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TikTok’s Proposed Deal Under Review by Trump Administration

WASHINGTON — After more than six weeks, two White House executive orders, new Chinese regulations and multiple bidders, a deal for the social media app TikTok has boiled down to one main strategy: mitigation.

TikTok, which is owned by the Chinese internet company ByteDance, said on Monday that it had offered a proposal to the Treasury Department that aimed to address the Trump administration’s concerns that the app could give the Chinese government access to sensitive data.

The proposal is far from an outright sale of TikTok’s U.S. operations, as President Trump suggested in an Aug. 6 executive order. Instead, ByteDance designed a proposal to alleviate the pressure it was facing from China and the United States and to mollify all sides. Specifically, it structured the deal to satisfy some of Mr. Trump’s concerns while dodging new Chinese regulations that could allow Beijing to block an outright sale of TikTok, people with knowledge of the discussions said.

Under the terms, TikTok would bring on Oracle, a business software firm that is close with the White House, as a “trusted technology partner.” That role could involve Oracle’s handling TikTok user data not just in the United States but also around the world, one person familiar with the matter said.

Oracle would also most likely gain a stake in TikTok, one person with knowledge of the proposal said. While the size of any Oracle investment in TikTok was unclear, Oracle would not be the app’s outright owner, another person said. And TikTok would also not transfer ownership of its valuable recommendation algorithm to Oracle, one person said. Beijing has essentially forbidden such a move.

The exact ownership structure for TikTok was still being debated, but some of ByteDance’s current investors are expected to be shareholders of the app, the people added. The deal would give U.S.-based investors voting control over TikTok, even though they may not own a majority of its shares, one person added. Such an arrangement could address concerns from the Committee on Foreign Investment in the United States, which scrutinizes investments with a foreign entity and makes a distinction between control and ownership of U.S.-based companies.

TikTok would also establish its headquarters in the United States. (It currently has offices in Los Angeles.) With discussions still underway, it’s possible that central details could still change.

The proposal now hinges on gaining the support of Mr. Trump, who previously said he was willing to ban TikTok if the app’s U.S. operations were not sold by a Sept. 20 deadline set by his executive order. Mr. Trump’s advisers, including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, seem inclined to accept the kind of deal that ByteDance has offered, people familiar with their thinking said.

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Credit…Ng Han Guan/Associated Press

Mr. Mnuchin and Mr. Ross, who are both playing a prominent role in reviewing ByteDance’s proposal, have come to favor a solution that would reduce national security and data risks by moving some of TikTok’s key operations out of China, rather than killing the company outright, those people said. There are few strong voices in the administration speaking out against such a deal, with the trade adviser Peter Navarro, a China hawk and one of TikTok’s more vocal critics, playing a minimal role in recent discussions.

ByteDance’s carefully designed proposal and the shifting views of Mr. Trump’s advisers indicate how they are more willing to compromise to mitigate an increasingly fractious situation over a video app that is beloved by American teenagers and influencers. On Sunday, ByteDance rejected a deal from Microsoft, in which Microsoft had proposed essentially taking over control of TikTok’s algorithm.

“This way D.C. is happy, Beijing’s happy with no algorithm being sold, and ByteDance and TikTok, along with Oracle, all have smiles on their faces,” said Daniel Ives, a technology analyst at Wedbush Securities. “This is a very tight balancing act for ByteDance because they’re trying to, by the thread of a needle, keep their company as a stand-alone.”

In its statement on Monday, TikTok said the proposal that was in front of the Treasury Department would “enable us to continue supporting our community of 100 million people in the U.S. who love TikTok for connection and entertainment.” Oracle confirmed that it was “part of the proposal submitted by ByteDance to the Treasury Department,” but declined to elaborate.

Mr. Mnuchin described on CNBC on Monday how Oracle would be a “trusted technology partner” for TikTok and said the software company had made “many representations for national security issues.” The White House declined to comment, and the Department of Commerce did not immediately respond to a request for comment.

Other parties may still be interested in participating in a deal. Walmart, which had been working on a TikTok bid with Microsoft, said on Sunday in a statement that it “continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties.”

In China, state media reports said on Monday that ByteDance would not sell TikTok in full to Oracle or any other bidders, suggesting that the company’s valuable algorithm would not trade hands. Last month, Beijing issued regulations that effectively said ByteDance would need a license to sell its technology to an American suitor.

At a regularly scheduled news briefing on Monday, Wang Wenbin, a spokesman for China’s Foreign Ministry, also criticized the American treatment of TikTok.

“TikTok has been rounded up and hunted in the United States, in a classic example of a government-coerced transaction,” Mr. Wang said. “This fully lays bare certain American politicians’ true intentions to seize by force, as well as the ugly face of economic bullying.”

Mr. Trump, who delights in being unpredictable, has a history of surprise decisions in his dealings with China. In recent years, he announced tariffs on hundreds of billions of dollars of products during a trade war and pardoned Chinese companies like ZTE at the request of China’s president, Xi Jinping.

Now he will essentially have to be persuaded to accept the type of compromise that he previously rejected. This summer, TikTok and its investors pressed the administration to allow them to address any concerns over national security by reconfiguring their operations, including moving their headquarters and data storage out of China. But Mr. Trump said no.

It is possible that Mr. Trump will face criticism from China skeptics in both parties if he takes a deal that doesn’t sever TikTok from ByteDance entirely.

In a letter on Monday to Mr. Mnuchin, Senator Josh Hawley, Republican of Missouri, urged the government to reject ByteDance’s proposal. He said ByteDance “can still pursue a full sale of TikTok, its code and its algorithm” to an American company.

“Or perhaps, given constraints imposed by Chinese law, the only feasible way to maintain Americans’ security is to effectively ban the TikTok app in the United States altogether,” Mr. Hawley said.

David McCabe and Ana Swanson reported from Washington, and Erin Griffith from San Francisco. Raymond Zhong contributed reporting from Taipei, Taiwan.

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U.S. Restricts Chinese Apparel and Tech Products, Citing Forced Labor

WASHINGTON — The Trump administration on Monday announced new restrictions on imports of apparel, hair products and technology goods from certain Chinese companies, saying those entities had used forced labor in the Xinjiang region to make their products.

The measure would allow U.S. customs agents to detain and potentially destroy goods brought into the country that are made by the named companies or entities in Xinjiang, a far western region where China has detained as many as a million Uighurs and other ethnic minorities in internment camps and prisons.

While the move is likely to further inflame tensions between the United States and China, it stops short of a more sweeping ban on cotton and tomatoes produced in Xinjiang that the administration was poised to announce last week. That measure had alarmed apparel companies that use Chinese cotton and spurred concern among some administration officials, who were worried it could hurt economic relations with China and prompt possible retaliation on American-grown cotton, according to people familiar with the internal discussions.

In a briefing with reporters on Monday, officials with the Department of Homeland Security said that the broader measure was undergoing further legal analysis, and that more announcements could soon follow.

The so-called withhold release orders announced by Customs and Border Protection on Monday target all products made with labor from the Lop County No. 4 Vocational Skills Education and Training Center in Xinjiang, which provides prison labor to nearby manufacturing entities, the border agency said.

The orders will also restrict hair products made in the Lop County Hair Product Industrial Park, apparel produced by Yili Zhuowan Garment Manufacturing Company and Baoding LYSZD Trade and Business Company, cotton produced and processed by Xinjiang Junggar Cotton and Linen Company, and computer parts made by Hefei Bitland Information Technology Company.

“These extraordinary human rights violations demand an extraordinary response,” Kenneth T. Cuccinelli II, the acting deputy secretary of homeland security, said of China’s actions in Xinjiang. “This is modern-day slavery.”

The economic scope of the order was not immediately clear, and border agency officials declined to specify the dollar value of imports from these companies.

Hefei Bitland has said on its website that its cooperative partners include major technology companies such as Google, HP, Haier, iFlytek and Lenovo. Yili Zhuowan has produced gloves for the French clothing brand Lacoste, according to the Workers Rights Consortium, a nonprofit.

Hefei Bitland “is not a direct supplier to HP,” a spokesperson for HP said in a statement. “We have robust policies in place to protect human rights and prohibit the use of involuntary labor of any kind across our supply chain. We are committed to ensuring everyone in our supply chain is treated with dignity and respect.”

American law bans the importation of any goods produced with forced labor. But human rights groups say the practice has long been widespread in Xinjiang, where many detainees are recruited into programs that assign them to work in factories, on cotton farms or in textile mills.

Xinjiang accounts for about 85 percent of China’s cotton production, according to the U.S. Agriculture Department, and about one-fifth of cotton production globally. Brands including Muji, Uniqlo, Costco, Caterpillar, Lacoste, Ralph Lauren, Tommy Hilfiger and Hugo Boss have been named in reports tying them to Xinjiang factories or materials. Some companies have denied the allegations.

