Just in case ByteDance didn’t get the message, Donald Trump on Friday evening ordered the Chinese company to divest its US assets and data related to TikTok within 90 days.
The order, which was tipped late last month and is separate from those issued on August 6, is a response from The White House to a CFIUS referral, stemming from an investigation into ByteDance’s 2017 purchase of Musical.ly.
“The transaction resulting in the acquisition by ByteDance of Musical.ly, to the extent that Musical.ly or any of its assets is used in furtherance or support of, or relating to, Musical.ly’s activities in interstate commerce in the United States, is hereby prohibited”, Trump said, before dropping the hammer (again):
Ownership by ByteDance of any interest in Musical.ly in the United States, whether effected directly or indirectly through ByteDance, or through ByteDance’s subsidiaries, affiliates, or Chinese shareholders, is also prohibited.
The CFIUS review, which began around a year ago, was “exhaustive”, Steve Mnuchin said Friday evening, noting that the committee had “unanimously recommended this action to the President in order to protect US users from exploitation of their personal data”.
Musical.ly was merged with TikTok in August of 2018.
William Barr is authorized to pursue any means necessary to enforce the order. ByteDance is not permitted to complete a sale without first notifying CFIUS, and the company must also confirm that it has destroyed all pertinent data upon any such sale. That is a laughable demand. If the company is, as Trump implicitly (and, in some instances, explicitly) claims, a Trojan horse for Beijing, that data was transferred to the Party long ago.
Obviously, this just adds to the pressure on ByteDance, which was already rushing to beat the clock following Trump’s order targeting TikTok earlier this month. The president has variously suggested that the US should receive a portion of the proceeds from the sale of TikTok, although it has never been clear under what authority he is prepared to assert that claim.
The order comes just hours after Reuters reported that planned trade talks between Mnuchin, Bob Lighthizer, and Liu He were delayed indefinitely due to a scheduling conflict.
“One source familiar with the talks said the delay was related to a conference of senior Communist Party leaders [and] did not reflect any substantive problem with the trade deal”, Reuters said, adding that “another source familiar with the plans said that US officials wanted more time to allow China to increase purchases of US goods agreed in the deal, to improve the political optics of the review”.
As a reminder, the “political optics” were not great for Trump headed into the second half of 2020. China was less than a quarter of the way to meeting their year-one target for purchases of US goods (figure below).
The US and China are, of course, also at odds over Hong Kong and Taiwan, with the latter receiving the highest-level US delegation in decades this week.
The US formalized a planned sale of F-16s to Taiwan on Friday. The move was expected, but will nevertheless draw a fresh rebuke from Beijing, which threatened to sanction Lockheed Martin last month and has previously decried the sale of military technology to the island.
Commenting further on Tiktok, Trump said “there is credible evidence that leads me to believe that ByteDance … might take action that threatens to impair the national security of the United States”.
Just another day in our Austin Powers world.