Updated: August 10, 2020 8:56:08 am
President Donald Trump on Thursday signed an executive order banning WeChat in the US, a popular messaging app with its roots in China. The order, which takes effect in 45 days, says Americans will be prohibited from carrying out any transactions with Tencent, the parent company of WeChat. The decision to ban WeChat will have long-term implications on consumers, American companies with a significant presence in China, US-China relations, and the future of the internet. So what exactly is WeChat and why is the Trump administration after the popular Chinese messaging app?
What is WeChat?
WeChat is China’s most popular messaging app with a monthly active user base of over 1 billion. WeChat is so popular that the app is the main form of communication among Chinese consumers. However, WeChat is hardly known to people living outside of China. The rise of WeChat in China can be attributed to the fact that the government has banned many popular American apps like Facebook, WhatsApp and Twitter in the country.
Even though many like to call WeChat a messaging tool, but it’s more than that. The app can be used for texting, voice or video calls, reading news, bill payments, taxis and even games. It’s no wonder why WeChat is called a “super app” in China.
The popularity of WeChat has made Facebook and other social media companies a bit nervous. Over the years, Mark Zuckerberg-owned Facebook has been trying to mimic the business model of WeChat, which thrives on games, e-commerce and virtual goods. Facebook, on the other hand, is very much dependent on the advertising revenue for growth.
Who owns WeChat?
WeChat is owned by Tencent, Asia’s largest company by market cap. This is the same company that owns a majority stake in Riot Games, the makers of League of Legends and Supercell, the developers of Clash of Clans. It also has a stake in Epic Games, the makers of Fortnite. Tencent also has a 1.5 per cent stake in South Korean company Bluehole, the publisher of PlayerUnknown’s Battlegrounds, better known as PUBG. China’s Tencent also owns stakes in Snap Inc, Activision, and Tesla. Tencent, which currently has a market cap of over $600 billion, is headed by Ma Huateng, better known as Pony Ma, the founder and CEO of the social media giant.
What’s the issue with WeChat?
The US wants “untrusted” Chinese apps to be removed from US app stores. And those “untrusted” apps belong to Chinese companies Tencent Holdings, the owner of WeChat, and ByteDance, TikTok’s parent company. The executive order said the government would ban WeChat and TikTok from operating in the US in 45 days if they are not sold by their parent companies.
“Like TikTok, WeChat automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,” Trump wrote in his executive order.
He continued: “The application captures the personal and proprietary information of Chinese nationals visiting the United States, thereby allowing the Chinese Communist Party a mechanism for keeping tabs on Chinese citizens who may be enjoying the benefits of a free society for the first time in their lives.”
WeChat, owned by Chinese tech company Tencent, has been accused of censoring content on its platform. Earlier this year, Toronto-based research group Citizen Lab found that WeChat censored keywords, including “Wuhan seafood market” and “Sars variation” about the coronavirus outbreak in late December. WeChat was also accused in the past for censoring political messages and disabling people’s account during the pro-democracy protests in Hong Kong.
How has Beijing responded?
China’s Ministry of Foreign Affairs on Friday warned that the US would have to “bear the consequences” of its action. “The United States is using national security as an excuse and using state power to oppress non-American businesses,” ministry spokesperson Wang Wenbin said. Meanwhile, Tencent’s spokesperson told Reuters that the company is “reviewing the executive order to get a full understanding.”
Who will be affected?
If WeChat gets banned in the US, it would cut off millions of Chinese-Americans from their friends, family and clients. In China, WhatsApp, Facebook and Twitter are banned. So WeChat is the only app left the Chinese diaspora or employees of American companies living in China can use to communicate. While TikTok’s US operations may be sold to Microsoft or any other American tech major by September 15, WeChat is unlikely to get a second chance. And if that happens, American businesses and Universities will face a lot of issues communicating with suppliers, dealers, manufacturing partners, and even students in China.
Will Apple be impacted?
Trump’s executive order can put Apple in an uncomfortable position as the company would be forced to pull WeChat —an app with over 1 billion users in China— from the iOS app store. This could impact sales of iPhones, Apple’s most popular product, in the world’s largest smartphone market.
If Apple is forced to pull WeChat from its App Store in China due to Trump ban, then both consumers and Chinese businesses might shift to other smartphones. Apple wouldn’t want to be seen in this situation in China, where it has invested billions of dollars over the years. Trump’s ban could also harm Apple’s supply chain since most of the company’s products are still assembled in China.
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