Amid the tensions of President Trump’s trade war and a growing spotlight on human rights abuses in Xinjiang, some major apparel brands have tried to limit their exposure to the region in recent years, including by moving textile and clothing operations to Bangladesh, Indonesia and Vietnam. In July, the sportswear maker Patagonia announced that it was exiting Xinjiang, and that it had told its global suppliers that using fiber made in the region was prohibited.

But human rights groups and industry analysts say supply chains in China remain opaque, allowing companies to profit off involuntary labor by Uighurs and other ethnic Muslims. Travel restrictions in Xinjiang can prevent companies from investigating their supply chains there, and companies that carry out audits of their suppliers may see only what the Chinese factories want them to see.

Concerns about the prevalence of forced labor in these supply chains led Customs and Border Protection to draw up more sweeping restrictions on products made with cotton and fabric from Xinjiang. On the morning of Sept. 8, an agency official told The New York Times that the import bans would cover the supply chains for cotton, from yarn to textiles and apparel made in the Xinjiang Autonomous Region, as well as tomatoes and tomato paste.

But that order was never announced. Officials from the Agriculture Department, the Treasury Department and the U.S. Trade Representative intervened to raise objections about the measure, saying it could threaten American cotton exports to China, or put the trade deal Mr. Trump signed with China in January at risk, people familiar with the matter said.

In their call on Monday, homeland security officials denied that any intervention prompted the delay, saying the legal review had been “driven by the unique nature” of the policy. “We want to make sure that once we proceed that it will stick,” Mr. Cuccinelli said.

Under a withhold release order, importers are still allowed to bring their products into the United States if they are able to provide proof to customs that the goods were not made with forced labor, for example through an extensive audit of the manufacturing facilities, said John Foote, a partner at Baker & McKenzie who specializes in international trade and forced labor issues. If the importer is not able to produce that proof, the product must be sent back, or it is subject to seizure by U.S. customs.

In August, labor and human rights groups including the A.F.L.-C.I.O. and the Uyghur Human Rights Project filed a petition asking Customs and Border Protection to issue a withhold release order on all cotton goods from the Xinjiang region.

“The system of forced labor is so extensive that there is reason to believe that most cotton-based products linked to the Uyghur Region are a product wholly or in part of forced labor,” the petition read.

Customs has issued several withhold release orders in the past against individual companies with ties to Xinjiang, including the Esquel Group, which said it had ties to Ralph Lauren, Tommy Hilfiger, Hugo Boss and Muji; Hetian Taida Apparel Company; and Hero Vast Group. Other entities and people in Xinjiang have been subject to sanctions, including the Xinjiang Production and Construction Corps, an economic and paramilitary group that plays an important role in Xinjiang’s development.

In July, the Departments of State, Treasury, Commerce and Homeland Security issued an advisory jointly warning American companies to monitor their activities in China, particularly in Xinjiang, saying they could face “reputational, economic and legal risks associated with certain types of involvement with entities that engage in human rights abuses.”

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ByteDance’s Need for a TikTok-Oracle Deal: China is Slowing

TikTok’s Chinese owner has fought tooth and nail to keep control over its wildly popular platform for dancing teens and young Los Angeles influencers. One big reason: The days of fast internet fortunes and meteoric digital growth in its home market may be coming to an end.

With Microsoft dropping out of the race to take over TikTok in the United States, Oracle has emerged as the leading contender to save the video app from impending restrictions from the Trump administration. TikTok’s parent company, ByteDance, has chosen the software giant to be its U.S. technology partner, an arrangement that would most likely give Oracle oversight over data on American users.

Speaking on CNBC Monday morning, Treasury Secretary Steven Mnuchin said that government officials would review the proposal by ByteDance and Oracle this week, and then make a recommendation to President Trump. Mr. Mnuchin did not make clear whether Oracle would also buy a majority share in TikTok’s U.S. operations as part of the proposed deal. Mr. Trump had pressed for new ownership of the app as a way to address concerns about potential data gathering by the Chinese government.

Deal talks had been held up after China signaled last month that it would bar TikTok’s technology from being transferred overseas. A partnership with Oracle would probably be more palatable to Beijing, which requires many foreign companies to work with local counterparts to do business in China.

For ByteDance’s founder, Zhang Yiming, the deal could determine whether his eight-year-old company becomes a globe-straddling digital colossus or is reduced to a mere power player in China, where the internet market is maturing and competition is becoming more intense.

Over the past decade, the confluence of engineering talent and commercial opportunity in China minted fortunes that only Silicon Valley’s matched. The country is still a huge market with plenty of spending power, but its economic growth has slowed. Its population of internet users, at 900 million in a country of 1.4 billion, is reaching natural limits. Ninety-nine percent of those people have smartphones on which they already spend pretty much their entire waking lives.

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Credit…Rozette Rago for The New York Times

“For the entire Chinese internet market, there is much less room than there used to be to increase the amount of time spent by users,” said Zhang Xueru, an analyst in Shanghai with 86Research. “Growth in the digital ad market is much slower than before.”

ByteDance declined to comment.

Mr. Zhang of ByteDance believed early on that only by having an international presence could his company compete on the level of Google, Facebook or Amazon. As ByteDance grew, he encouraged employees to adopt what he called a “Martian” perspective on business. He wanted them to think of ByteDance not as a Chinese company gone global, but as an inherently planetwide enterprise, free of national starting points or biases.

Growing wariness toward China’s technological advancements has made that vision look harder to sustain, though. Never before has the United States clamped down on a Chinese company with as much cultural cachet as ByteDance. India banned TikTok in June, also on national security grounds. More European governments are shying away from using Chinese telecommunications equipment, fearful of espionage.

ByteDance’s rivals in China began discovering long ago how hard overseas expansion could be.

The internet giant Tencent is a global heavy hitter in video games through its holdings of developers including Epic Games and Riot Games. It has mostly failed, however, to export its best-known product: WeChat, the company’s Swiss Army knife of an app, which the Trump administration is also threatening to curb. India recently banned the mobile version of the shooter game PlayerUnknown’s Battlegrounds, which Tencent distributes in the country.

China’s other internet behemoth, the e-commerce giant Alibaba, still makes more than 90 percent of its revenue at home despite years of investment in overseas marketplaces. Two of China’s newest tech titans — the shopping site Pinduoduo and the food delivery platform Meituan — are focused heavily on the domestic market.

“Tencent’s businesses are diversified with multiple revenue streams that we expect to generate sustained growth in the years ahead,” the company said in an emailed statement. “The China market continues to offer tremendous opportunities,” the statement said, adding that the company would continue to explore overseas expansion.

Alibaba declined to comment.

ByteDance is hardly a minnow in China. There, TikTok’s sibling app, Douyin, is beloved by advertisers and also helps carry the Communist Party’s propaganda messages. ByteDance now accounts for around one-fifth of online advertising revenue in China, a larger share than Tencent and the search engine Baidu, according to the research firm Bernstein. The country’s online ad market was worth $95 billion last year, according to iResearch.

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Credit…Thomas Suen/Reuters

Grabbing a bigger slice of the pie won’t be easy, even if ByteDance has for years been assembling an armada of other apps aimed at conquering more of China’s two-plus billion eyeballs.

Besides Douyin, it runs two other video apps, Xigua and Huoshan. Its news aggregator, Jinri Toutiao, was its first blockbuster in China and remains a major platform. It is building up its video game and music divisions. It has an e-book app, shopping apps, online learning services, a car buying site, a cloud services platform and an office productivity suite.

“ByteDance has always been very, very enamored with Amazon,” said Rui Ma, an investor and China tech analyst. It and other Chinese internet companies respect “the fact that Amazon can dominate in multiple things,” she said. “It’s also helped by the fact that Jeff Bezos is the richest man on earth.”

In China, ByteDance could still try to use Douyin, which has an estimated 300 million daily users, to herd more people toward its other products — those education apps, for instance.

“Their core user demographic spends eight to 12 hours a day on education, and there are not many large competitors with internet-first business models,” said Turner Novak, a general partner at Gelt Venture Capital who has studied ByteDance’s rise.

Video game companies are big advertisers on Douyin and TikTok, Mr. Novak noted, which suggests that ByteDance could make lots of money by advertising its own games on those platforms as well.

Conquering online retail might be trickier. ByteDance is already trying to turn Douyin into a mobile-age Home Shopping Network, a place where kindly looking people entrance viewers into buying things. Not everyone is convinced.

“E-commerce is not only about traffic,” said Shawn Yang, an analyst in Shenzhen with the investment bank Blue Lotus Capital Advisors. “E-commerce is also about service, about product quality, about logistics, payments. The whole process is very long, which means that it’s not as easy as online gaming or advertising.”

