TikTok, WeChat Bans Are a 'Lose-Lose' Proposition, Says Business Professor

August 12, 2020
As TikTok is readying a lawsuit against the Trump Administration's ban of the Chinese-owned social media app in the U.S., another company is feeling the pressure of a similar fate.
Included in the executive order was a potential ban of Chinese app WeChat.
"It's a lose-lose situation for everyone," Howard Yu, head of the International Institute for Management Development's Advanced Management Program, told Cheddar from Hong Kong Tuesday.
Compared to TikTok, Yu thinks a WeChat ban would have much broader implications.
"Whether you are communicating with friends, paying your tax, or checking hotels, using the internet, and all kinds of payment systems -- it's all rolled into one," Yu said. "It's almost like Amazon, Twitter and every single app is inside its integrated functionality."
Washington has expressed concern over WeChat's collection of data on the activities of overseas Chinese citizens, and fears that the Communist Party could demand this data.
"[The Trump Administration] has this belief that any Chinese companies would surrender to Beijing pressure and share this information with the government," Yu said.
The Wall Street Journal reported on Tuesday that the app went around a privacy safeguard and collected Android users' unique information without allowing them to opt out. However, TikTok has publicly declared that it stores all data away from mainland China, so the risk may not be as severe as some in Washington believe.
"I think this is where the gray area becomes. It's hard to project what would unfold, and this is where the suspicion comes in," Yu said. "From Washington's perspective, this is not enough."
While TikTok parent company ByteDance is holding talks with American companies like Microsoft and Twitter to hash out a potential sale of the app's U.S. operations, TikTok is also planning to sue the Trump Administration over its executive order.
Yu thinks the aggressive 45-day timeline presented by the White House will only make merger negotiations more difficult.
"We are talking about the most expensive acquisition Microsoft has done so far," Yu said. "This is not something you could go ahead without deep consideration."
Microsoft is reportedly considering paying up to $30 billion for TikTok's operations in the U.S., Canada, Australia, and New Zealand, according to CNBC.
"Business can only thrive based on stability, predictability, and transparency, and this barrage of executive orders really changed the game," Yu said.
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