

734 points| baylearn | 5 years ago |asia.nikkei.com

1265 comments

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[+] tannhaeuser|5 years ago|reply
I don't get it. It's US companies standing to loose their stronghold (near monopoly) on social, advertisement, and other forms of monetizing the web if the US creates a precedent for "national security" in this way, as in "we're welcoming social networks and free speech as long as it benefits the US and can be searched without warrant." Quite predictably, governments all over the world will be pressurized to question why they should give US companies (bred by teethless US antitrust) a free pass to destroy their publishing industry. Publishers themselves will put this onto the agenda in their own best interest. The French are already on the fence to create new digital tax legislation after EU/US negotiation have been aborted by the US side. Maybe hurting Google, Facebook, Twitter & co is seen as desired collateral damage?
[+] cwhiz|5 years ago|reply
China doesn’t allow many western companies to operate in China. Why should the US allow Chinese companies to operate in the US??

This is an outrage that we should not allow. They steal our intellectual property, create state funded companies that are given monopoly access to their markets, and then unleash their stolen products on the world market. And if American or other western companies try to compete on the ground in China, they can’t.

Would WeChat or TikTok exist if western chat and social media apps were given total access to Chinese markets??? Extreme doubt.

The eventual end result of bending over to China is a world where all of the goods, services, and software are owned by China. This imbalance that China has created is unworkable and cannot be allowed to continue.

[+] hintymad|5 years ago|reply
Isn't this just reciprocity? China banned a long list of media companies: FB, Google, YouTube, Twitter, Netflix, and every traditional media. Now the US is banning two apps made in China.
[+] puranjay|5 years ago|reply
What's stopping Volkswagen from lobbying Germany to ban Teslas because all the cameras in it pose a "national security risk"?

This is, by all account, a shortsighted move

[+] pelliphant|5 years ago|reply
Are you still trying to find logic in trumps actions?

The popular opinion on reddit seems to be that this is just trump being told that tiktok users where responsible for his failed tulsa rally, and personally, that explanation seems just as likely as any of the other explanations given here...

[+] jb775|5 years ago|reply
You're overthinking this. It's one thing for a popular app to come from another country. It's another thing when that country has complete control over business decisions, is your biggest global competitor, and is known to play dirty.
[+] gr2zr4|5 years ago|reply
What still amazes me after 5 (?) years since Snowden's revelations it's how EU hasn't banned US social platforms yet.
[+] snarf21|5 years ago|reply
Doesn't Tencent own interests in all of these game companies? Does mean that even things like Fortnite are illegal now?
[+] donw|5 years ago|reply
The US lost that near-monopoly years ago.

Broadly speaking, I think we're witnessing the birth of three distinct global powers.

One is centered on the US, and consists (broadly) of Canada, Mexico, the rest of Latin America, the Commonwealth nations, Japan, Korea, Israel, and Taiwan.

An American civil war would destabilize this to a large degree, so we'll have to see if that plays out.

Edit, since people seem confused: This would be an absolute nightmare scenario, but it is in the realm of possibility, and would massively change international political structures.

Another is centered on Germany and France, and controls Europe, parts of Africa, and the Middle East.

Finally, we've got China, which will likely control a big chunk of Africa and Southeast Asia.

Russia is a tough one, but I see them siding with China or Europe.

Contested territory will include Taiwan, bits of the Middle East, and an escalation of the border disputes with Japan. Likely bits of eastern Europe, plus conflicts on the China/India border...

What a time to be alive.

Edit: Just because somebody says that something is a possibility doesn't mean that they want that thing to happen.

Me coming down with a case of COVID is a possibility. In fact, I'm operating under the assumption that I will be infected at some point, regardless of precautions (masks, hand-washing, stepping back from my competitive doorknob-licking career, etc.)

That doesn't mean I want a case of Horribly Shitty Virus With Not-Yet Well-Documented Complications.

I'm just prepared for the worst (as best as I can), and hoping for the best (because why not?)

[+] baybal2|5 years ago|reply
> and other forms of monetizing the web if the US creates a precedent for "national security"

By far not a precedent. USA has been doing this even with its Western European "allies" for as long as NATO existed.

As for Chinese cos. Forced sales at firesale prices are not unprecedented too: Sany

[+] WhyNotHugo|5 years ago|reply
What I also don't get is why they'd be so stupid. Just tax the companies locally and make a profit.

As long as they contribute to the local economy, provide a service, and operate within the bounds of the law, that should suffice.

Banning them is just worse for everyone.

[+] siruncledrew|5 years ago|reply
What I don't get about the fervor the Trump administration is placing on banning Chinese apps over national security is that: i) on one hand there were Congressional hearings held 2 weeks ago where Trump said "Big Tech (FAANGs) were too big and needed to be broken up", and ii) on the other hand the US gov wants to now further cement American companies as de facto 'monopolies' for the world.

