Update, Aug. 7 (06:40 a.m. ET): A survey conducted in China shows 678 thousand smartphone users would get a different phone if WeChat was banned from the App Store there.
Overnight, U.S. President Donald Trump signed an executive order prohibiting any U.S. individual or company from doing business with ByteDance (the owner of TikTok), and WeChat.
From the order:
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. In addition, 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.
The order will take effect in 45 days, and prohibits the following:
...any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd. (a.k.a. Téngxùn Kònggǔ Yǒuxiàn Gōngsī), Shenzhen, China, or any subsidiary of that entity, as identified by the Secretary of Commerce (Secretary) under section 1(c) of this order.
As the order notes, WeChat is used by some people in the U.S. In China, however, WeChat is an absolutely fundamental part of life in the country. As Android Central's Alex Dobie notes:
It can't be overstated how massive WeChat is in China. It's used for *everything*. Not just chat, but payments, utility bills, plane and train tickets. A phone without WeChat in China is more useless than an Android device without GMS in the West. It's that big of a deal.— Alex Dobie (@alexdobie) August 7, 2020
It remains unclear at this stage how far-reaching this executive order is. It could, in time lead to both WeChat and TikTok being removed from Apple's App Store on iOS in the U.S. (unless TikTok is sold to Microsoft in the meantime), and there's certainly a possibility it could affect Apple in China too. According to the announcement, the definition of a "transaction" will be clarified by the Secretary of Commerce at the end of the 45-day grace period. As Nikkei Asian Review reports:
The order will likely force U.S. app stores including Google's and Apple's, to remove TikTok and WeChat. It is unclear whether using or downloading the apps will be prohibited in the U.S. after 45 days, according to legal experts.
"The specific impacts are not yet known and are subject to regulations to be issued by the Commerce Department . . .The restrictions may affect US person's ability to use these apps or result in other, more tailored restrictions," said Nicholas Turner, a Hong Kong-based counsel at law firm Steptoe & Johnson.
"Downloading the app is more likely to be banned because it involves signing a user agreement with the companies, which is a transaction by definition," said Ye Jun, a partner at Chicago-based law firm Getech Law specializing in corporate and patent law.
"It is more difficult to ban the use of the apps. If users already have them on their phones, it is near impossible to ask them to delete or stop using, unless the U.S. can build a 'great firewall' to block them once for all," Ye added.
As mentioned, it's unclear how this could affect Apple's dealings in China, and whether the EO extends to dealings abroad or only on U.S. soil. This is extremely important because if Apple somehow wound up prohibited from letting WeChat on the App Store in China, the iPhone would be made effectively useless in the country. 99% of smartphones in China use WeChat, not only to communicate and interact through social media but to make payments, pay bills, purchase travel tickets, and more. As Dobie again notes, "A phone without WeChat in China is more useless than an Android device without GMS [Google Mobile Services] in the West." It would be akin to Apple shipping an iPhone in the U.S. without Safari, iMessage, Mail, and Apple Pay, even this comparison doesn't really do the scale of the potential problem justice.
You can rest assured that lawyers at Apple, WeChat, TikTok, and more are furiously poring over this latest executive order trying to figure out just exactly what this could mean. Until the exact reach of the executive order becomes clearer, a lot if this will remain hypothetical, but there is no doubt that if Apple somehow wound up prevented from doing business with WeChat to the extent it was removed from the App Store, it would be fatal for Apple and the iPhone in China.
Update, Aug. 7 (06:40 a.m. ET) New survey reveals catastrophic impact of a WeChat ban in China
A survey conducted by a Chinese finance media outlet asked Chinese people on social media what they would do if WeChat was banned from Apple's App Store. 38.6k said they would uninstall the app, but more than 678k said they would buy a different phone, revealing just how important WeChat is in China.
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