By Jing Yang and Liza Lin
President Trump signed an executive order Thursday that imposes
strict new limits on WeChat, the most used app in China,
intensifying a tech war between the world's two largest economies.
The White House said it issued the order, typically used in
emergency situations, to protect national security.
The order bars people in the U.S. or subject to U.S.
jurisdiction from engaging in transactions involving WeChat with
Tencent Holdings Ltd., the app's operator. Mr. Trump signed a
similar order for Chinese-owned short-video app TikTok. Both orders
take effect 45 days after they were signed. Of the two orders, the
one affecting WeChat is far more consequential for China.
Here's a look at WeChat, why the Trump administration wants to
ban it and why that matters to Beijing.
What is WeChat?
Tencent, a gaming and internet giant, launched WeChat in 2011 as
an instant-messaging app. As it developed and added capabilities,
it became the go-to example of China's capacity to innovate.
Silicon Valley companies have since borrowed several of its
earliest features, such as voice messages and an easy-to-use mobile
payment system based on QR codes. Over the years, it has evolved
into a super-app considered indispensable for navigating daily life
in China, from socializing to reading news to buying vegetables at
How popular is it in China?
Among people who own smartphones in China, WeChat is virtually
ubiquitous. The app's domestic and international versions had a
combined 1.2 billion active users as of the end of March, according
to Tencent. The company doesn't break down WeChat user numbers by
country or region, but analysts say the majority are based in
mainland China or Chinese people living abroad.
It isn't an exaggeration to say that WeChat is as essential as
utilities for anyone living in China.
Many local Chinese governments offer e-services such as applying
for certain licenses on WeChat and host official social-media
accounts on the app.
What makes it different from other chat apps?
WeChat is an app of apps. Beyond text and voice instant
messaging, it offers a Facebook timeline-like function that allows
users to post texts, photos and videos. Its payment function, tied
to a user's bank account, can be used to pay for a range of goods
and services, including utilities like electricity and gas and even
More recently, the app has added what it calls "mini-programs,"
light apps that Tencent helps retailers, restaurants and other
businesses to develop to service customers on the platform. The
apps now number in the millions, according to Tencent, transforming
WeChat into one of the country's most powerful channels for sales
What sort of presence does it have outside China?
Tencent launched an effort to sell WeChat to international users
in 2012, hiring Argentine soccer legend Lionel Messi to help
promote the brand. The app never took off, due largely to
competition from WhatsApp, and within a couple of years Tencent all
but gave up taking it global. Throughout the years, however,
WeChat's influence in China has been carried around the world by
the Chinese diaspora and foreigners with professional or personal
ties with China.
WeChat had 70 million daily active users in India until it was
banned there following a border dispute in June, according to app
data tracker Apptopia. In the U.S.. 19 million people use it daily.
WeChat has also been a popular e-commerce and marketing conduit for
foreign brands to tap into China's market. Starbucks Corp., Walmart
Inc. and Gap Inc. are among the household names that rely heavily
on the app to reach Chinese consumers.
What impact does such a ban have on Tencent?
Analysts are scrambling to figure out the financial impact for
Tencent of Mr. Trump's executive order, which was vaguely worded.
The Shenzhen-based company generated less than 3% of its revenue
from the U.S. last year, according to estimates by analysts led by
Alex Liu at China Renaissance Securities (Hong Kong) Ltd. Still,
Tencent's Hong Kong-traded stock price slid as much as 10% on
Friday, before regaining some losses and closing 5% down at
HK$527.5 ($68) a piece.
Videogames contribute to a third of Tencent's revenue, but
WeChat is the linchpin that provides the traffic and user data that
fuel Tencent's other businesses. In the worst-case scenario for
Tencent, U.S. computer-chip makers could be restricted from
supplying chips the company uses to run its servers, which power
WeChat, gaming and other businesses, according to David Dai, senior
research analyst at Bernstein C. Sanford.
Why does the Trump administration want to ban it?
In a letter posted online, the Trump administration said WeChat
captures "vast swaths of information from its users," which
potentially exposes the personal information of Americans and
Chinese nationals living in the U.S. to exploitation by China's
ruling Communist Party. U.S. authorities say that WeChat, similar
to TikTok, censors content that the party deems as politically
sensitive, and could potentially be leveraged as a tool for
disinformation campaigns that benefit Beijing. More broadly, the
possible ban is in line with the U.S. government's campaign to
purge "untrusted" Chinese apps and equipment from U.S. digital
A spokesperson for Tencent said the company is "reviewing the
executive order to get a full understanding," but didn't elaborate.
In the past, the company has said that it protects users' privacy
and manages content according to laws in the countries where it
What sort of data does WeChat collect?
such as personal information, location and device details. Other
data stored include media and contact lists on the users' device,
and a record of search queries in the app. If users opt in, the app
can also collect biometric data such as facial recognition scans
and voiceprints to use in verifying identities and for account
security. Data collected from users of the international version of
its app is stored in servers in Canada and Hong Kong, the Tencent
How does censorship work on WeChat?
WeChat uses a sophisticated set of censorship systems that treat
users of its domestic and international version differently. In
2016, researchers at the University of Toronto's Citizen Lab tested
thousands of keywords on WeChat accounts registered in China,
Canada and the U.S. and found 174 that triggered censorship. The
majority were related to the 1989 Tiananmen Square protests,
pro-democracy protests in Hong Kong, the banned spiritual group
Falun Gong and memes involving senior Communist Party leaders. The
words were only censored for accounts registering for WeChat with
Chinese mobile numbers.
The same researchers showed how WeChat masks some of its
censorship by using "disappearing messages" -- pictures and
messages that appear to the user to have been sent but that never
reach the intended recipient
More recently, Citizen Lab found that text and pictures sent by
users of the international version of WeChat are being monitored by
Tencent and used to refine the censorship system used in mainland
How important is WeChat's overseas presence to the Communist
Chinese authorities rely heavily on WeChat to keep tabs on
Chinese nationals living abroad, as well as members of the Chinese
diaspora. China's security agencies have used the app to harass and
intimidate dissidents and political refugees living in other
countries. The government also has easy access to WeChat data,
allowing it to snoop on conversations Chinese abroad are having
with friends and family back home.
WeChat also helps the party maintain control over Chinese abroad
by locking them into a heavily censored information ecosystem. In
Australia, home to a large Chinese community, Chinese nationals
often turn to Chinese media on Wechat more frequently than to local
newspapers, according to Fu King-wa, a journalism and media studies
professor at the University of Hong Kong.
Write to Jing Yang at Jing.Yang@wsj.com and Liza Lin at
(END) Dow Jones Newswires
August 07, 2020 10:47 ET (14:47 GMT)
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