Even serving up videos that are longer than the bite-size ones that fill Douyin and TikTok might require more of ByteDance than an algorithm that intuits viewers’ tastes with uncanny accuracy.

“Netflix used to say that its recommendation technology was a core asset,” said Ms. Zhang of 86Research. “But in fact, long-form video platforms still need hits. The platforms need big shows to bring in users. So actually, recommendation technology isn’t especially important compared to content.”

For now, ByteDance may find the most success building upon what it already knows best. One path might be to use brief, punchy videos as a medium not just for entertainment, but for learning or even hiring and dating.

Eugene Wei, a tech executive and angel investor in San Francisco, has argued that short videos are uniquely suited to a recommendation engine like TikTok’s. Unlike news articles such as this one, TikTok’s user-made videos are easy to create and easy to consume, so people generate huge quantities of data about their tastes simply by using the app. ByteDance runs the data back into its systems to improve its recommendations, which keep people even more glued to the app.

The result, in Mr. Wei’s words: “a rapid, hyper-efficient matchmaker” akin to the magic Sorting Hat in “Harry Potter.”

“You need some creativity to adapt short video” to new business areas, Mr. Wei acknowledged in an interview. “But the fact that ByteDance already walked that path once means you just believe it more the next time around.”

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Oracle Chosen as TikTok’s Tech Partner, as Microsoft’s Bid Is Rejected

WASHINGTON — The Chinese owner of TikTok has chosen Oracle to be the app’s technology partner for its U.S. operations and has rejected an acquisition offer from Microsoft, according to Microsoft officials and other people involved in the negotiations, as time runs out on an executive order from President Trump threatening to ban the popular app unless its American operations are sold.

It was unclear whether TikTok’s choice of Oracle as a technology partner would mean that Oracle would also take a majority ownership stake of the social media app, the people involved in the negotiations said. Microsoft had been seen as the American technology company with the deepest pockets to buy TikTok’s U.S. operations from its parent company, ByteDance, and with the greatest ability to address national security concerns that led to Mr. Trump’s order.

“ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” Microsoft said in a statement. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”

ByteDance declined to comment. A spokeswoman for Oracle did not immediately respond to a request for comment.

The fast-moving series of events on Sunday came as the clock ticks down on the executive order from Mr. Trump, which said that TikTok essentially needed to strike a deal to sell its U.S. operations by Sept. 20 or risk being blocked in the United States. But sale talks had been in a holding pattern because China issued new regulations last month that would bar TikTok from transferring its technology to a foreign buyer without explicit permission from the Chinese government. And any resulting deal could still be a geopolitical piñata between the United States and China.

The Chinese regulations helped scuttle the bid by Microsoft. The software giant had said in August that it would insist on a series of protections that would essentially give it control of the computer code that TikTok uses for the American and many other English-speaking versions of the app.

Microsoft said the only way it could both protect the privacy of TikTok users in the United States and prevent Beijing from using the app as a venue for disinformation was to take over that computer code, and the algorithms that determine what videos are seen by the 100 million Americans who use it each month.

“We would have made significant changes to ensure the service met the highest standards for security, privacy, online safety and combating disinformation,” Microsoft said in its statement.

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Credit…Tom Brenner/Reuters

Oracle has said nothing publicly about what it would do with TikTok’s underlying technology, which is written by a Chinese engineering team in Beijing — and which Secretary of State Mike Pompeo has charged is answerable to Chinese intelligence agencies. That is a major concern of American intelligence agencies, led by the National Security Agency and United States Cyber Command, which warned internally that whoever controls the computer code could channel — or censor — a range of politically sensitive information to specific users.

ByteDance and TikTok have denied that they help the Chinese government.

TikTok has become the latest flash point between Washington and Beijing over the control of technology that affects American lives. The Trump administration had already banned the Chinese telecom giant Huawei from selling next-generation, or 5G, networks and equipment in the United States, citing the risk of a foreign power controlling the infrastructure on which all internet communications flow.

But TikTok took the battle in new directions. For the first time, the United States was trying to stop a Chinese cultural phenomenon, with an intense following among American teenagers and millennials, which carries with it the possibility of future influence.

Even if Oracle may try to close a deal, it is unclear whether Beijing would create new obstacles to the process. And election-year politics have hung over the negotiations from the start. Unlike many other technology companies, Oracle has cultivated close ties with the Trump administration. Its founder, Larry Ellison, hosted a fund-raiser for Mr. Trump this year, and its chief executive, Safra Catz, served on the president’s transition team and has frequently visited the White House.

Last month, Mr. Trump said he would support Oracle buying TikTok. He called Oracle a “great company” and said the firm, which specializes in enterprise software, could successfully run TikTok.

“I think that Oracle would be certainly somebody that could handle it,” he said.

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Credit…Rozette Rago for The New York Times

Along with Amazon, Oracle tried to win a $10 billion contract to run the Pentagon’s cloud services, one of the most hotly contested technology contracts issued by the Trump administration. Microsoft ultimately won that.

Oracle was also poised to provide the administration with a system earlier this year to help with a planned study that would have enabled the wide release of the malaria drug hydroxychloroquine to treat Covid-19. While doctors had warned the drug could have dangerous side effects, Mr. Trump had promoted its possible use to treat patients infected by the coronavirus.

Oracle’s relationship with the administration has drawn scrutiny. In August, a Department of Labor whistle-blower said that Mr. Trump’s labor secretary, Eugene Scalia, had intervened in a pay discrimination case involving the company.

On a call to discuss Oracle’s earnings last week, Ms. Catz preemptively told analysts that she and Mr. Ellison would not discuss reports about their bid for TikTok.

The rise of TikTok in the United States has been remarkably rapid; it has taken off in just the past two years. ByteDance, founded in 2012, has raised billions of dollars in funding, valuing it at $100 billion, according to PitchBook, which tracks private companies. Its investors include Tiger Global Management, KKR, NEA, SoftBank’s Vision Fund and GGV Capital.

In July, as pressure from the U.S. government escalated, ByteDance began discussions with investors to carve out TikTok.

But the deal quickly become a free-for-all with bids from various corporations and investment entities around the world and new demands from the U.S. and Chinese governments.

As the deal progressed, two of ByteDance’s largest backers, Sequoia Capital and General Atlantic, have sought to retain their holdings in its valuable subsidiary while saving TikTok from a ban in the United States. Both firms are represented on ByteDance’s board of directors.

In late August the firms teamed up with Oracle to bid against Microsoft. Microsoft, meanwhile, teamed up with Walmart to make its bid.

In an interview, Brad Smith, Microsoft’s president and chief legal officer, said that as he studied TikTok, it became evident that there were two distinct potential security threats.

The first was that Chinese authorities, using existing and new national security laws, could order TikTok to turn over user data. TikTok tracks everything that its hundreds of millions of users watch to funnel them more videos and other material. Given that users cannot opt out of that tracking, the only solution would be to move the data on Americans to servers that are solely in the United States, Mr. Smith said.

(TikTok currently uses a major server in Virginia, but backs up some of its data in Singapore, and there are questions about whether Chinese authorities could reach into any of those huge pools of user data.)

Microsoft would have located that data in the United States — and, in all likelihood, so would Oracle.

“Then Microsoft engineers began to see a second potential vulnerability: disinformation,” Mr. Smith said, one that has also been identified by Australian researchers. The only way to assure that TikTok’s Chinese engineers were not designing code and algorithms to affect what users saw, or did not see, would be for Microsoft to take over the code and the algorithms.

“We proposed to control the data sets and the algorithms from the day of the acquisition, including by moving source code for the algorithms to the United States,” Mr. Smith said.

Microsoft then would have worked over the course of a year with TikTok’s Chinese engineers so that it would vet any subsequent changes and make them reviewable by the U.S. government for security purposes before it was released into production, he said.

That is the approach favored by the National Security Agency and the Pentagon, according to intelligence officials. But it is exactly what the Chinese object to, which Beijing made clear in its new regulations last month.

David E. Sanger and David McCabe reported from Washington; Erin Griffith reported from San Francisco.

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U.S. May Ban Cotton From Xinjiang Region of China Over Rights Concerns

WASHINGTON — The Trump administration is weighing a ban on some or all products made with cotton from the Xinjiang region of China, a move that could come as soon as Tuesday as the United States looks to punish Beijing over alleged human rights violations, three people familiar with the matter said.

The potential ban, which could affect a wide range of apparel and other products, comes amid widespread concerns about the use of forced labor in Xinjiang, where China has carried out a crackdown against mostly Muslim minorities, including a campaign of mass detentions.

