Commerce Details Bans on Transactions With TikTok, WeChat
The Commerce Department outlined its prohibitions for the parent companies of TikTok and WeChat, saying in notices released Sept. 18 that it will no longer allow transactions between U.S. parties and the Chinese companies or their subsidiaries. The prohibitions detail a range of blocked activities for both ByteDance Ltd. and Tencent Holdings, including bans on providing internet hosting services, content delivery services and transactions with the two companies. Certain prohibitions on the availability of TikTok in the U.S. took effect Sept. 20, and all prohibitions on WeChat are effective as of Sept. 20. Other restrictions on TikTok will take effect Nov. 12.
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Commerce said it will block “any transaction” related to WeChat, TikTok, ByteDance or Tencent involving “any person” or “any property” subject “to the jurisdiction” of the U.S. Both notices define transactions as “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service.”
The notice did not say how Commerce will enforce the prohibitions or outline penalties for violators. “We're not going to go into what could be done through enforcement,” a senior Commerce official told reporters Sept. 18. “What I would say is that every company that I think this touches is becoming increasingly aware of the challenges that some of these applications pose.” The official said both companies “work very closely” with Chinese security agencies for “propaganda and surveillance purposes.”
The official also said Commerce is working closely with the Treasury Department and other agencies as the Committee on Foreign Investment in the U.S. reviews a potential sale of TikTok to Oracle. “We’re all working together on the CFIUS process,” the official said. “We took pains to not do anything in this order that might disrupt the ongoing negotiations with the parties and the president's deliberations with whether or not to accept the arrangement which is being developed.” If CFIUS approves the sale of TikTok, Commerce will likely remove the restrictions, the official said.
TikTok in August announced it was suing the Trump administration for banning transactions with the company and heavily criticized its experience with CFIUS (see 2008240031). The Commerce official said the agency is ready for more lawsuits that may arise. “It seems like there's legal challenges on everything these days,” the official said, “so we're prepared for whatever comes our direction.
The Commerce restrictions may jeopardize the sale of TikTok to Oracle, the Information Technology and Innovation Foundation said Sept. 18. The group also said the administration has given “no evidence” that the ban is necessary to protect U.S. national security. “If the administration wants to pressure China to allow U.S. companies to operate in the Chinese market, then it should be clear on that goal,” ITIF Vice President Daniel Castro said. “However, if the administration decides to ban these apps altogether, it should explicitly prohibit these companies from operating in the United States while following due process.”