While downplaying the threat of a ban on its chatting app WeChat, its owner Tencent believes that the ban will only impact its operations in the United States.
An equivalent messaging platform called Weixin is run by the tech giant in China and the company hopes that that service will remain unaffected.
Tencent believes that the American firm apple could instead be the bigger looser in China if Chinese messaging apps are not allowed to be downloaded on iPhones. Out of the more than one billion users worldwide, only 2 per cent are accounted for by the US, WeChat claims.
A presidential order as signed last week by the US president Donald Trump which barred all American companies from doing any business with both WeChat and TikTok within 45 days because of concerns over national security from usage of the apps.
Despite being somewhat expected, ByteDance, the Chinese owner of TikTok was “shocked” by the ban order on the short video sharing app. Just like TikTok. WeChat, and its parent company Tencent, were also caught in the cross fire amid the escalating trade and geopolitical tensions between the United States and China.
But while reporting its second quarter results on Wednesday, in which it reported a 37 per cent year on year growth in profits, the largest gaming company of the world Tencent, seemed to downplay Trump’s executive order.
“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.
The full implications of the US bans on Tencent and ByteDance are still unclear for business analysts as not details have been furnished officially.
Some analysts are concerned that the ban could impact Apple if the Trump ban is also applied for its Chinese operations. According to experts, if Chinese consumers are not allowed to download messaging apps like Weixin, the sale of iPhones would be hit quite hard.
The executive 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,” the order said when it was published by the White House.
The spread of mobile apps developed and owned by Chinese firms in the United States “threaten the national security, foreign policy, and economy of the United States”, Trump had said while making the announcement of the executive order on the ban.
The Chinese market is worth around $44bn a year to Apple, according to calculations made by Bloomberg.
(Adapted from BBC.com)