What happened: On September 19, another plot twist unfolded in the ongoing TikTok saga. CNN reported that President Trump has “approved the deal in concept” between ByteDance, Oracle, and Walmart. “I have given the deal my blessing,” Trump told reporters. “If they get it done that’s great, if they don’t that’s okay too.” Meanwhile, in a statement on the evening of September 19, the US Commerce Department also confirmed that it would defer until next Sunday — September 27 — the restraints that were expected to be activated today.
According to the agreement, ByteDance would continue to be the majority owner of TikTok, and Oracle would take a 12.5 percent stake in the company, while Walmart has preliminarily approved the purchase of a 7.5 percent stake. Walmart CEO Doug McMillon would also get a seat on the board of the newly created company. Needless to say, the cumulative 20 percent share contradicts Trump’s assertion that TikTok would be “totally controlled” by Walmart and Oracle.
“As part of this proposal, Oracle will become our trusted technology provider, responsible for hosting all US user data and securing associated computer systems to ensure US national security requirements are fully satisfied,” TikTok said. “We are currently working with Walmart on a commercial partnership as well. Both companies will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20 percent cumulative stake in the company. We will also maintain and expand TikTok’s global headquarters in the US, while adding 25,000 jobs across the country.” However, the future of WeChat, the Chinese messaging app, is still unclear, with the BBC reporting that US Magistrate Judge Laurel Beeler has blocked Trump’s ban on WeChat.
Jing Take: With so much uncertainty surrounding the future of TikTok and WeChat in the US, there’s been a rush to download the apps before the proposed deadline of September 20. Example: WeChat broke records in the US on September 18 registering its biggest one-day download numbers in nearly two years, stated the Verge. According to preliminary data from analytics platform Sensor Tower, WeChat reached 10,000 installs in the US on September 18. This is a 150 percent increase from the previous day and a 233 percent week-over-week increase. Moreover, TikTok also surpassed estimation, adding some 247,000 new installs, according to data from Sensor Tower. It could be argued that Trump’s potential ban is boosting the popularity of both Chinese apps in the US.
Nonetheless, there’s another aspect that requires consideration, and that is Beijing’s retaliation against American tech companies. The Washington Post reported that the Chinese government could endorse a prohibitive new corporate blacklist plan to retaliate against American executives and corporations. On September 19, China’s Commerce Ministry announced that the companies and individuals included in China’s “unreliable entities list” would be banned completely from trading with China or investing in the country. The widening of the attacks against Chinese apps could further fraction bilateral relations between the two superpowers, with American companies being hardest hit.
Additionally, some of the world’s most valuable companies like Apple and Google could lose brand value if China kicks them out, and American tech stocks could stumble and slide around the world, delaying the post-pandemic US economic recovery. Lastly, despite growing concerns over cybersecurity, the E.U. will defy Trump’s advances to ban the Chinese apps because of fears of punishment and retaliation from China. Given this, it appears that President Trump and his campaign to ban both TikTok and WeChat will, for at least the time being, continue to be a solo venture with a host of concerning yet unknown outcomes yet to be determined. Stay tuned.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.