US president Donald Trump ordered TikTok's Chinese parent ByteDance to sell its US assets within 90 days, citing national security concerns, amid tensions between Washington and Beijing.
The executive order came after the Committee on Foreign Investment in the United States (CFIUS), a US government body that reviews deals for potential national security risks, opened a new investigation of ByteDance’s acquisition of American lip-sync app Musical.ly in 2017.
"There is credible evidence that leads me to believe that ByteDance Ltd... through acquiring all interests in Musical.ly...might take action that threatens to impair the national security of the United States," Mr Trump said in the executive order on Friday.
Backing the order, US Treasury Secretary Steve Mnuchin said in an August 14 statement that "CFIUS conducted an exhaustive review of the case and unanimously recommended this action to the President in order to protect US users from exploitation of their personal data."
"The order directs ByteDance to divest all interests and rights in any assets or property used to enable or support the operation of TikTok in the United States, and any data obtained or derived from TikTok or Musical.ly users in the United States," Mr Mnuchin said.
The latest move comes on top of a previous executive order banning transactions with China's video-sharing app TikTok if its parent ByteDance does not reach a deal to divest it in 45 days.
“As we’ve said previously, TikTok is loved by 100 million Americans because it is their home for entertainment, self-expression, and connection,” TikTok said in a statement. “We’re committed to continuing to bring joy to families and meaningful careers to those who create on our platform for many years to come.”
TikTok allows users to share video clips of up to 15 seconds. It has become popular with young audiences over the past year and has about one billion users in more than 140 countries.
The latest orders are in line with the Trump administration's increasingly aggressive stance towards Chinese technology giants as Washington's relations with Beijing worsen and as Mr Trump faces presidential elections.
"The emerging tensions over TikTok and WeChat will be sitting on top of the priority list" in future trade discussions between the US and China," Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The two countries were scheduled to review their phase-one trade deal on Saturday but the discussions between US Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He were delayed due to "scheduling conflicts and the need to allow time for more Chinese purchases of US exports," according to Reuters. No new date for the initial six-month compliance review was set.
"A further deterioration in the US-China trade relationship is an important downside risk to the global equities at the moment," said Ms Ozkardeskaya. "But the price pullbacks will likely remain short-lived as stock investors continue relying on government and central bank support to keep the illusion alive."
Aside from TikTok, Mr Trump has also issued an order that would prohibit transactions with Chinese Tencent Holding's WeChat.
Software company Microsoft, the second-most valuable tech firm in the world, said it is in talks with ByteDance to explore a purchase of TikTok in the US. Twitter has held preliminary talks with TikTok about a possible deal to buy the video streaming app’s US operations, making it a potential competitor to software company Microsoft.
ByteDance is actively looking for a buyer for its US operations after Mr Trump issued an executive order banning businesses and US residents from transacting with the app.
Mr Trump has repeatedly insisted that the US Treasury should also receive a cut from the sale of TikTok’s US operations – an unprecedented move.
In his latest executive order on Friday regarding TikTok, Mr Trump ordered ByteDance to "certify in writing to CFIUS that it has destroyed all data that it is required to divest... as well as all copies of such data wherever located, and CFIUS is authorized to require auditing of ByteDance on terms it deems appropriate in order to ensure that such destruction of data is complete."
Mr Trump said he reserves his authority "to issue further orders with respect to ByteDance, Musical.ly, Musical.ly in the United States, and TikTok Inc. as shall in my judgment be necessary to protect the national security."
