Commerce Secretary Wilbur Ross says the U.S. plans to restrict U.S. access to the Chinese-owned apps TikTok and WeChat on Sunday night on national security and data privacy grounds.
IMD Business School LEGO Professor of Management and Innovation Howard Yu told Yahoo Finance’s On the Move that there’s a “lack of security experts’ opinions weighing in” on the situation.
“There's no real IT specialist trying to say ‘Are we doing enough? Are we not doing enough?’ when Oracle (ORCL) is becoming this tech partner,” Yu explains. Oracle is reportedly nearing a deal with TikTok to own a roughly 20% stake in the company. Walmart will reportedly join in the partnership.
Yu says there needs to be more transparency and due process. “Businesses only thrive when there is predictability and transparency, and we know the rules of the game. What we are seeing is this massive shift in rules of the game, what should be acceptable, what is not, in the name of national security without an open hearing,” says Yu.
“We are talking about the unwinding of globalization in its complete form. And notice this is no longer about trade. This is about something deep in the technological aspect,” Yu continues.
Yu explains that in the short term, companies like Facebook (FB) may see advertising spike due to their similar additional features and customers’ wait-and-see approach, but what happens in the long run will depend on two scenarios, Yu says.
“If Oracle and Walmart (WMT) win in this circumstance, and they can continue to allow TikTok to have a certain way of operating in that scenario, then it's still a promising platform. But if we really come to an abrupt end, then all the international companies around the world will start to feel the chill,” Yu warns.
“If you're Microsoft (MSFT), whether you are Google (GOOGL), seeing your rival being hammered down, not because of a market situation, but because it’s getting squeezed in geopolitics, that sends a chill to the boardroom,” he adds.
McKenzie DeGroot is a producer at Yahoo Finance. Follow her on Twitter: @degrootmckenzie