October 27, 2020

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Tencent and TikTok targeted by US executive order

US to ban transactions with Tencent and ByteDance

CNN reported that President Donald Trump has signed an executive order just yesterday (6th August) that will come into effect in 45 days if ByteDance and Tencent does not sell TikTok and WeChat. Once the deadline is reached, it will be prohibited to make any transactions with these companies if they do not sell the very successful (and controversial) sites.

Trump moves on Tencent

Who are these companies?

ByteDance is the owner of TikTok, which has been criticised by many recently for harvesting and sending a ton of data back to mainland China, and that it has ties to the Chinese Communist party.

But what is more interesting for us is Tencent. They are the owners of Riot Games, and have shares in several high-profile gaming companies – owning 40% of the shares of Epic Games, as well as smaller percentages of Activision Blizzard, Discord, Funcom, Paradox Interactive, Reddit, Ubisoft and more.

What does this mean exactly?

For WeChat, which allows its users to transfer funds to each other, the order states it will ban financial transactions with Tencent. The order states “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.”

While there are no details on how exactly will this be enforced, the US President may have just made it illegal for US citizens to make any purchases from Epic Games, , Riot Games, League of Legends, Fortnite, Valorant, and whatever they may come up with in the future.

How did the companies respond?

TikTok already responded to this executive order:

“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.”

As for Tencent, they are currently “reviewing the executive order to get a full understanding” according to their spokesperson, though their share prices dropped 10% for a short time on the Hong Kong stock exchange, so they will surely not take this lightly.