There's already various international issues with CCP-affiliated companies, but there must be some ulterior motive to go after TikTok and WeChat with such urgency right now, as opposed to any other time in the last 4-5 years.

* Personally, I think the result of what happens to TikTok, WeChat, or US app stores over Chinese apps doesn't matter in the end. What matters is that demands on Chinese apps to come to a deal with the US by September gives Trump more firepower to work with - if the deal happens, Trump paints himself as a US savior from Chinese meddling; if the deal doesn't happen, Trump blames China entirely as the bully and pushes America to retaliate.

[+] bharathlohray|5 years ago|reply
Advertising won't stop. It is just someone else who will make the money.
[+] jariel|5 years ago|reply
a) Publishing is altogether a different situation.

b) Small nations can't feasibly have their own social app networks to any degree of scale.

c) The US is not China. For the most part FB is not a national security risk, whereas the Chinese apps could become that. China uses it's apps to observer and control every aspect of behaviour in China - the wherewithal, mans, intent etc..

d) This is tit for tat: China does not allow foreign social media in it's house.

I'm not so sure I agree with this, but it's not so outlandish.

[+] TheOtherHobbes|5 years ago|reply
Election. Team Trump believes it needs to take a firm stand on something or other.

There are much more obvious national security threats, but this is kindergarten tit for tat politics for ratings. So don't expect any action on those.

Or any understanding of second order consequences for the US. Or a coherent national IT security strategy, which is what the US and EU really need.

[+] FooBarWidget|5 years ago|reply
The Trump administration is stirring up China hate as a means of getting reelected. Anything goes. The national security concerns may or may not be factual, but Trump doesn't care about that one bit.

It baffles me that people cannot see this very obvious fact. Just proof that his strategy is working.

[+] mark2996|5 years ago|reply
I really think its as simple as Trump hates TikTok because 95% of TikTok users are not Trump supporters. Every thing else is just excuses/rationalization for the ban (although some of the reasons may actually be good, they aren't what Trump cares about)
[+] chvid|5 years ago|reply
You have posted the reason why this and the TikTok ban is most likely a bluff.

This (ordering companies such as Apple and Google to sever all business with TikTok and WeChat's owners and by extension removing them from all app stores) is a cannon that only can be fired once and will be so loud that it will fundamentally damage the centralised app store model.

This is similar to the muslim travel ban and will be overturned by some court and the Trump administration probably expect this. But does this anyway for the purpose of political communication.

[+] krn|5 years ago|reply
> if the US creates a precedent for "national security" in this way

It can be a real threat to national security[1]:

> Thursday's order alleges that TikTok "automatically captures vast swaths of information from its users," such as location data and browsing and search histories, which "threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information -- potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage."

It has nothing to do with other Western nations. It's about protecting your citizens from aggressive foreign states that operate based on completely different values.

I would consider going even further, and banning all Chinese researchers from the top US schools[2]:

> Seventy-one institutions, including many of the most prestigious medical schools in the United States, are now investigating 180 individual cases involving potential theft of intellectual property.

> Almost all of the incidents they uncovered and that are under investigation involve scientists of Chinese descent, including naturalized American citizens, allegedly stealing for China.

[1] https://www.cnn.com/2020/08/06/politics/trump-executive-orde...

[2] https://www.nytimes.com/2019/11/04/health/china-nih-scientis...

[+] president|5 years ago|reply
As you stated, this is about national security, which should be of the utmost urgency and concern. So you think saving the likes of Google, Facebook, Twitter is more important than saving the liberty of citizens and the lives of the overseas dissidents that are being endangered?
[+] supernova87a|5 years ago|reply
Regardless of how I feel about this particular company or transaction, to me this is a bad overreach of presidential power. I guess it's merely a reflection of the incompetence/inaction of Congress to study the matter and do something about it, as is their responsibility.

Why do I say so?

1. The justification for this is that it's a "national emergency with respect to the information and communications technology and services supply chain". Supply chain? Are you kidding me? The permissions given to the executive to declare emergencies for critical goods and services such as related to war time -- these extend to a voluntary communications app? Strains belief, and however you feel, this is not a good precedent to allow.

2. CCP is censoring / monitoring / scraping users' data, so this is a national emergency.... but not for 45 days and then also ok if we can buy the company on our terms.

This is yet another thing I guess time to throw up your hands and say, this is how we live now. One throw-it-against-the-wall proclamation after another.

Even if you're somewhat ok with it, are you really ok with this principle being applied, when someday it may not go how you want, for something you care about?

