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Paper hits U.S. push to acquire video app

by Compiled by Democrat-Gazette Staff From Wire Reports | August 5, 2020 at 2:12 a.m.

China's state-run media has struck back in the war over TikTok, branding U.S. demands for the sale of the social media app's American operations to Microsoft Corp. as "theft" and suggesting Beijing may block the transaction.

The editorial, published late Monday by the China Daily newspaper, represented Beijing's strongest defense yet of ByteDance Ltd. and its viral video app. "China will by no means accept the 'theft' of a Chinese technology company, and it has plenty of ways to respond if the administration carries out its planned smash and grab," it said.

President Donald Trump insisted several times on Monday that any sale of TikTok assets would include some form of payment to the U.S., and demanded that TikTok be sold to an American company by Sept. 15 or be shut down.

White House press secretary Kayleigh McEnany sidestepped a question Tuesday about what authority the federal government had to collect a portion of proceeds from the potential sale of TikTok, saying "I'm not going to get ahead of the president on any official action."

The Treasury Department did not reply to questions about what legal precedent Trump is relying on to get a payment for the TikTok deal.

There are no "obvious antitrust or other legal bases" for the demand for "what is in effect a payoff to the U.S. government," said Eswar Prasad, an economist at Cornell University. "The notion of a payment to the U.S. government sets a dangerous precedent of explicit entanglement between national security and economic considerations."

The war of words between Washington and Beijing has also spread into the boardroom. At the same time as his advisers are racing against the clock to strike a deal for its U.S. assets, ByteDance's billionaire founder Zhang Yiming has penned his second letter to his employees in as many days, declaring Trump's real goal is not to save but to kill off TikTok.


ByteDance became the world's largest startup thanks to the success abroad of TikTok, which American lawmakers accuse of posing a threat to national security because of its ability to vacuum up data. Trump has the power to cripple ByteDance's prized asset by adding TikTok to the U.S. entity list, which would compel American companies such as Apple Inc. and Alphabet Inc.'s Google to drop the service from their app stores.

While the China Daily acknowledged that selling the U.S. business "might be preferable" to ByteDance, the newspaper compared the process to officially sanctioned theft, a sentiment echoed in other prominent state media including the Communist Party's Global Times newspaper.

"With competitiveness now dependent on the ability to collect and use data, it offers an either-or choice of submission or mortal combat in the tech realm," the China Daily said.

Beijing often uses the editorial page of the English-language China Daily to deliver messages to a Western audience.

The U.S. crackdown has split many in the industry: Some decry the betrayal of values like free speech and capitalism, while others advocate doing whatever it takes to subdue a geopolitical rival and its pivotal tech industry.

TikTok is already being used in a major disagreement between India and China. Apps from ByteDance and Tencent Holdings Ltd., are to be blacklisted by India in retaliation over a major military clash between the two countries. Tencent's QQ -- China's second-largest social media platform -- and ByteDance's Vigo Video will join TikTok and WeChat on a blacklist announced in June, according to a government document obtained by Bloomberg News.


While the Chinese Ministry of Foreign Affairs has declined to comment on Microsoft's TikTok talks, spokesman Wang Wenbin reiterated criticism Tuesday of what he said were Washington's double standards and overreach.

"If following the wrong example set by U.S., every country could use national security as an excuse to target American companies," Wang told a regular news briefing in Beijing. "The U.S. should not to open a Pandora's box, otherwise it will swallow the bitter fruit itself."

Trump repeatedly insisted on Monday that any sale of TikTok's U.S. operations would have to include a substantial payment to the U.S. That was "open robbery," tweeted Hu Xijin, editor-in-chief of the Global Times, a tabloid run by the party's People's Daily newspaper.

It's unclear what regulatory measures China could take. The Global Times wrote China has a "limited ability" to protect its companies since the U.S. still enjoys technological superiority.

Information for this article was contributed by Kari Lindberg of Bloomberg News and by Tali Arbel of The Associated Press.


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