The scope of the order remains unclear, including whether it would cover all cotton products shipped from Xinjiang or China, or potentially extend to items that contain Xinjiang cotton and are shipped from third countries.

But any move to block cotton imports could have huge implications for global apparel makers. Xinjiang is a major source of cotton, textiles, petrochemicals and other goods that feed into Chinese factories. Many of the world’s largest and best-known clothing brands rely on supply chains that extend into China, including using cotton and textiles produced in Xinjiang, in the country’s far west.

Studies and news reports have documented how groups of people in Xinjiang, especially the largely Muslim Uighur and Kazakh minorities, have been recruited into programs that assign them to work in factories, cotton farms, textile mills and menial jobs in cities.

President Trump has taken a harder stance toward China as the presidential election approaches, blaming Beijing for allowing the coronavirus to spread around the world and ravage the American economy. The Trump administration has steadily ramped up its pressure on China in recent months, placing sanctions on dozens of companies and individuals over alleged human rights violations in Xinjiang and national security risks.

The new ban could produce a stampede out of China for major apparel brands. Amid a prolonged trade war and rising tensions between the United States and China, many companies have looked to relocate apparel supply chains to countries like Vietnam, Bangladesh and Indonesia. But some have found China’s quality production hard to replicate, or faced fierce competition for factory space.

The measure, called a withhold release order, would be issued by U.S. Customs and Border Protection. The agency has in the past issued such bans against individual companies it suspected of using forced labor in Xinjiang, but it has been weighing more sweeping action against a broader category of goods. Customs and Border Protection did not immediately respond to a request for comment.

In July, the Trump administration placed several apparel companies on a blacklist that prevented them from buying American products, citing their use of forced labor in Xinjiang. The list included reported current or former suppliers to major international apparel brands, such as Ralph Lauren, Tommy Hilfiger and Hugo Boss. Several of the listed Chinese companies and the major international brands they supply pushed back against those measures, saying they had found no evidence of forced labor or other abuses in their supply chains.

Companies caught up in the debate over whether their products are made with forced labor say the opaque nature of Chinese supply chains can make it difficult to trace exactly where cotton is sourced.

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Forget TikTok. China’s Powerhouse App Is WeChat.

Just after the 2016 presidential election in the United States, Joanne Li realized the app that connected her to fellow Chinese immigrants had disconnected her from reality.

Everything she saw on the Chinese app, WeChat, indicated Donald J. Trump was an admired leader and impressive businessman. She believed it was the unquestioned consensus on the newly elected American president. “But then I started talking to some foreigners about him, non-Chinese,” she said. “I was totally confused.”

She began to read more widely, and Ms. Li, who lived in Toronto at the time, increasingly found WeChat filled with gossip, conspiracy theories and outright lies. One article claimed Prime Minister Justin Trudeau of Canada planned to legalize hard drugs. Another rumor purported that Canada had begun selling marijuana in grocery stores. A post from a news account in Shanghai warned Chinese people to take care lest they accidentally bring the drug back from Canada and get arrested.

She also questioned what was being said about China. When a top Huawei executive was arrested in Canada in 2018, articles from foreign news media were quickly censored on WeChat. Her Chinese friends both inside and outside China began to say that Canada had no justice, which contradicted her own experience. “All of a sudden I discovered talking to others about the issue didn’t make sense,” Ms. Li said. “It felt like if I only watched Chinese media, all of my thoughts would be different.”

Ms. Li had little choice but to take the bad with the good. Built to be everything for everyone, WeChat is indispensable.

For most Chinese people in China, WeChat is a sort of all-in-one app: a way to swap stories, talk to old classmates, pay bills, coordinate with co-workers, post envy-inducing vacation photos, buy stuff and get news. For the millions of members of China’s diaspora, it is the bridge that links them to the trappings of home, from family chatter to food photos.

Woven through it all is the ever more muscular surveillance and propaganda of the Chinese Communist Party. As WeChat has become ubiquitous, it has become a powerful tool of social control, a way for Chinese authorities to guide and police what people say, whom they talk to and what they read.

It has even extended Beijing’s reach beyond its borders. When secret police issue threats abroad, they often do so on WeChat. When military researchers working undercover in the United States needed to talk to China’s embassies, they used WeChat, according to court documents. The party coordinates via WeChat with members studying overseas.

As a cornerstone of China’s surveillance state, WeChat is now considered a national security threat in the United States. The Trump administration has proposed banning WeChat outright, along with the Chinese short video app TikTok. Overnight, two of China’s biggest internet innovations became a new front in the sprawling tech standoff between China and the United States.

While the two apps are lumped in the same category by the Trump administration, they represent two distinct approaches to the Great Firewall that blocks Chinese access to foreign websites.

The hipper, better-known TikTok was designed for the wild world outside of China’s cloistering censorship; it exists only beyond China’s borders. By hiving off an independent app to win over global users, TikTok’s owner, ByteDance, created the best bet any Chinese start-up has had to compete with the internet giants in the West. The separation of TikTok from its cousin apps in China, along with deep popularity, has fed corporate campaigns in the United States to save it, even as Beijing potentially upended any deals by labeling its core technology a national security priority.

Though WeChat has different rules for users inside and outside of China, it remains a single, unified social network spanning China’s Great Firewall. In that sense, it has helped bring Chinese censorship to the world. A ban would cut dead millions of conversations between family and friends, a reason one group has filed a lawsuit to block the Trump administration’s efforts. It would also be an easy victory for American policymakers seeking to push back against China’s techno-authoritarian overreach.

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Credit…The New York Times

Ms. Li felt the whipcrack of China’s internet controls firsthand when she returned to China in 2018 to take a real estate job. After her experience overseas, she sought to balance her news diet with groups that shared articles on world events. As the coronavirus spread in early 2020 and China’s relations with countries around the world strained, she posted an article on WeChat from the U.S. government-run Radio Free Asia about the deterioration of Chinese-Canadian diplomacy, a piece that would have been censored.

The next day, four police officers showed up at her family’s apartment. They carried guns and riot shields.

“My mother was terrified,” she said. “She turned white when she saw them.”

The police officers took Ms. Li, along with her phone and computer, to the local police station. She said they manacled her legs to a restraining device known as a tiger chair for questioning. They asked repeatedly about the article and her WeChat contacts overseas before locking her in a barred cell for the night.

Twice she was released, only to be dragged back to the station for fresh interrogation sessions. Ms. Li said an officer even insisted China had freedom of speech protections as he questioned her over what she had said online. “I didn’t say anything,” she said. “I just thought, what is your freedom of speech? Is it the freedom to drag me down to the police station and keep me night after sleepless night interrogating me?”

Finally, the police forced her to write out a confession and vow of support for China, then let her go.

WeChat started out as a simple copycat. Its parent, the Chinese internet giant Tencent, had built an enormous user base on a chat app designed for personal computers. But a new generation of mobile chat apps threatened to upset its hold over the way young Chinese talked to one another.

The visionary Tencent engineer Allen Zhang fired off a message to the company founder, Pony Ma, concerned that they weren’t keeping up. The missive led to a new mandate, and Mr. Zhang fashioned a digital Swiss Army knife that became a necessity for daily life in China. WeChat piggybacked on the popularity of the other online platforms run by Tencent, combining payments, e-commerce and social media into a single service.

It became a hit, eventually eclipsing the apps that inspired WeChat. And Tencent, which made billions in profits from the online games piped into its disparate platforms, now had a way to make money off nearly every aspect of a person’s digital identity — by serving ads, selling stuff, processing payments and facilitating services like food delivery.

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Credit…Wu Hong/EPA

The tech world inside and outside of China marveled. Tencent rival Alibaba scrambled to come up with its own product to compete. Silicon Valley studied the ways it mixed services and followed its cues.

Built for China’s closed world of internet services, WeChat’s only failure came outside the Great Firewall. Tencent made a big marketing push overseas, even hiring the soccer player Lionel Messi as a spokesman in some markets. For non-China users, it created a separate set of rules. International accounts would not face direct censorship and data would be stored on servers overseas.

But WeChat didn’t have the same appeal without the many services available only in China. It looked more prosaic outside the country, like any other chat app. The main overseas users, in the end, would be the Chinese diaspora.

Tencent did not respond to a request for comment.

Over time, the distinctions between the Chinese and international app have mattered less. Chinese people who create accounts within China, but then leave, carry with them a censored and monitored account. If international users chat with users inside China, their posts can be censored.

For news and gossip, most comes from WeChat users inside China and spreads out to the world. Whereas most social networks have myriad filter bubbles that reinforce different biases, WeChat is dominated by one super-filter bubble, and it hews closely to the official propaganda narratives.

