In the United States, it seems that it will not be so easy to get rid of the popular Chinese apps, WeChat and TikTok, as the administration of President Donald Trump wanted.
First, US judge Laurel Beeler has blocked the US Department of Commerce’s decision to remove the messaging app WeChat from Apple and Google’s app stores. According to the order of the American department, released on September 18 this year, Apple and Google were supposed to remove WeChat from app stores on September 20. At the same time, the US Department of Justice urged Beeler not to block this decision.
The official reason for the application ban was that TikTok and WeChat collect user data and cooperate with China’s intelligence services, so their use poses risks to US national security.
In her ruling, the US Justice of the Peace pointed out that the WeChat users who filed the lawsuit “have raised serious substantive issues based on the First Amendment to the US Constitution, and the balance of harm is tilting in favor of the plaintiffs.”
The same sentiments in the United Kingdom
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The same sentiment towards WeChat can be seen in the United Kingdom. WeChat is basically a Chinese person’s wallet and they use it to pay for everything. Some financial companies in the UK have even started accepting WeChat payments in order to cover a larger Chinese market.
Some of these UK companies are from the financial service provision sector, or FX brokers in short. These brokers that have clearance to the Chinese market are more than happy to accept WeChat because they know that it’s the most transparent payment method for the Chinese government as well as the most comfortable for the user base.
Furthermore, most of these FX brokerages had already started B2B partnerships with fintech companies en masse. For example, the growing number of forex brokers that support PayPal was already an indication that these companies were starting to step into this specific sector with renewed vigor. However, it was unlikely that this would yield large results considering the overwhelming commissions that PayPal charges for simple transactions. It was still a good method for people that didn’t have international Bank Accounts or weren’t supported by their local banks to access these international platforms.
WeChat was supposed to be the addition to this new project as it would incorporate tens of millions of potential customers if these companies could iron out the license with the Chinese regulator. Although the ban didn’t go through and the judge blocked it, there are suspicions that this may have sent the wrong or confusing message to Tencent, the owners of WeChat.
Therefore, it’s likely for the tenuous relationship between WeChat and the west will continue, making life much harder for financial companies vying for Chinese presence.
What other things does the decision hold?
Laurel Beeler’s preliminary injunction also blocked a US Department of Commerce order banning other WeChat transactions in the United States, which could have impacted the usability of the site for current US users. While the US government has identified “serious threats” to national security, Beeler noted, there was very little evidence that its effective ban on WeChat for all US users addresses these concerns.
Secondly, the Americans themselves did not agree with the decision of the Department of Commerce. Against the background of news about the blocking, they actively downloaded both applications to their smartphones.
If TikTok has always been popular not only in the United States but throughout the world, WeChat remained among the outsiders in America in terms of downloads. However, over the past couple of days, it has managed to break out of about the second thousand top apps in the top 100 most downloaded in the US.
CNN noted that many people rely on WeChat as the primary way to connect with family and friends in China. We can remember that most of China’s popular applications and social networks are blocked. Instead of them, the citizens of the country are offered their own programs, including the WeChat messenger. Therefore, blocking it in the United States for many immigrants from China would be quite painful.
Despite the fact that instant messengers themselves are not directly banned, and American users can continue to communicate through them or create familiar video content, nevertheless, any updates or bug fixes for both programs in the event of the entry into force of the Ministry of Trade ban will become inaccessible to US citizens.
At the same time, the companies themselves agreed to make certain concessions to the US authorities. US companies Oracle and Walmart will own 20% of the TikTok app, and Walmart will acquire 7.5% and become a commercial partner of the WeChat app for eCommerce and electronic payments. President Donald Trump approved the deal. This means that applications will continue to work in the United States. Oracle will store US TikTok user data in its cloud.
According to CNN sources, China’s ByteDance will maintain a majority stake in TikTok. Reuters notes that the deal is structured as a partnership, not a takeover. Once the deal is completed, a global company, TikTok Global, will be created, which will most likely be registered in Texas. It will go to an IPO (public offering of its shares) within 12 months and on one of the American stock exchanges. Oracle and Walmart also said in a joint statement that the share of US companies in TikTok will continue to grow in the future.
The new company, according to Trump, will also contribute $5 billion to an education fund for American children and adolescents.
We can remember that in Russia, WeChat in May 2017 at first came under blocking, but less than a week later agreed to be entered in the surveillance register, which imposes on it the obligation to collect and store data of its user. The same applies to the content of correspondence, video, audio files, calls, etc.
We see almost similar sentiments in different countries and at some point, we are entering a phase of a new Cold War, where multiple countries are involved already.