Pixel Envy

Written by Nick Heer.

White House Executive Order on WeChat Risks Snarling Global Business

Zheping Huang and Vlad Savov, Bloomberg:

The White House’s vaguely worded edict left a lot of open questions about how broadly the ban would be applied and the full ramifications for Tencent Holdings Ltd. But it likely gets WeChat bumped off Apple and Google’s app stores in 45 days, which means at least suspending updates for a service vital to everything from engineers talking with iPhone assemblers to Chinese people video-chatting with family back home.

If the ban extends to a block on its use, that threatens to eventually sever those ties because WeChat is the go-to for a billion people for everything from booking movie and train tickets to shopping, and alternatives like WhatsApp are blocked in China. The potential ructions underscore Tencent’s pivotal role within the global tech and internet economies, as a juggernaut with deep investments or connections with American businesses from Activision Blizzard Inc. and Snap Inc. to the NBA.

“It would practically shut down communication between the U.S. and China,” said Graham Webster, China Digital Economy Fellow at think tank New America. “These orders just wrap the real issues up in political theater.”

WeChat is, as Ben Thompson put it, “the most important layer of the smartphone stack” in China, and it remains so for many of those with family and friends in the country. Ming-Chi Kuo, in a note to investors, estimates that iPhone shipments would drop significantly if Apple could not keep WeChat in the App Store. I’m not weeping at the thought of fewer sales; this as an indication of just how important WeChat is. At the extreme end, these clumsy executive orders could be as powerful a motivator as antitrust action for a change in how apps work on iOS.

In the short term, it means that people and businesses around the world may be cut off from family, friends, customers, and a substantial source of income.