- Two executive orders signed on 6 August prohibit transactions with ByteDance (TikTok) and with WeChat, owned by Tencent.
- The exact scope is for the Department of Commerce to set before the 45-day period expires.
- It affects anyone who advertises, sells or collects payment in China through these apps, and anyone who relies on third-party platforms.
On 6 August 2020 the President of the United States, Donald Trump, signed two executive orders prohibiting US persons and companies from carrying out transactions with ByteDance, the owner of TikTok, and with the WeChat app, owned by China’s Tencent. The prohibitions would take effect after 45 days, on Sunday 20 September, and rest on the emergency economic powers act and a declaration of national emergency.
The official justification was data security: the US government argues that the apps collect information on their users that the Chinese Communist Party could access. But the practical scope was left open, because it fell to the Secretary of Commerce to define which transactions were prohibited. For companies, uncertainty is a risk in itself, and not only for American ones.
What the orders prohibit
The orders do not shut the apps down worldwide or directly affect European users. They prohibit persons subject to US jurisdiction from transacting with the two parent companies, which in practice may reach app stores, infrastructure providers, advertising and payments. The order on Tencent is limited to transactions related to WeChat, not the rest of its businesses.
What “transaction” means is the decisive point, which is why a definition from the Department of Commerce was awaited. Depending on how it is drafted, the effect could range from a narrow restriction to a broad block. When a rule is announced with a deadline and a scope still to be determined, the prudent course is to prepare several scenarios rather than wait for the final text. It was also reported that ByteDance was negotiating the sale of its US operations, so the deadline could also serve as a negotiating window.
Effects on European companies
Although this is a US decision, its effects can reach Spanish companies. Those selling in China often use WeChat for communication, customer service and payment; those advertising on TikTok depend on a platform under political pressure. And companies with subsidiaries or suppliers in the United States may be caught up in the compliance chain.
It is a clear case of platform risk: a channel that seemed stable can stop working because of someone else’s decision. Measuring how much of sales, customer contact or team communication depends on a single app is the first step in knowing whether there is a problem and how big it is. The aim is not to dramatise but to measure: many companies discover when doing this exercise that they depend on one particular service more than they thought.
What to review
It is worth drawing up an inventory of the third-party platforms that sustain the business, asking one simple question about each: what would happen if it disappeared tomorrow. Then check whether alternatives exist, whether you hold customers’ contact details outside the platform and whether advertising contracts allow switching channel.
It is also useful to follow legal developments closely, because orders of this kind can end up in the courts and in negotiations that change deadlines and conditions. This note reports a fact and does not seek to judge the political decision; each company should analyse its exposure with the help of its adviser. And if the company transfers customer data to providers in those countries, this review should be linked to the one on data protection and international transfers.
Depending on a single outside channel is a decision, even when it is not taken consciously.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
