Update (1900ET): As TikTok lashes out at the Trump Administration, Tencent has been conspicuously quiet.
But CNBC reported a few moments ago, citing a domestic poll, that Chinese consumers would retaliate against Apple if WeChat is banned form its app store.
Some in China Could Ditch $AAPL if WeChat Banned from App Store - CNBC, Citing Poll— *Walter Bloomberg (@DeItaOne) August 7, 2020
No surprises there.
Meanwhile, Tencent shares are getting absolutely hammered.
* * *
Maybe its is oft-professed fondness for "deals", but for whatever reason, it seems President Trump is determined not only to see Microsoft buy TikTok, but to claim some sort of role (or reward) for the US government in bringing about the buyout. Last night, Trump issued yet another executive order targeting both TikTok owner ByteDance and Tencent-owned WeChat, another popular Chinese social media company.
In the order, Trump essentially formalized threats made a week ago by setting a time limit for barring both companies from the US. While the recourse for WeChat is less clear, the order was worded in a way that would allow TikTok to continue operating under the auspices of Microsoft. Perhaps this had something to do with the reports about Microsoft looking into buying TikTok's entire global business (instead of just the US, Canada, Australia and New Zealand-facing business that MSFT claimed to be interested in on Sunday night.
Stocks slumped in Asia and Europe Friday morning, and US futures are pointing to a lower open, as Beijing's insistence that the US would not be allowed to simply "steal" TikTok in a "smash & grab" deal probably led analysts to conclude that - whatever Trump's intentions with the EO - it would likely complicate deal talks in the near term, as Trump just made Microsoft's job of courting the national party that much more difficult.
In its own statement published Friday morning, TikTok said it was "shocked" by Trump's EO, which was issued "without due process" (note: it tickles us to hear Chinese companies wax poetic about the importance of "due process".)
TikTok added that it has sought to engage in "good faith" with the US government for more than a year, and has even expressed its willingness to sell the business to a US company. The company added that it would "pursue all remedies available in order to ensure that the rule of law is not discarded and that TikTok and its users are treated fairly".
Read the full statement:
TikTok is a community full of creativity and passion, a home that brings joy to families and meaningful careers to creators. And we are building this platform for the long term. TikTok will be here for many years to come.
We are shocked by the recent Executive Order, which was issued without any due process. For nearly a year, we have sought to engage with the US government in good faith to provide a constructive solution to the concerns that have been expressed. What we encountered instead was that the Administration paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses.
We made clear our intentions to work with the appropriate officials to devise a solution to benefit our users, creators, partners, employees, and the broader community in the United States. There has been, and continues to be, no due process or adherence to the law. The text of the decision makes it plain that there has been a reliance on unnamed "reports" with no citations, fears that the app "may be" used for misinformation campaigns with no substantiation of such fears, and concerns about the collection of data that is industry standard for thousands of mobile apps around the world. We have made clear that TikTok has never shared user data with the Chinese government, nor censored content at its request. In fact, we make our moderation guidelines and algorithm source code available in our Transparency Center, which is a level of accountability no peer company has committed to. We even expressed our willingness to pursue a full sale of the US business to an American company.
This Executive Order risks undermining global businesses' trust in the United States' commitment to the rule of law, which has served as a magnet for investment and spurred decades of American economic growth. And it sets a dangerous precedent for the concept of free expression and open markets. We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the Administration, then by the US courts.
We want the 100 million Americans who love our platform because it is your home for expression, entertainment, and connection to know: TikTok has never, and will never, waver in our commitment to you. We prioritize your safety, security, and the trust of our community – always. As TikTok users, creators, partners, and family, you have the right to express your opinions to your elected representatives, including the White House. You have the right to be heard.
As Trump ratchets up pressure for a deal (and further inserts himself into the deal talks, much to both companies chagrin), CNBC reminds us that Microsoft isn't the only company reportedly "talking" to TikTok. There are at least three groups of potential investors, according to one CNBC source (we assume CNBC is referring to the VC group, Microsoft and (possibly) Facebook (though the company has vehemently denied interest in TikTok).
By adding another layer of pressure beyond what CFIUS was already applying, Trump is making these deal talks really interesting. Meanwhile, expect more whining from the teens about mean ol' Trump trying to shut down their favorite "safe space".