What happens when a company is the subject of a presidential executive order? For TikTok, it apparently means it is time to start preparing advertisers for a possible ban of its app in the United States, and to offer refunds for ad campaigns that TikTok is unable to run, according to Reuters.
The executive order, signed by President Trump, would ban U.S. transactions with TikTok and WeChat, the Chinese-owned messaging app, starting on September 15, 2020.
Earlier this month, Microsoft stated in a blog post that the company is committed to acquiring TikTok “subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.” From there, Microsoft will pursue discussions with TikTok’s parent company, ByteDance. The discussions are to be completed no later than September 20, 2020.
Among other measures, Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the the country after it is transferred.
The Verge reported that the executive branch has the power to levy sanctions against individuals and corporations, like it did with Huawei. The difference between that, and the executive order regarding TikTok, is that these sanctions are supposed to be put in place by the Commerce Department – not the White House.
As such, the situation could lead to legal challenges. TikTok posted a blog in which the company stated, “We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the Administration, then by the US courts.”
This is going to get messy very quickly, especially if Microsoft acquires TikTok from ByteDance before the September 15, 2020, deadline set in the executive order. It could lead to a legal battle between Microsoft and the White House. Personally, I am suspicious that the date on the executive order was intended to persuade Microsoft to cancel discussions with TikTok.