Update published September 18, 2020
In a follow up to President Trump’s Executive Orders signed in August, the Department of Commerce has announced “prohibitions on transactions relating to mobile applications (apps) WeChat and TikTok to safeguard the national security of the United States.” As of Friday, September 18, the Department of Commerce stated it would ban Americans from downloading WeChat and TikTok as of Sunday.
The announcement comes ahead of a possible TikTok-Oracle deal, which still needs approval from both President Trump and Beijing. Should the block be enforced, it will effectively cut off communications between China and Chinese app-users all over the world. These range from Chinese living overseas to a vast number of businesses that depend on Chinese apps for payments. It will have disruptive and potentially devastating consequences. Both announcements are due on Sunday, but given past uncertainties, it remains to be seen if either will actually go ahead.
Original article published August 6, 2020
On Thursday night, President Donald Trump issued two executive orders that will ban TikTok and WeChat from US operations in 45 days if the applications are not sold by their Chinese-owned parent companies, ByteDance and Tencent. Both orders cite national security concerns and would bar “any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States” with ByteDance and Tencent.
President Trump accused the tech giants of collecting proprietary information from Americans and monitoring Chinese citizens abroad. “The spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States,” Trump wrote in a statement.
Over the past month, US-China relations have reached unrecognizable lows with the shutdown of consulates in both China and the US. Trump’s new executive order will have untold blowback as the Chinese government is surely to retaliate.
For the luxury industry, the ban on TikTok immediately disrupts brand strategies that are looking to the rising platform to reach Gen-Z consumers. However, the real threat to brands is the larger scale political implications. With tech and politics now so closely intertwined, the modern luxury brand infrastructure that relies so heavily on digital platforms is left vulnerable to the strike of President Trump’s pen.