Tencent has played down Donald Trump’s ban on its WeChat app, believing it will only affect its US operations. The tech giant runs an equivalent messaging platform in China called Weixin which it hopes will be unaffected.
The bigger fallout may be Apple’s sales in China if its iPhones aren’t allowed to download Chinese messaging apps. WeChat has more than one billion users worldwide but says the US only accounts for 2% of its revenue.
Last Friday, US President Donald Trump ordered US firms to stop doing business with both WeChat and TikTok within 45 days citing national security concerns.
The TikTok ban was expected but still “shocked” the company’s owners ByteDance. WeChat, and its parent company Tencent, also found itself caught in the crossfire of the escalating tensions between the US and China.
However, Tencent, the world’s largest gaming firm, downplayed Mr Trump’s executive order when it reported its second quarter results on Wednesday. It saw a 37% rise in profits.
“If you look at the executive orders from May 2019 and then obviously the executive order a couple of days ago, they specify very clearly they cover US jurisdiction, and consequently we don’t see any impact on companies advertising on our platform in China,” said James Mitchell, Tencent’s chief strategy officer.
Bigger bite
Business analysts are unclear about the full implications of the US bans on Tencent and ByteDance, and are waiting for more details.
There are fears that Apple could suffer if the ban stretches to its operations in China. Experts say sales of its iPhone will be hit hard if Chinese consumers are not allowed to download messaging apps like Weixin onto them.
The executive order said it would ban “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.”
Mr Trump said that the spread in the US of mobile apps developed and owned by Chinese firms “threaten the national security, foreign policy, and economy of the United States”.
According to calculations made by Bloomberg the Chinese market is worth around $44bn (£33.7bn) a year to Apple.
Source: bbc.com
