US TikTok and WeChat bans hit Chinese tech giants

US TikTok and WeChat bans hit Chinese tech giants

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The banning of short video sharing app TikTok in the US has hit several Chinese tech giants hard as Donald Trump escalates a growing cold war between the two countries. An executive order from the president says US firms must stop doing business with the app within 45 days, citing concerns that the app is harvesting data which can then be used by Chinese spy agencies, threatening national security. TikTok has denied claims that the Chinese government has access to its user data. TikTok has around a billion users and is owned by ByteDance, which also runs Chinese news platform Toutiao and is one of the country’s largest technology firms with a value of around US$100bn. The platform is currently in discussions with Microsoft Corp (NASDAQ:MSFT) to sell its US operations, however Trump has said the companies have until September 15 to reach a deal. The platform may also take legal action against the US government to protest the ban, saying it wanted to “ensure the rule of law is not discarded”. Trump has also issued a similar order against social media and messaging app WeChat, owned by fellow Chinese tech giant Tencent which saw its shares on the Hong Kong Stock Exchange lose around 5% of their value in Friday’s session following the news. The developments follow recommendations from the White House on Thursday that Chinese firms listed on US stock markets should be delisted unless they allow regulators to access their audited accounts. “Much like Huawei and ZTE, TikTok has become part of the geopolitical cold war between the US and China…What actually happens with TikTok is less important than the fact Trump went after the company – a soft way to attack China via a service that is becoming an increasingly prominent part of American teenage life. Though it isn’t as traditional as closing the consulate in Houston, it is another needling move by the President ahead of November’s election, designed to draw focus away from domestic issues”, said Connor Campbell at Spreadex. Given a recent spate of ‘tit-for-tat’ exchanges between the two nations, it is expected that China will react against the ban in some form, although most of the US’s own tech platforms including Google, Facebook and YouTube are already banned in the country. The banning of WeChat is also likely to spell trouble for users that use the app to communicate to individuals inside China, closing another channel of communication between the populations of the two superpowers.

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