After TikTok ‘Sale’, Senator Rubio Targets China’s QQ App Next
Is the U.S. taking the India approach to China’s mobile apps? They banned around 54 of them this summer.
So far, Washington is not taking the India approach. It’s more of a precision strike. The latest target on radar is instant messaging app QQ, owned by Tencent. Senator Marco Rubio wants it banned.
Less than 24 hours after word that Larry Ellison’s Oracle ORCL will be taking over TikTok in the U.S., Rubio asked President Trump for a review of QQ, an app mainly used by Chinese people here in the U.S. He wants it added to Trump’s August 6 Executive Order looking into WeChat, which is China’s leading messaging app, and is also owned by Tencent.
“The links between the Chinese government and Communist Party to this high-risk software could not be more pronounced as Tencent’s chief executive, Pony Ma, is a member of China’s national legislature, the National People’s Congress,” Rubio wrote in a letter to the President dated September 11.
Huateng “Pony” Ma is worth around $58.7 billion and is the 20th richest man in the world, according to Forbes.
“The identical ownership and similar functions of the two (Tencent) applications highlight the common threats that they pose, including data privacy risks, as well as espionage and censorship at the direction of the Chinese government and Communist Party,” he says. “Add QQ to the Executive Order on WeChat.”
In August, Rubio got an op-ed published in The Washington Examiner saying he would introduce legislation to create a “framework of standards for foreign-based apps” to be allowed to operate in the U.S.
One of the most vocal China hawks in the Senate, Rubio warned last October about TikTok when he requested Treasury Secretary Steven Mnuchin have the Committee on Foreign Investment in the United States (CFIUS) launch a full review of the national security implications of TikTok’s acquisition of Musical.ly. That review is actually not complete, nearly 11 months later.
News broke on Sunday about Oracle’s deal with ByteDance’s TikTok, the first Chinese app to go global. Most of China’s apps, including WeChat and QQ, are local phenomenons. That tends to be enough, given that China has hundreds of millions of internet users with cell phones. But TikTok put China on the map as a global app developer for the first time. The popular web conference company Zoom is run by a Chinese born techie named Eric Yuan, but he is based in California.
The specifics of the Oracle-TikTok deal are unclear, with key words such as “tech partnership” not sounding at all like a traditional acquisition. Assuming the main concern was over user data, perhaps Oracle will be in charge of all that and not ByteDance.
What’s a bit more damning — and what Rubio’s harking about QQ serves as testimony — is the growing concern of Beijing’s political ties to China’s biggest and best tech firms.
“Those are allegations that China’s tech firms have had to increasingly fight off over the past few years, and it’s something that’s going to persist,” thinks Nick Marro, lead analyst for global trade at The Economist Intelligence Unit, the business intel division of The Economist magazine.
Going forward, multinational companies will have to deal with a tech decoupling, and new risk of doing business with China tech companies that could quicken a severing of ties in the worst case for Beijing, or a rejiggering of the China dominant supply chain into other Asian nations, still run by Chinese capital and management.
Meanwhile, China has not used tit-for-tat measures against the U.S. for picking on TikTok, Huawei and now WeChat and QQ — but that will change after the election.
Will a Biden presidency maintain this kind of pressure on QQ, WeChat and Huawei?
If the Republicans are in the minority position, a position many Republican observers suggest they prefer, they will seek to label Biden as pro-China if he does not continue with these policies.
A Trump presidency will surely continue them, and that is when China could go ham.
We’re still waiting for the other shoe to drop on potential export controls against SMIC, notes Marro.
SMIC is a leader in the burgeoning mainland China semiconductor industry, an industry being funded by state banks in an effort to reduce the country’s reliance on foreign microchips. The U.S. said SIMC is a Chinese defense contractor and U.S. firms might be banned from supplying them with chip hardware used for the military.
“We have no relationship with the Chinese military,” the company said in a statement. It said SMIC products are “solely for civilian and commercial end-users and end-uses.”
Such a ban would have more macro consequences for China’s technology industry; an industry currently building out its Greater Silicon Valley in the southeast, a development project that was in the works even before Trump was elected.
“This story isn’t over,” says Marro.
The trade war has four fronts: the tariff front, the tech front, the financial front, and the human rights front, which is seen being the front used to convince a Biden Administration to play hardball with China if elected.
China can cope with this because it has a massive domestic market to serve. But, so long as they need American tech to build out their Greater Silicon Valley plans, China will have to either try and do it themselves, or convince the Japanese, South Koreans, Taiwanese and maybe the Europeans to ignore their American allies.