The US government’s crusade against Chinese companies operating in the United States still has a long way to go. After Huawei and TikTok, it now appears to be the turn of Tencent and Epic, two companies offering popular video games and other software services that can now be seen hit by the Trump administration’s lockdowns.
As Bloomberg has learned, the Trump administration is investigating the data collection policies of some companies linked to Tencent . As we have seen, Tencent is a Chinese tech giant that over the years has invested in dozens of other small companies such as Epic Games (creators of ‘Fortnite’ and Unreal Engine). In addition, he is also the direct owner of others such as Riot (creators of “League of Legends”).
They indicate from Bloomberg that these two companies and a few others in which Tencent has a stake have received letters from the Committee on Foreign Investments in the United States (CFIUS) in which they are asked about the security protocols they follow to handle the transactions. US user data . While no details are given on what exactly was requested in those letters, it does correspond to the veto the United States announced a month ago on companies based in China.
In this case, although there is no direct veto or executive order, companies linked to Tencent could be forced to modify their operations to comply with US regulations . This regulation aims primarily to ensure that the data of American users does not leave American servers and especially does not end up in China or in the hands of companies based in China. Reason? The United States strongly believes that companies based in China provide this data to the Chinese government.
A respite for TikTok and WeChat
Just because the target is now on Tencent doesn’t mean things are over for TikTok and WeChat. Both were to be banned from use and downloading from this September 20 in the United States by order of the United States government. It wasn’t like that, neither TikTok nor WeChat was removed from the Google Play Store and Apple’s App Store . Each for different reasons.
WeChat, owned by Tencent by the way, was saved thanks to an order from a California judge. By this order The Trump administration’s order to remove the app and shut down its operations is stopped . According to the judge, it has to do with the First Amendment to the US Constitution, which protects the rights to freedom of expression and religion without government interference. The US government veto interferes with the free speech and freedoms of WeChat users in the United States, the judge said.
In ByteDance / TikTok, things are even more complex. Following the preliminary agreement between Oracle and ByteDance for the management of TikTok in the United States, the next step is to close all conditions. As we have seen, Oracle is not buying TikTok from the US as such, but it will be a “trusted technology provider” . This, very simplified, means that they will own a percentage of the company and offer the servers where the data of US users is stored.
TikTok will be owned by a new company called TikTok Global , in which ByteDance, Oracle and Walmart will participate. According to the President of the United States, the company will have a majority American stake and its headquarters will probably be in Texas (United States). Now that controlling stake has a trick. Oracle will take 12.5% of the company and Walmart with 7.5%. And the remaining 80%? It will remain from ByteDance. So how is it possible that this is majority US ownership? Because currently 40% of ByteDance is held by American investors, so that 80% of ByteDance is added to 20% of Oracle and Walmart to make about 53% of direct and indirect investments of American companies. As I said, things are complex.
While all of this is going on the Trump administration gave TikTok an extra week before vetoing it in the United States. This extra week is dedicated to shutting down operations and TikTok can operate as required by the US government. Requirements that are far from what was initially requested, such as the complete takeover of TikTok by an American company. It looks like the TikTok recommendation algorithm won’t be sold either, which China doesn’t allow and which Oracle can access, at most, on a review.