Trump targeted both WeChat and TikTok with US bans – why then did it seem Tencent was getting an easier ride?

  • China
  • Saturday, 19 Sep 2020

HONG KONG, Sept 19 (SCMP): The United States Commerce Department issued a sweeping order barring the downloading by US users of TikTok and WeChat to go into effect on September 20. The order also barred the payment and fund transfers to or from people in the US. The order does not ban US companies from doing business on WeChat outside the US nor does it bar transaction with Tencent’s other businesses.

With the date of a proposed US ban on Chinese social apps TikTok and WeChat rapidly approaching and prior to this order, it looked like WeChat was being given an easier ride by the Trump administration.

And analysts say this is partly to do with the vague wording of Trump’s original executive order against the apps, the fact that TikTok has millions more users in the US than WeChat and the social and political power of TikTok relative to WeChat.

Global short video hit TikTok is owned by Beijing-based ByteDance whereas WeChat, which millions of Chinese people use to chat, shop, pay bills and more, is operated by Shenzhen-based Tencent Holdings.

On Wednesday the Department of Justice said in a court filing that the upcoming US ban, slated to take effect on September 20, will not affect WeChat users and by using and downloading the app they will not be exposed to “criminal or civil liability”.

“We can provide assurances that the [Secretary of Commerce] does not intend to take actions that would target persons or groups whose only connection with WeChat is their use or downloading of the app to convey personal or business information between users,” the US government said.

An executive order issued by president Donald Trump in early August, prohibits “any transaction” between WeChat and US individuals and companies, citing national security risks. Trump imposed a deadline – this Sunday – for the Commerce Department to draft the scope of such “transactions” and implement the ban.

However, it looks as though hard-hitting measures against WeChat may not be forthcoming.

“I don’t think that the US is relaxing its stance on WeChat, rather it is not sure how to implement a ban on it logistically,” said Paul Haswell, a partner who advises technology companies at international law firm Pinsent Masons.

The DOJ filing was in response to a preliminary injunction initiated by the US WeChat Users Alliance, a nonprofit organisation formed by attorneys who want to preserve access to WeChat for users in the US, against Trump’s executive order. The group argued that a US ban on the app would be like ‘losing a limb’ for them.

In a hearing on Thursday, US Magistrate Judge Laurel Beeler said she may consider delaying the ban by granting the injunction because Trump’s order is too vague, according to a Bloomberg report. The judge did not make a final decision.

WeChat did not immediately respond to a request for comment.

Other analysts said the difference in approach to TikTok and WeChat by the Trump administration reflects their relative power in the US.

“I personally don’t think there has been a fundamental attitude shift from the US government on Chinese apps,” said Alex Liu, an analyst at China Renaissance Securities. “However, the disparity of influence and the user scale of the two Chinese apps, may have led to the US government’s seemingly softer approach to WeChat.”

WeChat has around 1.2 billion monthly users but only a small fraction – 1.5 million – of these are in the US, according to online data portal Statista. Last month, TikTok revealed it had 100 million monthly active users in the US – an 800 per cent rise from January 2018.

“TikTok has more mainstream appeal and a larger user base in the US meaning it has the potential to be a more powerful political tool for Beijing,” said Fergus Ryan, analyst at the International Cyber Policy Centre of the Australian Strategic Policy Institute think tank. “WeChat, because it is highly surveilled and censored, is also a powerful political tool but its scope is more limited to the Chinese diaspora.”

The influence of these two apps in the US is not comparable, said Shawn Yang, Shenzhen-based managing director of Blue Lotus Capital Advisors. “[WeChat in the US] is not involved in social and political events in the US, so its social influence is much smaller than TikTok.”

However, the Trump administration is concerned by how WeChat is closely intertwined with some US companies, who use it to reach end consumers in the world’s biggest internet market – China.

Firms such as McDonald’s, Nike, Starbucks, Walmart and KFC use WeChat to connect with Chinese customers. They may be hard hit by Trump’s order. So too might Apple, which could have to drop WeChat from its app store in China.

A poll on Weibo, China’s equivalent of Twitter, conducted by Sina’s news platform last month asked users to choose between switching to a new phone brand or uninstalling WeChat if they could no longer use the app on their iPhones. More than 750,000 out of the 800,000 people who responded said they would get another phone.

Shortly after the executive order was issued in August, a US government official told the Los Angeles Times that the ban was mainly aimed at transactions related to the WeChat app but not transactions with Tencent.

The Trump administration has also been privately seeking to reassure US companies, including Apple, that they can still do business with the WeChat messaging app, Bloomberg reported last month.

Tencent has also hired several lobbyists in the US this year to defend itself on Capitol Hill, including former US representative Ed Royce and five other former congressional aides, according to congressional lobbying disclosure forms.

“After the executive order on WeChat, many large US companies expressed their opposition. This kind of lobbying must have put pressure on the US government,” said Yang from Blue Lotus.

Ultimately though, officials may simply be stumped by how to enforce the ban.

“The Justice Department’s comments have created considerable confusion around what ‘transaction’ means and the impact on WeChat and users of WeChat,” said Haswell from Pinsent Masons. “It’s unclear how this matches up with the assertion that the ban will not impact US companies dealing with WeChat.”

As a result, the impact of Trump’s executive order against WeChat “remains unclear”, he added. - South China Morning Post

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US , Tik Tok , We Chat , Social Apps , Ban , China , Business Still On


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