“The filter bubbles on WeChat have nothing to do with algorithms — they come from China’s closed internet ecosystem and censorship. That makes them worse than other social media,” said Fang Kecheng, a professor in the School of Journalism and Communications at the Chinese University of Hong Kong.

Mr. Fang first noticed the limitations of WeChat in 2018 as a graduate student at the University of Pennsylvania, teaching an online course in media literacy to younger Chinese.

Soft-spoken and steeped in the media echo chambers of the United States and China, Mr. Fang expected to reach mostly curious Chinese inside China. An unexpected group dialed into the classes: Chinese immigrants and expatriates living in the United States, Canada and elsewhere.

“It seemed obvious. Because they were all outside China, it should be easy for them to gain an understanding of foreign media. In their day-to-day life they would see it and read it,” Mr. Fang said. “I realized it wasn’t the case. They were outside of China, but their media environment was still entirely inside China, their channel for information was all from public accounts on WeChat.”

Mr. Fang’s six-week online courses were inspired by a WeChat account he ran called News Lab that sought to teach readers about journalism. With his courses, he assigned articles from media like Reuters along with work sheets that taught students to analyze the pieces — pushing them to draw distinctions between pundit commentary and primary sourcing.

During one course in 2019, he focused on the fire at Notre-Dame cathedral in Paris, which inspired many conspiracy theories on WeChat. One professor at the prestigious Tsinghua University reposted an article alleging that Muslims were behind the fire, which was untrue.

The classes were a big draw. In 2018, Mr. Fang attracted 500 students. The next year he got 1,300. In 2020, a year of coronavirus rumors and censorship, Tencent took down his News Lab account. He decided it was not safe to teach the class on another platform given the more “hostile” climate toward foreign media.

Still, he said that blocking WeChat would be unlikely to help much, as users could easily switch to other Chinese apps filled with propaganda and rumors. A better idea would be to create rules that force social media companies like Tencent to be more transparent, he said.

Creating such internet blocks, he said, rarely improved the quality of information.

“Information is like water. Water quality can be improved, but without any flow, water easily grows fetid,” he said.

In a class in 2019, he warned broadly about barriers to information flow.

“Now, the walls are getting higher and higher. The ability to see the outside has become ever harder,” he said. “Not just in China, but in much of the world.”

When Ferkat Jawdat’s mother disappeared into China’s sprawling system of re-education camps to indoctrinate Uighurs, his WeChat became a kind of memorial.

The app might have been used as evidence against her. But he, like many Uighurs, found himself opening WeChat again and again. It contained years of photos and conversations with his mother. It also held a remote hope he clung to, that one day she would again reach out.

When against all odds she did, the secret police followed.

If propaganda and censorship have found their way to WeChat users overseas, so too has China’s government.

For ethnic minority Uighurs, who have been targeted by draconian digital controls at home in China, the chat app has become a conduit for threats from Chinese security forces. In court documents, the Federal Bureau of Investigation said China’s embassies communicated on WeChat with military researchers who had entered the United States to steal scientific research. The Chinese Communist Party has used it to keep up ties and organize overseas members, including foreign-exchange students.

Not all uses are nefarious. During the pandemic, local governments used the app to update residents traveling and living abroad about the virus. China’s embassies use it to issue travel warnings.

While the Chinese government could use any chat app, WeChat has advantages. Police know well its surveillance capabilities. Within China most accounts are linked to the real identity of users.

Mr. Jawdat’s mother, sick and worn, was released from the camps in the summer of 2019. Chinese police gave her a phone and signed her into WeChat. At the sound of his mother’s voice Mr. Jawdat fought back a flood of emotions. He hadn’t been sure if she was even alive. Despite the relief, he noticed something was off. She offered stilted words of praise for the Chinese Communist Party.

Then the police reached out to him. They approached him with an anonymous friend request over WeChat. When he accepted, a man introduced himself as a high-ranking officer in China’s security forces in the Xinjiang region, the epicenter of re-education camps. The man had a proposal. If Mr. Jawdat, an American citizen and Uighur activist, would quiet his attempts to raise awareness about the camps, then his mother might be given a passport and allowed to join her family in the United States.

“It was a kind of threat,” he said. “I stayed quiet for two or three weeks, just to see what he did.”

It all came to nothing. After turning down a media interview and skipping a speaking event, Mr. Jawdat grew impatient and confronted the man. “He started threatening me, saying, ‘You’re only one person going against the superpower. Compared to China, you are nothing.’”

The experience gave Mr. Jawdat little tolerance for the app that made the threats possible, even if it had been his only line to his mother. He said he knew two other Uighur Americans who had similar experiences. Accounts from others point to similar occurrences around the world.

“I don’t know if it’s karma or justice served, for the Chinese people to also feel the pain of what it’s like to lose contact with your family members,” Mr. Jawdat said of the proposed ban by the Trump administration. “There are many Chinese officials who have their kids in the U.S. WeChat must be one of the tools they use to keep in contact. If they feel this pain, maybe they can relate better to the Uighurs.”

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Credit…Jacquelyn Martin/Associated Press

Ms. Li was late to the WeChat party. Away in Toronto when it exploded in popularity, she joined only in 2013, after her sister’s repeated urging.

It opened up a new world for her. Not in China, but in Canada.

She found people nearby similar to her. Many of her Chinese friends were on it. They found restaurants nearly as good as those at home and explored the city together. One public account set up by a Chinese immigrant organized activities. It kindled more than a few romances. “It was incredibly fun to be on WeChat,” she recalled.

Now the app reminds her of jail. During questioning, police told her that a surveillance system, which they called Skynet, flagged the link she shared. Sharing a name with the A.I. from the Terminator movies, Skynet is a real-life techno-policing system, one of several Beijing has spent billions to create.

The surveillance push has supported a fast-growing force of internet police. The group prowls services like WeChat for posts deemed politically sensitive, anything from a link to a joke mocking leader Xi Jinping. To handle WeChat’s hundreds of millions of users and their conversations, software analyzes keywords, links and images to generate leads.

Although Ms. Li registered her account in Canada, she fell under Chinese rules when she was back in China. Even outside of China, traffic on WeChat appears to be feeding these automated systems of control. A report from Citizen Lab, a University of Toronto-based research group, showed that Tencent surveilled images and files sent by WeChat users outside of China to help train its censorship algorithms within China. In effect, even when overseas users of WeChat are not being censored, the app learns from them how to better censor.

Wary of falling into automated traps, Ms. Li now writes with typos. Instead of referring directly to police, she uses a pun she invented, calling them golden forks. She no longer shares links from news sites outside of WeChat and holds back her inclination to talk politics.

Still, to be free she would have to delete WeChat, and she can’t do that. As the coronavirus crisis struck China, her family used it to coordinate food orders during lockdowns. She also needs a local government health code featured on the app to use public transport or enter stores.

“I want to switch to other chat apps, but there’s no way,” she said.

“If there were a real alternative I would change, but WeChat is terrible because there is no alternative. It’s too closely tied to life. For shopping, paying, for work, you have to use it,” she said. “If you jump to another app, then you are alone.”

Lin Qiqing contributed research.

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TikTok Deal Faces Complications as U.S. and China Ratchet Up Tit-for-Tat

SAN FRANCISCO — On most days, companies like ByteDance, Microsoft, Walmart and Oracle are considered kings within their fields. But over the weekend, it became increasingly clear that they can also be something else: a set of pawns.

The industry titans have been caught in an escalating tit-for-tat between the United States and China over the sale of the U.S. operations of TikTok, the viral social media app owned by the Chinese internet company ByteDance. The sale was ordered in early August by President Trump, who said TikTok posed a national security threat because of its Chinese ties.

For weeks, China was critical of Mr. Trump’s order but stayed quiet on what it would do about it. That allowed ByteDance and TikTok to pursue sale talks with potential bidders like Microsoft, Walmart, Oracle and others. Then over the weekend, Beijing threw the whole process for a loop when it updated its export control rules to include some of TikTok’s key technologies — a sign that the Chinese government could exert its authority to delay or scuttle any deal at the last minute.

Now a blockbuster deal that had been set to be completed soon has become far more complicated, according to three people close to the talks. The two groups vying to buy TikTok’s U.S. business — one is an alliance between Microsoft and Walmart, and the other is an offer led by Oracle — are discussing how to interpret China’s new rules and how to move forward, said the people, who were not authorized to speak publicly. At the same time, the bidders are honing drafts of their offers and tweaking them as part of the negotiation process, the people said.

“Certainly this deal and high tech in general is now inherently politicized, and there’s no escaping it,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies. “As long as the U.S. and China have such low trust of each other, the way TikTok is being treated, and the way American companies may be treated in China, may become the new normal.”

