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Trump Moves to Ban TikTok and WeChat

By Rich Duprey – Aug 7, 2020 at 12:47PM

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The executive orders preventing U.S. companies from doing business with the apps take effect in 45 days.

President Trump is preparing to ban Chinese video-sharing app TikTok and the mobile texting app WeChat in 45 days because of national security concerns. He issued two separate executive orders that will prevent them from doing business with U.S. companies.

The popular apps from ByteDance and Tencent (TCEHY -1.31%) collect large swaths of personal data from users, including Chinese nationals in the U.S. in the case of Tencent's WeChat, which could be given to government officials in China to target individuals and possibly exact reprisals.

Note that says "executive order"

Image source: Getty Images.

Applying pressure to effect a sale

Microsoft (MSFT -1.94%) has confirmed it is interested in acquiring TikTok, a move that Trump backs, though he conditions it on some of the proceeds going to the U.S. Treasury. The New York Times reports two other companies are also pursuing a purchase.

Citing the risks the social media companies represent, the TikTok executive order says, "This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information -- potentially allowing China to track the locations of federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage."

The U.S. Senate unanimously passed a bill banning TikTok's use on government-issued devices.

The Tencent order notes a researcher found a Chinese database containing billions of text messages from users in the U.S., Taiwan, South Korea, and Australia, as well as China.

Facebook (META -0.54%) is finding the controversy an opportune time to launch Instagram Reels, a TikTok-like video-sharing service that lets users record and edit 15-second video clips.

TikTok responded to the executive order by saying it was "shocked" and promised to pursue all remedies available to it, including legal ones. Reuters reported that Tencent is "reviewing the executive order to get a full understanding" of its implications.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook, Microsoft, and Tencent Holdings and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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