Late in the evening of August 6, the Trump administration released a pair of executive orders stating the intention to ban all transactions with Tencent and ByteDance, along with their subsidiaries, as defined by the secretary of commerce. Tencent owns WeChat and has major stakes in or outright owns a number of video game studios. Similarly, ByteDance owns TikTok, an increasingly popular social media platform in the United States and internationally. A full ban on transactions with both companies and their subsidiaries would have significant impacts far beyond the two companies. However, a definition on what transactions and which subsidiaries does not appear in either order. The orders state that they will be specifically defined sometime within the next 45 days.
The types of activities banned and with whom are at the heart of any sanction. That these terms are not defined yet is particularly curious. In effect, this leaves the Trump administration with a huge range of potential policies it may adopt. It may decide to ban only transactions with the China-based portions of either company, or it may only ban particular types of transactions like those involving personal data of U.S. persons, or it may ban both companies and their subsidiaries outright, but then implement some type of license allowing for most commerce with either company to continue — albeit with the implicit threat that the licenses could be canceled with little notice.
If these important elements are all undefined in the executive orders, as released, why even bother issuing them now and what is the goal underpinning them?
What might the final sanctions look like? That is difficult to know for sure. Good sanctions design is supposed to focus on shaping behavior instead of merely meting out simple punitive actions. Given the chaos and competing interests within the Trump administration it is hard to know for sure what the administration wants from either company right now.
The State Department issued an announcement condemning the collection of personal information by “untrusted” Chinese apps and pledged to purge them from the United States. This implies the administration is most concerned about data collection and will seek to limit both companies’ ability to collect it. Of course, others have suggested the reason for the ban is more personal.
Assuming the concern is to genuinely protect the data of U.S. citizens, then that points to a potentially significant set of sanctions for both companies. Assuming TikTok’s U.S. operations are not sold to Microsoft, it’s likely this will result in a full ban on transactions with U.S. companies at a minimum. That would then result in both Apple and Google removing the app from the App Store and Google Play Store, respectively.
Tencent could face similar sanctions, though given its wider presence in the gaming sector, this would likely be coupled with licenses. The company either owns or has major stakes in numerous gaming studios. While they are only games, they still can collect significant amounts of data on their users, which the Trump administration may be concerned with. This could result in any games made by studios owned outright by Tencent being similarly banned from the United States too. Companies in which Tencent has major ownership stakes would likely be granted at least a temporary license allowing for them to either wind down their involvement with Tencent or allowing them to continue provided no user data is transmitted to Tencent.
While protecting the data of U.S. citizens is a laudable goal, this whole affair leaves a lot to be desired. The Trump administration seems primarily concerned only about foreign-owned apps gathering data on Americans. Yet there are plenty of U.S.-based companies with apps that gather vast amounts of user data and there are few rules on how this data is stored or to whom it can be sold. Ideally, an action like these sanctions would be coupled with new rules or legislation on how we want domestic companies to treat the data they collect on Americans. Otherwise, the executive orders feel more opportunistic than effective.
Perhaps something restricting the sale of U.S. citizens’ data to China might come next. The specifics of these sanctions are supposed to be hashed out in the next 45 days as the industry reacts and as Tencent and ByteDance try to work something out with the U.S. government.
The reality show president wants everyone to stay tuned for the next episode to see just what he is going to do.
Shea Cotton is a senior research associate at the James Martin Center for Nonproliferation Studies within the Middlebury Institute of International Studies at Monterey.