TikTok owner vows to sue over crackdown by 'modern-day pirate'

By GT staff reporters Source: Global Times Published: 2020/8/7 15:52:30 Last Updated: 2020/8/8 17:29:17

Trump administration's daylight robbery, blatant intimidation to "smash & grab" from TikTok.Illustration:Liu Rui/GT

In a white-knuckle move that has led analysts to label him a modern-day pirate, the Trump administration issued an executive order on Thursday blocking all US deals with TikTok's Chinese parent ByteDance after 45 days, even as Microsoft is in talks to secure a deal for the hugely popular video-sharing app in the US.

A parallel executive order was also issued on Thursday to ban any US deal with Tencent, operator of Chinese messaging app WeChat, after 45 days, or starting September 20.

The fresh blow to TikTok, whose success has made it a big thorn in the back of US regulators, is apparently unbearable, with its parent ByteDance hitting back with a rare, harshly worded statement on Friday vowing it will take the matter to court if the US government fails to treat it in an equitable way.

The Chinese social media giant's 37-year-old founder Zhang Yiming has found himself in hot water over recent days, as some Chinese internet users branded him a "traitor" for accommodating the Trump administration's demands. 

In the statement on ByteDance's public WeChat account, the firm criticized the US government for disregarding the facts and local laws to determine contractual terms, and for even trying to intervene in negotiations between private firms.

The US executive order set a dangerous precedence in the free and open market, and the firm will take all feasible measures to ensure that the rule of law is not abandoned, read the statement. 

"The declaration is long overdue, a clear sign that [the firm] has completely abandoned fantasy and stood to fight," Liu Dingding, a Beijing-based independent internet analyst, told the Global Times on Friday.

The social media company has been caught in the middle, trying not to offend Chinese users while yielding to US demands, he said, estimating the firm's eventual move to take the US government to court - which could see ByteDance suffer a major setback - to have an impact, at most, on its US operations and service in pro-US markets such as India.

Other than that, the company will benefit from a great deal of opportunities in its home territory; what's more, a number of countries and regions in Europe, Southeast Asia and South America will be vying for the overseas headquarters of the firm, the analyst said. 

In a move to extend its presence beyond the US, TikTok said on Thursday it would set up its first European data center in Ireland. 

A Tencent spokesperson also told the Global Times on Friday that the company is reviewing the executive order to get a full understanding.

The crackdown on premium Chinese assets amounts to robbery, said Chinese analysts on Friday, labeling the unscrupulous president as a pirate in the modern era and warning that the example set by the US government utilizes executive power to prey upon foreign businesses.

US President Donald Trump on Thursday signed an executive order to ban US firms from making transactions with TikTok's parent company ByteDance, starting in 45 days, the latest step by the US to force the sale of TikTok with the threat of a ban. Click the timeline for more.Photo: GT

Trump's latest executive order seemingly intends to put greater pressure on ByteDance to rapidly divest TikTok, thereby forcing down its acquisition cost, Liu commented. 

Trump said on Monday that a TikTok ban in the US is set for September 15 if no acquisition deal is reached by that date.  

The deal, estimated to be worth about $50 billion, could have taken years to settle were it not for the coercion from the US government, Liu said.

Microsoft is by no means the only interested buyer, and growing threats from the Trump administration to force the Chinese-origin service into a dead end mean it is impossible for other potential buyers to increase their bids, he said. 

Speculation about potential buyers other than Microsoft has continued in recent days. Apple shares briefly soared in the early trading session on Tuesday on reports that it is showing great interest in acquiring TikTok. The iPhone maker denied the market rumors shortly after. 

The new executive order is intended to accelerate the deal and is essentially a case of expropriation, Tao Qiang, a senior partner at the Beijing Yingke Law Firm Shanghai Office, told the Global Times on Friday.

The acquisition is government expropriation on the grounds of security and national interests, setting it apart from normal commercial deals, Tao said.

A raft of hostile actions against TikTok has mired the app and its parent ByteDance in uncertainty, and has been seen as playing into the interests of Facebook in particular.

Facebook's photo-sharing app Instagram on Wednesday released its TikTok copycat Reels, in an effort to pounce on the local market.  

TikTok has been downloaded more than 175 million times in the US and over 1 billion times across the globe, according to the executive order targeting the app.

The enviable social media success the Chinese app has gained, an annoying weak link for US tech behemoths including Microsoft, Facebook, Google and Apple, makes TikTok a coveted asset, industry watchers said. 

"TikTok has touched the bottom line of US national competitiveness," Hu Qimu, a senior fellow at the Sinosteel Economic Research Institute, told the Global Times on Friday.

The video-sharing app incorporates an array of emerging technologies such as big data and artificial intelligence, challenging the US' technological monopoly, Hu said. He referred to TikTok's outsmarting of Facebook on the latter's home turf as the export of cultural soft power, something the US fears.

Infographic: GT

The attempt to force the sale of TikTok and a newly intensified clampdown reek of modern piracy, Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Friday.

As Hu put it, the coronavirus pandemic has slammed US state coffers, especially as a new relief package remains elusive, and the Trump administration is possibly relying on a TikTok deal to aid its budget shortfall. 

Lambasting the latest actions taken against Chinese firms, Chinese Foreign Ministry spokesman Wang Wenbin told reporters on Friday that the US will eventually feel the impact of overriding market principles and international rules in favor of its self-interests. He said that will only result in the decline of its morality, damaging its national image and adding to its international trust deficit.

The US has used national security as an excuse, frequently abused national power and groundlessly clamped down on related firms, a barefaced act of hegemony, Wang said, noting that China resolutely opposes this.

China urges the US to correct its wrongdoings, and to stop politicizing economic issues, cease cracking down on related firms, and provide a fair, just and non-discriminative environment for businesses from all countries. 

Posted in: ECONOMY

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