He added, “We’ve passed the threshold where we feel confident we’re able to mitigate these kinds of risks between each other, and regular companies are being caught in the middle.”

Samm Sacks, a cyberpolicy fellow at the think tank New America, said the Trump administration was likely to counter China’s latest move with its own, and that more U.S. companies operating in China could be in an increasingly precarious position. “This is just the tip of the iceberg,” she said.

Representatives for Microsoft, Oracle and Walmart declined to comment.

“We are studying the new regulations that were released Friday,” Erich Andersen, ByteDance’s general counsel, said in a statement. “As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the U.S. and China.”

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Credit…Tingshu Wang/Reuters

In Washington on Monday, China’s new export measures were widely seen as a potential poison pill for the TikTok deal. If China does move to block TikTok’s sale, that could goad Mr. Trump into taking harsher action, further escalating tensions between the United States and China.

Already, the Trump administration has placed sanctions on dozens of Chinese companies in recent weeks over alleged security threats and human rights violations, and it has threatened to take more measures to block Chinese tech companies like Alibaba and Baidu from doing business in the United States. Under Mr. Trump, the sale of Grindr, the gay dating app, to Beijing Kunlun Tech Co., a Chinese company, was unwound.

Peter Navarro, the White House trade adviser known for his harsh criticism of China, said in an interview on Monday that it was “critical” that Americans not use apps that are made in China because Beijing could use them to surveil, track and potentially even extort Americans.

“That’s really the policy position underlying why we have gone after TikTok and WeChat and there will be others because China, communist China, the Chinese Communist Party, is basically going out around the world trying to acquire technology and influence,” he said. Of Mr. Trump, he added, “This country and this president, the strongest president on China in history, is not going to put up with that.”

Mr. Navarro said he was not part of the negotiations over TikTok’s sale, a deal that was being reviewed by the Treasury Department. The White House referred a request for comment to the Treasury Department, which did not respond.

According to an analysis by the U.S.-China Business Council, China’s new export controls affect two technologies that are critical for TikTok — the data analytics used to create personalized information feeds, and technology that governs user interactions with artificial intelligence, including voice recognition and other voice technologies.

To transfer these technologies to partners out of China, exporters now need to obtain several approvals from their provincial commerce department, a process that can take up to 45 working days. ByteDance has said that it will comply with the new regulations.

China’s new export controls came just as a sale of TikTok appeared to be close, after weeks of negotiations and a changing cast of bidders. Earlier on, a coalition of tech companies that included Walmart, Alphabet and SoftBank tried to make an offer for parts of TikTok’s business. That effort, which CNBC had reported on earlier, ended up falling apart, the people said.

That was when Walmart joined forces with Microsoft, while Alphabet bowed out of the talks. Now the bidding has boiled down to the Microsoft-Walmart group versus Oracle, with both continuing to pursue a deal despite the new Chinese rules, said the people close to the discussions.

SoftBank and Alphabet, which is Google’s parent company, declined to comment.

Matt Perault, an associate professor at Duke University’s Center on Science and Technology Policy, said that the United States and China had politicized other deals in the past, including Qualcomm’s attempted acquisition of the Dutch company NXP Semiconductors. In 2018, Qualcomm terminated that deal after Chinese authorities did not grant antitrust approvals for the acquisition of NXP’s China operations.

Even so, Mr. Perault said the TikTok deal stood out because the United States is on the eve of an election in which the president has made China a key component of his re-election strategy, and the company involved is one of the strongest competitors to U.S. tech companies in a generation.

“The politicization is having an immediate impact,” Mr. Perault said, adding that the degree of politicization was “unique.”

Mike Isaac reported from San Francisco and Ana Swanson from Washington.

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U.S. Penalizes 24 Chinese Companies Over Role in South China Sea

WASHINGTON — The Trump administration on Wednesday added 24 Chinese companies to a government list that bans them from buying American products, citing their role in helping the Chinese military construct artificial islands in the disputed South China Sea.

The Trump administration has penalized dozens of Chinese companies in previous months by adding them to the so-called entity list over national security concerns related to advanced technology and alleged human rights violations against Muslim minorities in the Xinjiang region. But this is the first time that the administration has used the entity list in relation to China’s encroachment in the South China Sea, which stretches south of Hong Kong and borders the Philippines, Vietnam, Malaysia and other countries.

Companies added to the entity list will no longer be able to buy technology and other products shipped from the United States, “whether a toothbrush or a semiconductor,” without first obtaining special permission to do so, said Kevin Wolf, an international trade partner at Akin Gump. While companies can request a license to continue selling to firms on the entity list, such requests are often denied, the Commerce Department said.

The State Department also announced that it would begin imposing visa restrictions on Chinese citizens “responsible for, or complicit in, either the large-scale reclamation, construction, or militarization of disputed outposts in the South China Sea.” Such individuals would be barred from the United States, and their family members may also face visa restrictions, the announcement said.

Senior State Department officials said they could not publish the names of the executives that would be precluded from traveling to the United States, but they noted that there were “dozens of individuals” who would be subject to the travel restrictions.

The move is the latest in a series of actions that have further soured relations between China and the United States. President Trump, who has accused Beijing of not doing enough to prevent the coronavirus from becoming a global pandemic, has increasingly looked to punish China.

In recent weeks, the Trump administration moved to bar the Chinese-owned social media apps TikTok and WeChat from the United States, shut down a Chinese diplomatic mission in Houston, and placed sanctions on Chinese officials and entities over human rights violations, among several other measures. In July, Secretary of State Mike Pompeo announced that China’s claims across much of the South China Sea were “completely unlawful,” paving the way for the United States to pursue sanctions against Chinese companies acting in the region.

A spokesperson from the Chinese Embassy in Washington on Wednesday called the sanctions “completely unreasonable” and said the South China Sea was an “integral part of China’s territory.”

“It is an act of hegemony in serious violation of international law and basic norms covering international relations. China firmly rejects and condemns it,” the spokesperson said. “We urge the U.S. side to immediately withdraw its wrong decision and stop harming China’s interests and undermining China-U.S. relations.”

The South China Sea has become a potential site for military confrontation, with worrying brushes between ships and aircraft. On Tuesday, China accused the Americans of flying a U-2 spy plane over a live-fire military exercise that China had been conducting, calling it a “naked provocation.” Senior State Department officials declined to confirm or comment on news reports of two missiles fired by Chinese military into the South China Sea.

The Chinese government has been rapidly building artificial islands in the disputed waters since 2013, dredging and constructing more than 3,000 acres of new land, including air defense and anti-ship missile features, the Commerce Department said in its announcement. The island building undermines the sovereignty of other countries in the region and comes despite the condemnation of the United States and other countries, according to the announcement.

“The entities designated today have played a significant role in China’s provocative construction of these artificial islands and must be held accountable,” Wilbur Ross, the commerce secretary, said in a statement.

A senior Commerce Department official told reporters on Wednesday that “there’s been a relatively small amount” of U.S. exports to the companies targeted on Wednesday, totaling around $5 million over the past five years.

The named companies include several divisions of China Communications Construction Company, a contractor for many of the “Belt and Road” infrastructure projects that China has built around the world. In its announcement, the State Department said that the company had “engaged in corruption, predatory financing, environmental destruction and other abuses across the world.”

The list also includes Beijing Huanjia Telecommunication Company, Chongxin Bada Technology Development Company, Shanghai Cable Offshore Engineering Company, Tianjin Broadcasting Equipment Company, and the research institutes of the China Electronics Technology Group Corporation and China Shipbuilding Group.

China must not be allowed to use these companies “as weapons to impose an expansionist agenda,” Mr. Pompeo said in his statement. “The United States will act until we see Beijing discontinue its coercive behavior in the South China Sea, and we will continue to stand with allies and partners in resisting this destabilizing activity.”

The United States does not have maritime claims in the South China Sea, but wants to ensure Beijing does not trample on the “sovereign rights” of Southeast Asian nations. Senior State Department officials also accused China and its state-owned companies of “bullying and coercion” in the region, which plays host to lucrative and vital shipping lanes.

David R. Stilwell, the assistant secretary of state for the Bureau of East Asian and Pacific Affairs, has referred to China’s territorial expansion in the region as “modern-day equivalents of the East India Company,” referring to the trading company that fueled the British Empire.

Pranshu Verma contributed reporting.

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How TikTok’s Talks With Microsoft Turned Into a Soap Opera

SAN FRANCISCO — When Microsoft began talking this summer with the popular video app TikTok and its Chinese parent company, ByteDance, no one had any intentions of pursuing a blockbuster deal.

With tensions swirling between the United States and China, along with the complexities of running a social media company, any large acquisition appeared too treacherous to navigate. So Microsoft discussed taking a small stake in TikTok and becoming one of the app’s minority investors, said four people briefed on the conversations.

