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TikTok deal still has a chance but WeChat ‘dead’ in the U.S., says senior administration official

  • September 18, 2020

Despite a Commerce Department announcement of a ban on transactions, a deal that would allow TikTok to remain operating in the U.S. could still happen, a senior Trump administration official told CNBC on Friday.

However, the official said WeChat, the social messaging app owned by Chinese tech giant Tencent, is “dead in the United States.”

Earlier Friday, the Commerce Department announced it was banning U.S. business transactions involving the TikTok and WeChat. Beginning Sunday, American companies will no longer be able to distribute WeChat and TikTok, taking away their availability in U.S. app store libraries.  

WeChat will be able to continue operating for people who have it installed on their devices, according to department officials who spoke with reporters on the condition of anonymity. But issues may arise because WeChat uses services run by U.S. firms to deliver data in the app. 

More stringent restrictions on TikTok, which is owned by Beijing-based ByteDance, in the U.S. are set to go into effect Nov. 12, based on the Commerce moves Friday. The actions are the latest developments in weeks of uncertainty stemming from President Donald Trump’s claims that the Chinese-owned apps present national security risks to American users. 

It is still possible a deal involving Oracle and Walmart to take stakes in TikTok can happen. Oracle said earlier in the week it had a deal in place with TikTok, but Trump said days later he was not ready to sign off on the proposal to make the California-based cloud company a technology partner with the social media app. Trump indicated he wanted a larger portion of the entity to be owned by U.S. partners.

Negotiations for a TikTok deal may persist through the weekend, as “a lot of major pieces” need to be resolved, including ownership structure and questions over TikTok’s software. However, the official said there is a chance for a transaction to be finalized before the Commerce Department’s latest restrictions go into effect. 

There is no appetite in the Trump administration for a separate deal involving WeChat, which is a vital app for people in the U.S. to communicate with friends and family in China. 

In a statement Friday, a Tencent spokesperson said it “has always incorporated the highest standards of user privacy and data security” and called the Commerce Department’s restrictions “unfortunate.”

“But given our desire to provide ongoing services to our users in the U.S. — for whom WeChat is an important communication tool — we will continue to discuss with the government and other stakeholders in the U.S. ways to achieve a long-term solution,” the spokesperson said.

—CNBC’s Steve Kovach contributed to this article.

Article source: https://www.cnbc.com/2020/09/18/tiktok-deal-still-has-a-chance-but-wechat-dead-in-the-us-says-senior-administration-official.html

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