On the evening of August 14th, Eastern Time, according to the findings of the Committee on Foreign Investment in the United States (CFIUS), US President Trump invoked the amendment to the National Defense Production Act of 1950 and issued a new executive order requiring bytebeat to be in TikTok’s US business will be divested within 90 days (possibly extended to 120 days).
Earlier, on the evening of August 6, U.S. Eastern time, Trump cited the International Emergency Economic Powers Act (IEEPA) to sign an executive order requesting that from September 20, any person or company under U.S. jurisdiction is prohibited from interacting with TikTok’s parents. The company ByteDance conducts any transactions.
According to informed sources, the two executive orders cited different laws, and the new presidential order will not cover the previous one, but will be implemented independently and side by side. The old administrative order was intended to curb Bytedance’s global business, while the new administrative order clearly forced Bytedance to divest TikTok’s US business.
Zhang Yiming had previously stated in an internal letter, “The real purpose is to hope for a complete ban and more…” This means that under the dual pressure of the US government, TikTok’s situation in the United States has actually become worse. . Today TikTok has only two choices: either directly exit the United States and hand over the market to its biggest competitor Facebook, or seek US buyers to contain Facebook on a global scale.
Must be stripped
“Spin off TikTok” is the latest proposal submitted by CFIUS to the President. In October 2019, CFIUS launched an investigation into the 2017 acquisition of musical.ly by ByteDance. Trump said in the executive order that “there is credible evidence to convince me” that Bytedance’s acquisition of musical.ly and its integration into TikTok may take actions that are detrimental to US national security.
The amendment to the US National Defense Production Act of 1950 cited by Trump gave the President of the United States great discretion. According to the law, the president and his authorized person can review foreign investment to determine whether the investment has an impact on the national security of the United States. If there is reliable evidence that foreign control will harm the national security of the United States, other laws cannot take measures. To mitigate this impact, the president can decide to block the transaction, and this decision is final and not subject to judicial review.
In the latest executive order, Trump ordered ByteDance to immediately proceed to withdraw funds from TikTok in accordance with CFIUS requirements, including all tangible and intangible assets related to TikTok, and all withdrawals or derivatives from TikTok or Musical.ly. Data about US users. ByteDance must confirm to CFIUS that it has destroyed all data and copies that need to be stripped after stripping. At the same time, CFIUS has the right to require ByteDance to be audited in accordance with the terms it deems appropriate to ensure the destruction of relevant data.
Trump also requested that ByteDance need to submit a list of TikTok buyers to CFIUS. Only 10 days after the submission of the list and CFIUS has not expressed objections, ByteDance can complete the delivery of TikTok. The buyer must be a U.S. citizen or owned by a U.S. citizen, has no direct or indirect contract, financial, family, employment, or other close and continuous relationship with ByteDance or its executives, employees, or shareholders, and can prove that it is willing and able to comply with this Executive order. In addition, CFIUS may consider whether the proposed sale or transfer will threaten the national security of the United States, and whether it will completely divest the required assets to the satisfaction of CFIUS.
Earlier, on the evening of August 6, U.S. Eastern time, Trump requested in another executive order that, starting from September 20, all transactions involving TikTok’s parent company ByteDance and its subsidiaries within the jurisdiction of the United States Any transactions of will be banned. At present, it seems that the two administrative orders are likely to be implemented in parallel due to the different laws cited and the content is not mutually exclusive.
Hard choices
Trump’s latest executive order means that TikTok’s forced withdrawal from the US market is a foregone conclusion . The only options facing TikTok today are to sell the US business to a US company or directly exit the US market .
Microsoft is currently the largest potential buyer of TikTok’s US business. On August 2, US Eastern Time, Microsoft stated that after CEO Satya Nadella had talked with US President Trump, “the company is ready to continue discussions on the acquisition of TikTok’s US business.” Since then, Microsoft confirmed in a statement that the company will work with the US government and the goal is to complete this negotiation before September 15. In addition, according to several US media reports, US social media Twitter is also discussing the possibility of merger with TikTok.
If Microsoft or Twitter’s acquisition of TikTok’s US business is finally reached, it will help TikTok to contain its world’s largest competitor, Facebook. A comment published by Forbes in July this year stated that since 2018, Facebook has been planning how to replace TikTok. Now, with the support of the White House, Facebook will have a rare opportunity to achieve its goals.
According to the list of the most downloaded apps in the world in 2019, among the top 5 most popular apps, Facebook’s apps account for 4, and only the 2nd place falls into TikTok’s pocket. This breaks the pattern that has been dominated by Facebook over the years. In addition, information from the third-party platform Ypulse shows that TikTok has defeated Facebook’s app and has become the favorite of the younger generation in the United States.
Industry analysts pointed out that as long as TikTok is alive around the world, Facebook will not be able to win the overall victory in the short video social field. As long as TikTok exists in the United States and is not in Facebook’s hands, it will always be a constraining Facebook’s future. The “poison pill” of action.
And if TikTok chooses to withdraw directly from the US market, this not only means giving up a huge market share to Facebook, but also means that in the future Facebook may take advantage of American culture to suppress TikTok’s long-term development globally. TikTok The global business may be completely destroyed.
A similar situation is already happening in India. On June 29, the Ministry of Electronics and Information Technology of India announced the ban on 59 applications related to China, including TikTok. Within a week, Facebook quickly launched Instagram Reels in the Indian market, filling the market as a replica of TikTok.
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