Even a small deal would be a win-win, the thinking went.

For Microsoft, a minority investment would potentially bring TikTok over to using its Azure cloud computing service, immediately making the app one of Microsoft’s biggest cloud clients, said the people, who declined to be identified because the details are confidential. (TikTok has been using Google’s cloud computing services to power its videos.)

For ByteDance and TikTok, a deal with Microsoft could help propel the valuation of the app’s business outside China to as high as $80 billion, the people said. It would also provide TikTok with the endorsement of a blue-chip American company to mollify the Trump administration, which had called TikTok’s Chinese ties a national security threat.

Yet what started as discussions about a small investment morphed into a big, messy, political soap opera. Pushed by President Trump, who has ordered TikTok’s U.S. operations to be sold or to cease operating, ByteDance is now discussing selling parts of TikTok’s global operations to several potential bidders. And with so many groups jumping into the talks to get a piece of any deal, all are trying to drive their own interests and agendas.

Apart from Microsoft, the bidders include Oracle, the enterprise software company, the people with knowledge of the talks said. Bankers and investors, some authorized and some simply trying to gin up a deal, have also called Netflix and Twitter about buying TikTok, they said, though it is unclear if those companies have a genuine interest in an acquisition. Microsoft, with the deepest resources and a market value of more than $1.6 trillion, still appears the furthest along for now, the people said.

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Credit…Shannon Stapleton/Reuters

The sale scenarios on the table are head-spinning, the people said, because all of the parties — ByteDance, TikTok, their investors, and the bidders — want to get the most out of any deal. The talks have covered everything from selling just TikTok’s North American operations all the way to every part of TikTok, minus ByteDance’s Chinese-only video app Douyin, they said.

A deal price is unclear, though numbers have ranged from $20 billion to $50 billion depending on what parts of TikTok will be sold, the people said. The talks are fluid and no deal may ultimately be reached.

Even if one does take place, a TikTok sale — which has become a referendum on the U.S.-China relationship — may still be disrupted if Beijing or Mr. Trump weigh in. Mr. Trump has been highly involved, including talking to Microsoft’s chief executive, Satya Nadella, and saying that Oracle could handle buying TikTok. In an Aug. 6 executive order, he imposed a deadline for TikTok’s U.S. operations to be sold by Sept. 15.

On Monday, TikTok sued the U.S. government, arguing that the executive order had deprived it of due process. The suit could give TikTok more time to operate in the United States if the courts order it, a stalling tactic that may help the app wait it out past the Nov. 3 election.

Steven Davidoff Solomon, a law professor at the University of California in Berkeley, who contributes to The New York Times, said the United States’ forcing such a huge company to sell itself was “really unprecedented.” He added, “This is a forced sale, and ByteDance is trying to keep it from being as much of a fire sale as possible.”

This account of TikTok’s deal discussions was based on interviews with more than a dozen people who were involved in or were briefed on the situation. They spoke on condition of anonymity because they were not authorized to speak publicly.

Representatives from TikTok and ByteDance, Microsoft, Netflix, Twitter, Oracle and the White House declined to comment.

A spokesman for China’s Foreign Ministry, Wang Wenbin, called Mr. Trump’s executive order a “naked act of bullying,” and added that the U.S. government would eventually “reap what it sows.”

TikTok, which ByteDance created partly out of a $1 billion purchase of the lip-syncing app Musical.ly in 2017, has become a phenomenon in the United States and elsewhere. More than 100 million Americans regularly use the app, the company has said, especially teenagers and twentysomethings.

Last year, as tensions between the United States and China grew worse, the Trump administration began scrutinizing TikTok and ByteDance. In November, the Committee on Foreign Investment in the United States, a powerful panel known as Cfius that reviews foreign acquisitions, opened an inquiry into ByteDance’s deal to buy Musical.ly after lawmakers voiced concerns that TikTok was giving data on its American users to Beijing.

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Credit…Jeenah Moon for The New York Times

TikTok has denied that it helps Beijing. To reduce the U.S. pressure, Zhang Yiming, ByteDance’s chief executive, began consulting with a small group of investors in his internet company, including Sequoia Capital and General Atlantic. ByteDance, which is privately held, has been valued at about $100 billion.

Doug Leone, one of Sequoia’s partners, and Bill Ford, chief executive of General Atlantic, became Mr. Zhang’s bridge to the White House, the people with knowledge of the talks said. In their conversations, the Trump administration had specific stipulations: First, it wanted TikTok to overhaul its governance and shareholder structure to reduce ByteDance’s ownership of the app. Second, it wanted guarantees that TikTok’s American user data be stored on U.S. servers.

The firms needed a major U.S. tech partner to get the deal done, the people close to the talks said. Mr. Zhang and the investors figured that Facebook, Google and Amazon were under too much antitrust scrutiny. But Microsoft, with its cash hoard of $137 billion, cloud expertise and strong government relationships, could work.

Mr. Zhang, a former Microsoft engineer, reached out to Microsoft executives to gauge their interest, said one person with knowledge of the talks. Sequoia and General Atlantic declined to comment.

By July, Microsoft joined the talks. At the time, the discussions centered on Microsoft making a minority investment in TikTok, the people said. Between the U.S.-China tensions and the pressures of operating a social media company, Microsoft executives were hesitant about a big deal, said people briefed on the conversations. ByteDance and Mr. Zhang also wanted to retain some ownership of TikTok, they said.

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Credit…Doug Mills/The New York Times

Yet as the talks progressed, Microsoft grew warmer on a potentially larger deal with TikTok. While Microsoft has lots of data about industries like gaming and workplace software, it has little information about people’s social media behavior. TikTok’s user interaction information could strengthen Microsoft’s data science operation, the people briefed on the talks said.

TikTok could also be linked to Microsoft’s $7 billion advertising business. Together, that could make a meaningful difference to Microsoft’s growth, they said.

ByteDance and Microsoft came to see an acquisition of TikTok’s U.S. operations as a cleaner option, they added. Microsoft could allow TikTok to operate as a stand-alone unit, similar to how it had treated past large acquisitions, such as its $2.5 billion acquisition of the company behind the video game Minecraft in 2014 and its $26 billion purchase of professional networking site LinkedIn in 2016.

All the while, Trump administration officials were keeping an eye on the situation. Last month, Treasury Secretary Steven Mnuchin, who is chairman of Cfius and holds the final word on the panel’s recommendations of ByteDance’s purchase of Musical.ly, spoke with TikTok and Microsoft about how TikTok’s data should be on U.S. servers, three of the people said.

On July 31, Mr. Mnuchin presented the Cfius analysis of the ByteDance-Musical.ly deal to Mr. Trump, two people said. The recommendation: that ByteDance be ordered to sell TikTok to an American owner, with Microsoft acquiring most of TikTok’s business and the stakes held by ByteDance’s Chinese shareholders winnowed to a minority investment.

A spokesman for the Treasury and Mr. Mnuchin declined to comment.

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Credit…Ian C. Bates for The New York Times

But aboard Air Force One later that day, President Trump said he planned to ban TikTok entirely. Several of Mr. Trump’s advisers were furious at the derailment of their recommendation, saying that China hawks like Peter Navarro, the White House director of trade and manufacturing policy, had exerted too much influence, according to White House officials and others close to the president.

In a statement, Mr. Navarro said, “Nobody exerts ‘influence’ over President Donald J. Trump. He listens carefully to a wide range of often sharply competing views and then he makes the best and most informed decision. That’s why he is such a great president.”

The next 72 hours were chaotic. News leaked that Microsoft was in talks to acquire TikTok. Private equity firms and bankers circled. That briefly included Stephen A. Schwarzman, chief executive of the Blackstone Group, said people familiar with the talks. Blackstone declined to comment.

That weekend, Mr. Trump called Mr. Nadella about TikTok. Mr. Trump said ByteDance had 45 days to complete a sale of TikTok’s business in the United States. He added that any deal should help the U.S. government in some way, perhaps in the form of job creation or other economic benefits, or some kind of offering to the Treasury Department.

Privately, officials at Microsoft and TikTok were shocked. The 45-day window put TikTok at a disadvantage in negotiating the best deal. Mr. Trump also seemed to be arguing for “tipping the waiter,” essentially offering a percentage of the deal to the Treasury, the people said.

On Aug. 2, Microsoft issued a statement about its pursuit of TikTok and said it would provide “proper economic benefits to the United States, including the United States Treasury.” It did not elaborate on what that meant.

A few days later, Mr. Trump signed his executive order to block TikTok if it was not sold by mid-September. A week later, he issued another executive order giving ByteDance 90 days to close such a deal.

