By Sebastian Herrera 

A California federal judge will hear arguments Friday as part of an emergency push to delay enforcement of an executive order placing restrictions on the app WeChat.

U.S. Magistrate Judge Laurel Beeler initially ruled Friday that an existing motion seeking a preliminary injunction was moot because the Commerce Department Friday morning detailed what transactions would be restricted on WeChat. But she left the door open for an emergency hearing on the matter, and the group that sued the Trump administration seeking the injunction, called the U.S. WeChat Users Alliance, plans to continue pressing its case.

The alliance, a nonprofit organization, sued the Trump administration in August to block the app from being restricted in the U.S. The group has said it isn't affiliated with the app's owner, Tencent Holdings Ltd.

In a filing before Friday's hearing, attorneys representing the alliance said U.S. orders involving WeChat remain ambiguous, and that the government hasn't provided details on its claim that the app is improperly sending user data to the Chinese government. "The government's rushed actions warrant careful judicial review before they are allowed to take effect," plaintiffs said.

The Trump administration said Friday it would ban U.S. downloads of Chinese-owned apps WeChat and TikTok after Sunday night, meaning the apps may have to be removed from marketplaces like Apple Inc.'s App Store and Google Play. The administration is also barring money transfers in the U.S. through WeChat.

It sets the stage for an escalation in a battle between the world's two-largest economies over the future of technology. American companies whose fortunes are linked to China had also pushed back against the administration's plans, saying it could undermine their competitiveness.

Attorneys from the WeChat users alliance and the federal government presented arguments on the preliminary injunction Thursday in a court hearing.

Michael Drezner, an attorney for the U.S. government, said during a public hearing Thursday that the president had been within his power in issuing the order and providing the timeline he did and that plaintiffs were suing before the government made clear which transactions they would target.

"The plaintiffs decided to bring these claims before they were fully crystallized, before they had an actual concrete controversy," Mr. Drezner said.

Tencent, one of Asia's largest technology companies, has played down the threat of a U.S. ban on WeChat, asserting that a potential U.S. ban would apply only to the international version of the app.

WeChat and its domestic sister app Weixin have about 1.21 billion monthly active users combined. On an earnings call in August, Tencent executives sought to distinguish the two apps and allay investors' fears. The company generates less than 2% of revenue from the U.S., a Tencent executive said at the time.

Administration officials have cited concerns that data the app collects from U.S. users could be shared with the Chinese government.

The order raised the possibility that people living in the U.S. would have a harder time accessing the app or doing business through it.

Mr. Trump last month issued a similar executive order focused on the popular video app TikTok. Oracle Corp. is part of a group that struck a deal with TikTok parent ByteDance Ltd. to revamp the app's U.S. operations. Discussions between U.S. officials and TikTok's suitors are ongoing, though ByteDance has said the Chinese government also has to approve the sale.

WeChat bundles social media, text messages, mobile payments, corporate marketing and other functions into one app. While WeChat's users are primarily in China, the app is important among the Chinese diaspora in the U.S. and is widely used by foreigners with professional or personal ties in China.

"This is a super app and something that has multiple functions, and, critically, it is designed for Chinese-speaking people," Michael Bien, an attorney representing the WeChat users alliance, said in an interview before the hearing. "For this group, it is everything."

As with the order against TikTok, the order involving WeChat says the company collects vast amounts of data that could potentially expose the personal information of Americans and Chinese nationals living in the U.S. to the Chinese government. TikTok and WeChat have said they protect the privacy of their users.

Apple, Ford Motor Co., Walmart Inc., Walt Disney Co. and other multinational companies with strong business ties to China previously raised concerns to White House officials about the potential ban, arguing that it could affect their competitiveness and restrict them from forming deals in the country.

The lawsuit alleges a ban would violate WeChat users' rights to free speech, due process and equal protection under law. It also sought notice of which transactions would be barred. Plaintiffs have said the order illegally targets Chinese-Americans.

TikTok also filed a lawsuit in August against the U.S. government potentially banning the app.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com

 

(END) Dow Jones Newswires

September 18, 2020 14:53 ET (18:53 GMT)

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