US WeChat ban could make iPhones in China useless

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US President Donald Trump has recently signed an executive order banning transactions with ByteDance and WeChat which is owned by Tencent Holdings Ltd., in China. This has had a crippling effect on the market value of the company resulting in a loss of $46 billion.

WeChat, unlike TikTok, has much less presence in the US diaspora than China. However, it is widely used for payments in China. The order will take effect in 45 days with the apps getting removed from Google’s Playstore and Apple’s App Store.

Implications of WeChat ban in China

While TikTok has responded saying no due processes have been followed for the order and would attract legal action against the government, WeChat’s owner was quoted by BBC saying that the company is reviewing the executive order to get a full understanding.

WeChat, as we all know, is a Chinese messaging platform. But, in recent years it has turned out to be the go-to app for instant payments. It is used for all sorts of payments like bills, travel, shopping etc. It reigns supreme in China and smartphone users generally cannot imagine a phone without it. The implications of the order could mean the end of the iPhone in China in the long term.  

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It is likely that removing WeChat from the App Store will be more detrimental to iOS users than Android. Android, unlike iOS, allows side-loading of apps that are not available on the Play store. Hence, iPhone users in China will be left out after the ban making their devices pretty much useless.

The US Government has been actively trying to cut every means of ties with Chinese Tech companies, accusing that their data will be easily accessed by the Chinese Government only to be used strategically later. It banned Huawei’s 5G equipment, and now is after applications like TikTok and WeChat. More Chinese apps are now on the radar.

Tencent hit badly

The executive order was also reportedly vague in the description and this led to a lot of confusion during the trading on Friday. Tencent is one of the biggest game publishers and as per Newzoo data. It has collaborations with Activision Blizzard Inc. and Electronic Arts Inc. It also owns the publishing rights of PUBG, a large stake in Fortnite maker Epic Games Inc., and Riot Games Inc.

Hence, confusion in this regard led to the shares of Tencent falling more than 10% before recovering to 6.8%. Trump’s order on WeChat follows a similar trend of the country’s approach to TikTok. However, the sudden decision comes as a surprise. That said, athough a US official clarified later that the order is limited to WeChat and not Tencent as a whole, the damage was already done by then.

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