[+] rapsey|5 years ago|reply
Justifications are meaningless. The US wants to curtail Chinese influence and power, so it finds some mumbo-jumbo to justify it.
[+] techntoke|5 years ago|reply
Does anyone remember when Trump bombed Syria while hosting Xi, and then bragged about how beautiful the chocolate cake was?
[+] paxys|5 years ago|reply
None of these Chinese companies would have grown to what they are today without intense government-enforced protectionism at home, and until China agrees to compete on a fair playing field I'm perfectly fine with them all being banned outside of their firewall.

Would China ever agree to let Instagram, Facebook, YouTube, Snapchat, WhatsApp, Messenger etc. or any new startup operate freely and make money there? It should never have had this one-way economic benefit to begin with.

[+] thewarrior|5 years ago|reply
Some people here are wondering about the implications of this. What this means IMO is that all Chinese investments in SV need to be liquidated at fire sale prices in the next 45 days. Regardless of how people here feel about China this is a huge escalation. The US is inflicting huge losses on Chinese companies for no clear violation of US laws on their part. The pandoras box is now open.

Do countries get to do this to each other whenever they feel like it now ? Can China force Tesla to sell its Chinese operations because Teslas data gathering poses a national security risk ? China has some pretty serious means available to it for escalation. China can ban Boeing from China forcing the US taxpayer to incur serious losses in keeping the company afloat.

The whole thing is pretty stupid overall. Most people don't realize that during the 2008 crisis it was Chinas 500 billion dollar stimulus that kick started demand and pulled the world out of a depression. China and the US are interdependent and hold up the global system upon which global growth depends. If China slows down as a result of all this that reduces global growth. Pushing China to the wall can make them take extreme steps like undercut the entire dollar based financial order leading to mass instability. The US might come out victorious anyway but its not worth the risks. Not to mention a war which if it breaks out could lead to WW3.

Previous attempts to contain China were much more tactful with things like the TPP and the Iran deal. Right now the world is hurtling towards the abyss and most people here don't even realise it.

A meta point I'd like to add is that currently 10 % of the earths population in the "Westosphere" controls 60 % of the worlds wealth. This is untenable in the long term and all this flailing about will not stop a reversion to a more balanced world. Its better that this happen gracefully than in a violent fashion.

[+] danboarder|5 years ago|reply
This is sad, we in the US are losing the little high ground we had and no longer lead by example to bring the world closer together by encouraging free markets and free people. I'm against this protectionist nationalism, it only leads to future conflict.
[+] ekianjo|5 years ago|reply
> no longer lead by example to bring the world closer together by encouraging free markets and free people.

It does not work very well if you are the only nice guy within a group of a--holes. You just end up being beaten up. Free Markets work well if pretty much everyone adopts the same rules of commerce, but China is way beyond that point.

[+] karterk|5 years ago|reply
US is merely reciprocating the policies of CCP: let them allow US companies to compete fairly in China as well.
[+] sreejithr|5 years ago|reply
Not really. There are other developing economies with serious tech sectors like India which operate according to the rules based open market system we have in place.

If the US doesn't take action against Chinese protectionism, why should other countries abide by the rules and give US access to their markets? The US provides China it's market even though China closes it down for everyone.

I think US being soft on China sets a bad precedent.

[+] toto444|5 years ago|reply
> I'm against this protectionist nationalism, it only leads to future conflict.

And unfortunately this is what the top comment preaches and I am very disappointed to see that the more-educated-than-the-average-person readers of HN fall into the trade war / retaliation fallacy.

Trade always benefits both parties. Otherwise they would not start trading in the first place.

[+] baby|5 years ago|reply
I don’t think the US has ever lead by example. Europe has though.
[+] frequentnapper|5 years ago|reply
You need to study up on game theory. Being the only nice guy surrounded by jerks who take advantage of you benefits them and wipes you out.
[+] Shank|5 years ago|reply
According to Sam Dean (LA Times): "Video game companies owned by Tencent will NOT be affected by this executive order! White House official confirmed to the LA Times that the EO only blocks transactions related to WeChat." [0]

So that clears up at least a little of the ambiguity.

[0]: https://twitter.com/SamAugustDean/status/1291576813685108736

[+] gzu|5 years ago|reply
So does this ban transactions with all of Tencent or just those in relation to WeChat? https://www.whitehouse.gov/presidential-actions/executive-or...

  Section 1.  (a)  The following actions shall be prohibited beginning 45 days after the date of this order, to the extent permitted under applicable law: any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd. (a.k.a. Téngxùn Kònggǔ Yǒuxiàn Gōngsī), Shenzhen, China, or any subsidiary of that entity, as identified by the Secretary of Commerce (Secretary) under section 1(c) of this order.
[+] voisin|5 years ago|reply
Is there any precedent for a president to do such a thing? I am completely astonished and dumbstruck that everyone is ok with this.
[+] throwaway64054|5 years ago|reply
The (US-HQ'd) company I work for has a small but significant office in China. We are not a household name, even within tech, so I doubt we'd be a target of any retaliation by China.

