Trump targets Chinese tech giants and their partners

TikTok and Trump combination photo

What you need to know:

  • Trump is forcing the world to choose between China and the US. Now, popular TikTok is being forced into a sale of its US assets to Microsoft.
  • There have also been crackdowns on other Chinese companies like Huawei. 
  • This led Safaricom, whose network rides on Huawei, to comment about its role in powering M-Pesa and Kenya’s communication networks.

A few years ago our office sponsored a global technology competition. The winner of one of the modest prizes was an activist group in Sudan, a country that was under UN sanctions and US-led international blacklist on financial transactions.

We dared not pay it through our local bank. Even if the payment were allowed, it would put us on a watch list which could jeopardize other relationships. It did not matter that the payment was to reward and encourage good deeds with loads of paperwork to back the prize.

We stayed in touch with the recipient about the delay in remitting their prize, and they understood. While these payment hurdles were new to us, they dealt with them all the time. Meanwhile, other prizes to Afghanistan, Haiti, Liberia and Zimbabwe were paid out.

This weekend, US President Donald Trump fired the latest salvo in his battle with China by banning Bytedance and Tencent, the parent firms of TikTok and WeChat, respectively. While attention is on TikTok, a media darling now, more impact will be from the ban on Tencent, the parent of WeChat.

WeChat, as a payment app and social media channel, is a way of life in China. It is ubiquitous in china in everything - banking, e-commerce, travel, and communications. You link it to your bank, withdraw cash or use it as a virtual currency to pay for money transfers, taxi & trains, groceries, utilities, send money to housekeeper or relatives. It processes one billion daily financial transactions and has 50 million merchants who use it.

It is used for news, social media, movies, games and can even be used for divorce filings.

Another giant platform in China is Alibaba, and both claim one billion users each. Taobao, an Alibaba company, is big in e-commerce, enabling rural farmers to live stream and connect with customers in different towns.

Control

The two Chinese companies along with five US firms - Microsoft, Apple, Amazon Google, and Facebook, form seven super platforms that are among the most valuable companies in the world.

They control most of the world's information flows, connect users with free tools while using their own data to sell them back services. It’s what Netflix does well by sniffing your browsing and watching habits to find other things they believe you will also like.

The executive order acknowledges some of WeChat’s one billion users are in the USA. And it cautions that while WeChat captures swathes of information from users, as other platform companies do, it claims that the Chinese government also uses the app to spy on the activities of its citizens while in the USA.

But Trump is forcing the world to choose between China and the US. Now, popular TikTok is being forced into a sale of its US assets to Microsoft.

There have also been crackdowns on other Chinese companies like Huawei. This led Safaricom, whose network rides on Huawei, to comment about its role in powering M-Pesa and Kenya’s communication networks.

Africa

Companies are all adopting to build ecosystems and platforms of their own.  In doing so, African entities should not be forced to choose sides in the services they roll out.

With its partner, Vodacom, Safaricom aims to grow M-Pesa's footprint beyond the current 36 million across five countries by enabling small businesses to receive virtual payments. Other burgeoning African platforms are Ecobank with 24 million customers doing money transfers to 33 countries and MTN with 35 million mobile money users.

Banks in Kenya have also invested in partnership to ease transfers and payments with China. These include Absa, Stanbic and Equity while Family Bank has partnered with SimbaPay to enable instant money transfer and payments via WeChat to China.

Finally, the Sudan group got paid, through the old fashioned remittance method of meeting at a quiet place and handing them their prize, in dollar bills.