The war on China’s tech (WeChat ban): Part 2


This article is part 2 of the war on China’s tech. Part 1, which you can read here, focused on the UK’s ban of Huawei. In part 2 the focus shifts to the US’s ban of WeChat, which came in alongside that of TikTok’s. The Trump administration has had its crosshairs aimed at TikTok for a few months now, but the ban on WeChat came as a surprise to many. The reason for the ban was the same as TikTok’s: A threat to national security.

WeChat has over a billion users and is a ‘super-app’ and the equivalent of WhatsApp, Facebook, Uber, PayPal, and Instagram. Outside of China it is used by those who want to keep in touch with family and friends back in China. The app is owned by Chinese tech giant Tencent, who also own, and hold stakes in, many prominent businesses. The company owns multiple game developers such as Riot Games and Supercell, the makers of League of Legends and Clash of Clans. They also have stakes in Epic Games (40%), Universal Music Group (10%), Spotify (10%), Snap Inc (13.2%) and Tesla Inc (5%).

Commercial Implications

Tencent downplayed the ban and have not had the same reaction to it as TikTok. This could be down to the belief that the ban will only affect their US operations, or the fact that the US only accounts for 2% of WeChat’s revenue. However, the same cannot be said for ordinary Chinese people, other businesses, investors and academics that have a stake in both the US and China.

Western social media such as Facebook, WhatsApp and Twitter are all banned in China. Therefore, WeChat is the only tool available to the aforementioned groups to easily communicate with friends, family and business associates in China. The ban means that those affected in the US will have to find alternative ways of communication with those in China. No doubt the ban is very inconvenient for communications, but it could also prove to be an unnecessary cost for businesses that use WeChat regularly as they look for alternative ways of communicating with business associates in China.

The bulk of the commercial fallout may actually be felt by Apple though. The ban states that US companies are to cease business relations with WeChat. As a result, Apple could be forced to remove WeChat from its app store because it is “untrusted”. Given the importance of WeChat in China, Apple products suddenly becoming less desirable and Apple’s revenue in China could take a massive hit. According to Bloomberg Apple sold products and services worth $44bn (£33.7bn) last year in China, which accounts for 17% of the company’s total sales.

Legal Implications

Whilst Tencent have brushed off the executive order due to its minimal impact, a coalition of WeChat users in the US are suing the Trump administration after filing a complaint in the federal court in San Francisco. The US WeChat Users Alliance’s primary argument is that the ban goes against the First Amendment of the US constitution and targets a racial group.

The handling lawyer has also added that, in a separate case, the Supreme Court found that social medias are “places of public assembly” which strengthens the Alliance’s First Amendment argument. Furthermore, WeChat has been used by the US’ Chinese diaspora to share information and organise protests and other such events. The suit also claims that due to the ambiguity of the order (i.e. what interactions with WeChat are banned), it fails to guarantee due process, which breaches the Fifth Amendment.

At present the Alliance is asking the Trump administration to turn over any evidence used in the decision to ban WeChat. The Alliance intends to use the evidence in their bid for a preliminary injunction, with a hearing set for the 17th September. The government is arguing the order has no legal effect on the group and thus are not entitled to any evidence, and the courts cannot review the order because it is a ‘national security determination’.

The outcome of the hearing could be a significant one and possibly a turning point in the war against China’s tech. If it goes the way of the US government then we could see retaliation from China. If it goes the Alliance’s way, then the Trump administration could stop its siege on China’s tech just before the 2020 presidential elections.

Abu Sattar

Abu is a law graduate with aspirations of becoming a commercial solicitor. His legal interests are in property, data protection and technology, but with enough information he can have an opinion on anything. He also wants to see and work towards greater diversification of the legal sector, particularly of more senior roles.

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