However, my worry is this: Whilst we have a lot of really good people in China, we don't do any business in China (and there's no realistic prospect of us doing so). So at this point operating in China seems like a huge exposure to risk for relatively little reward in the long term.

But I don't see an alternative for us. Pull out of China and business continuity would take a huge hit; stay in China and accept the risks & uncertainty.

Basically, I'm torn about the whole situation.

[+] A4ET8a8uTh0|5 years ago|reply
I am going to ignore value judgment over whether it is fair, or whether it even makes sense and am going to jump straight to enforcement framework and EO interpretation.

EO appears to single out two entities WeChat ( Tencent subsidiary ) and TikTok ( ByteDance subsidiary ). EO appears to indicate that the restrictions will be governed by sanctions framework.

Tencent owns a fair amount of gaming outfits so based on ownership, for example, Grinding Gears could be affected since Tencent owns 80% stake there. Gears seems to interpret the order in an optimistic way leaning heavily on phrase 'any transaction that is related to WeChat', but ignores 'with Tencent Holdings Ltd.' and how it is likely going to be interpreted by the banking. In short, Tencent interpretation right now is 'it applies only if it only blocks transactions related to WeChat.'

I personally have less generous read, but if a lawyer could actually weigh in, that would work:P

Original text:

Section 1. (a) The following actions shall be prohibited beginning 45 days after the date of this order, to the extent permitted under applicable law: any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd. (a.k.a. Téngxùn Kònggǔ Yǒuxiàn Gōngsī), Shenzhen, China, or any subsidiary of that entity, as identified by the Secretary of Commerce (Secretary) under section 1(c) of this order.[1]

[1]https://www.whitehouse.gov/presidential-actions/executive-or...

Diclaimer:

I am not a lawyer yo. Don't be an idiot.

[+] cwhiz|5 years ago|reply
The entire western world should treat China exactly the same way China treats them.

Western companies have a difficult time operating in China, but Chinese companies have zero problems operating in western countries. It’s completely unfair and if we follow this to conclusion, the future will be one of only Chinese international corporations.

Would WeChat or TikTok even exist if the Chinese market were open to existing western chat and social media software?? Unlikely.

If China wants their companies to be able to access western markets then they must allow western companies to access their markets.

Quite frankly, the entire western world should be banding together to oppose this nonsense from China. We should outright ban any goods or technology that originates in China until China changes its behavior and opens its economy.

[+] jianshen|5 years ago|reply
What is his motivation for this right now? Is it just the distraction of the week or was there a specific incident recently that triggered this?
[+] euix|5 years ago|reply
Didn't Pompeo say something this week along the lines of banning China Mobile servicing telephone calls to the U.S.? That means if you carry a cell phone from China to the U.S. you can't get roaming service anymore?

I am surprised Lenovo hasn't been singled out yet. They supply enterprises throughout the U.S. a lot of corporations that hand out laptops to their employees all use Lenovo.

[+] geokon|5 years ago|reply
The ongoing anti China circus through executive orders is arbitrary and draconian to say the least... and while I've been mostly ignoring it so far, a lot of Americans live in China and have money on Wechat. Are they now violating this week's "law"?

The actual executive order: https://www.whitehouse.gov/presidential-actions/executive-or...

It's quite short and just adds a lot of FUD

[+] sneak|5 years ago|reply
An important note that nobody seems to be reporting on: this is only possible because Apple and Google have control over which apps are permitted on your device.

The US government has no legal authority to ban publishing (including apps) in the US. They do, however, have the ability to regulate trade between the operators of the App Store (Apple) and the Play Store (Google), and app publishers, which is what they're doing here.

Ban the business relationship, and they've effectively banned the publishing. It's an end run around the US constitution, and everyone should be up in arms about it: not just at the US government, but also at Apple and Google for creating a legal chokepoint for mass censorship by the US federal government.

This would not be possible if end users actually exercised control over their own devices. This is how the web works, and it's how everything else on your device should work, too.

[+] sreejithr|5 years ago|reply
I agree 100% with this. I mean, there are other developing economies with serious tech sectors like India which operate according to the rules based open market system we have in place.

If the US doesn't take action against Chinese protectionism, why should other countries abide by the rules and give US access to their markets? The US provides China it's market even though China closes it down for everyone.

I think US being soft on China sets a bad precedent.

[+] mariomariomario|5 years ago|reply
Wow this is huge if Tencent is out of the game in the US. What happens to their stakes in companies like Reddit and Riot Games?
[+] whateveracct|5 years ago|reply
Instagram Reels is launching at a "convenient" time.. . . ..
[+] PopeDotNinja|5 years ago|reply
For WeChat, how much impact will this have on Americans? As an American, I tried signing up to communicate w/ someone in China, and I couldn't get through the verification process.

Obviously TikTok has a big USA presence.