Since then, other potential suitors have emerged, including Oracle. ByteDance, backed into a corner by the White House, wants the best price for TikTok — and not only from one bidder in Microsoft. And sensing ByteDance’s weakness, more potential acquirers are kicking the tires on the hot, fast-growing app. All of that may turn off Microsoft from a purchase.

Even as deal discussions have continued, TikTok sued the U.S. government on Monday over Mr. Trump’s executive order.

“We far prefer constructive dialogue over litigation,” the company said in a statement. But given the executive order, it said, “we simply have no choice.”

Mike Isaac reported from San Francisco, and Andrew Ross Sorkin from New York. Reporting was contributed by Ana Swanson, Maggie Haberman, Michael J. de la Merced, Raymond Zhong and Alan Rappeport.

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Trump’s Attacks on TikTok and WeChat Could Further Fracture the Internet

WASHINGTON — China and the United States once acted like opposites when it came to governing the internet.

Beijing imposed a heavy state hand. It blocked major foreign websites, sheltered Chinese tech firms as they developed alternatives to Western rivals and kept a tight grip on what people said online. The United States stood for a global openness that helped a generation of internet Goliaths dominate worldwide.

But when President Trump issued executive orders that could lead to a U.S. ban next month on two of the world’s most popular Chinese-made apps, TikTok and WeChat, the White House signaled a new willingness to adopt Beijing’s exclusionary tactics. Mr. Trump went further on Friday, ordering ByteDance, the Chinese owner of TikTok, to give up its American assets and any data that TikTok had gathered in the United States.

On Monday, the administration also clamped down further on Huawei by restricting the Chinese tech giant’s ability to buy computer chips produced abroad using American technology. That followed a White House initiative this month to begin purging Chinese apps and telecom companies from American networks, saying they posed a security threat.

Together, the moves herald a new, more invasive American philosophy of tech regulation, one that hews closer to China’s protectionist one, though without the aims of censoring content and controlling the populace. The shift could hurt American internet giants like Facebook and Google, which have greatly benefited from the borderless digital terroir outside China, as well as Chinese internet giants like Tencent and Alibaba, which have tried to expand into the West.

If more countries follow Mr. Trump by basing digital controls on diplomatic allegiances, protectionist aims or new concerns about the security of their citizens, the internet could become more of a patchwork of fiefs as varied as the visa policies that fragment world travel.

“A wholesale ban will undoubtedly trigger retaliation and may contribute to the type of fracturing of the internet that we have witnessed in recent years, and which authoritarian governments favor,” said Ron Deibert, the director of the Citizen Lab research group at the University of Toronto’s Munk School of Global Affairs and Public Policy.

China and the United States have different starting points when it comes to governing high-tech industries. The Communist Party has no tolerance for its citizens speaking out against it online or organizing outside its sphere of control. It has also made no secret of its ambitions to cultivate Chinese companies’ expertise in advanced technologies, which foreign competitors say sometimes leads the authorities to give local firms unfair advantages.

The White House orders on TikTok and WeChat, expected to take effect on Sept. 20, were framed as measures to defend American citizens against the threat of data gathering by Beijing. They also appear to stem from the idea that China should be punished in kind for violating democratic norms. This principle of reciprocity has guided the Trump administration’s recent confrontations with Beijing over trade, industrial policy and the news media.

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Credit…Chris Delmas/Agence France-Presse — Getty Images

Yet when applied to internet governance, reciprocity could carry a heavy price for the United States. While few countries have fully embraced China’s walled-garden approach to cyberspace, many governments are uneasy with the dominance of American giants like Facebook, Google and Amazon within their borders, and are considering new taxes and restrictions on their operations.

As the Trump administration cracks down on TikTok and WeChat, other nations may start to see their dependence on U.S. technology providers in a different light.

Already, Vietnam and Turkey have tightened control over American social media. Across much of the developing world, Chinese software and social media companies have a good shot at beating out Western ones, Mr. Deibert said. China has worked for years to expand its influence in Africa, Latin America and the Middle East, and Chinese smartphone and telecom equipment makers have already won footholds there by focusing on providing the lowest-cost gear.

A White House spokesman, Judd Deere, said in a statement that the administration was “committed to protecting the American people from all cyber-related threats to critical infrastructure, public health and safety, and our economic and national security.”

A spokesman for China’s Foreign Ministry, Wang Wenbin, this month called Mr. Trump’s executive orders “nothing short of bullying.”

Mr. Wang did not address China’s own restrictions on American websites, saying only that other countries might begin using national security as an excuse to act against U.S. companies. “The United States must not open Pandora’s box, or it will suffer the consequences,” he said.

China’s digital cleaving dates to the late 1990s, when it began constructing the Great Firewall, a sophisticated set of internet controls. Viewing the internet inside China as an issue of national sovereignty, Beijing heavily censored online content, and over time blocked Google searches, social media like Facebook and Twitter, and news sites including The New York Times.

Behind that wall, Chinese internet companies like Alibaba, Baidu and Tencent, the maker of WeChat, thrived on a huge captive market. But China also tried to play it both ways as these companies began expanding into regions such as Southeast Asia and Europe.

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Credit…Roman Pilipey/EPA, via Shutterstock

Inside China, citizens became accustomed to a Chinese-only internet with homegrown search engines, e-commerce sites and social media sites. Many younger Chinese have never heard of Google, Twitter, Facebook or Instagram.

While American politicians denounced Chinese censorship, they took little action to penalize China for its bans. Previous presidents — Democrats and Republican alike — argued that the United States was so big and powerful that it could afford to lead by example as it tried to spread principles of openness and democracy.

Over the years, China’s economic growth and keener security threats eroded that confidence. Enter Mr. Trump, who has ushered in a new era of score keeping and tit-for-tat action.

Mr. Trump has chastised other countries for paying less than the United States to fund groups like the North Atlantic Treaty Organization, or for charging higher tariff rates than the United States does. His administration is now working on an initiative that could be its biggest push for reciprocity yet: It plans to demand that other members of the World Trade Organization lower their tariff rates, or else the United States will raise its own rates, people with knowledge of the deliberations said.

In a May 29 speech in the Rose Garden, Mr. Trump criticized China for stealing American intellectual property, violating its commitments to the World Trade Organization and raiding American factories. But he said he “never solely blamed China” for those actions.

“They were able to get away with a theft like no one was able to get away with before because of past politicians and, frankly, past presidents,” he said. “But unlike those who came before, my administration negotiated and fought for what was right. It’s called fair and reciprocal treatment.”

Mr. Trump has seen the appeal of Chinese-style policies in other areas as well. He praised China’s leader, Xi Jinping, for extending his own term limits. He curtailed access for Chinese journalists and researchers in the United States, mirroring Beijing’s media restrictions. Mr. Trump’s advisers and others in Congress have also pointed to Chinese industrial policies as evidence that the United States should put more funding toward its high-tech sectors.

Matt Perault, a professor at Duke University’s Center on Science and Technology Policy, said it was “disturbing to see the United States engage in a trade war that uses China’s practices.” Before, he said, American policy aimed to provide the world with an alternative model to China.

He added that Chinese companies operating in the United States were now being forced to adopt strategies similar to those that American companies had long taken in China to reduce regulatory risk. The moves include divesting assets, limiting themselves to minority stakes in new investments and adjusting where they store customer data.

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Credit…Greg Baker/Agence France-Presse — Getty Images

Elsewhere, the Trump administration is still pushing for a more open internet and fighting for the interests of its tech giants by opposing other countries’ efforts to regulate their digital economies.

This includes an offensive against new or proposed digital services taxes in countries including France, Britain, Italy and India, which would fall heavily on Google and Amazon. The administration has also objected to European efforts to address privacy concerns by blocking the flow of consumer data to the United States.

In its executive orders restricting WeChat and TikTok, the White House pointed to a recent move by India to ban the two apps. To some in Washington, that seemed like a bizarre rationale, given how vociferously the United States has criticized India’s use of protectionist policies in other areas.

Clete Willems, a partner at Akin Gump and a former trade official in the Trump administration, said the executive orders were motivated by national security concerns, not by reciprocity.

“A lot of people have asked: ‘Should China be angry? Twitter is already banned. Google is already banned. How angry can China be?’ But we’re not just copying their playbook,” Mr. Willems said. “The administration is trying to respond to what it sees as a legitimate national security threat.”

Others said out-and-out bans, if not coupled with more meaningful regulation, might prove self defeating.

“There’s a strong argument to be made that the Great Firewall of China was the first salvo in this battle,” said Samm Sacks, a fellow at the New America think tank. “My response to that is: Is mirroring the Chinese government’s approach the right way? Is that even going to make us more secure?”

Ana Swanson reported from Washington, and Paul Mozur and Raymond Zhong from Taipei, Taiwan.