With time running out for Bytedance Inc. to either sell the TikTok social media app in the US or have it shut down, American companies operating in China are focusing on a potentially much more devastating ban that targets the WeChat mobile payment app.
“Think of the US company if you suddenly get rid of credit cards,”
Mobile payments have become ingrained in Chinese society, where credit cards have never caught on. It is estimated that 83% of all payments in China in 2018 were made via mobile phone apps. About 92% of the business is split between WeChat, owned by Tecent Holdings, and Alipay of Alibaba.
More than a dozen U.S. companies, including Apple Inc., Walmart Inc., and Walt Disney Co., last month held a phone call with the Trump administration to voice their concerns about a vague executive order banning transactions with Tencent and is set to go into effect on September 20 – which is also the deadline ByteDance must meet to secure a sale of TikTok in the United States before the Trump administration closes it.
The Commerce Department did not respond to FOX Business’ request for further information.
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Trump fears that both apps will capture large amounts of user data and allow the Chinese Communist Party to compile personal and proprietary information about Americans.
For all businesses operating in the country, however, mobile payment apps are their lifeblood.
A US ban on WeChat “would simply be devastating,” Ker Gibbs, president of the US Chamber of Commerce in Shanghai, told FOX Business. “It’s hard to see how some of these American companies could survive in this market without being able to use WeChat payments.”
The immediate impact would be a loss of sales for companies like Nike, as customers who couldn’t use their preferred payment method would respond by bringing their business to rivals like Adidas, based in Germany.
But there is also the possibility that a ban by the Trump administration will cause companies domiciled outside of the United States whose applications rely on the WeChat system to stop using the app for fear of secondary sanctions.
WeChat, which allows Chinese citizens outside the country to stay in touch with friends and family at home, can also be used for services as diverse as calling taxis and taking out mortgages.
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Such considerations are why the Trump administration may end up providing some exclusions, hoping to thread the needle between national security and commercial reality.
Apps like WeChat, which had 1.17 billion monthly active users at the end of 2019, the vast majority of them in China, are why the country sees around 20 times the number of U.S. mobile transactions, giving it access to more data and an advantage in artificial intelligence research.
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“If China is amassing a lot more data without the same privacy restrictions that apply to the West, then in theory, it can pursue artificial intelligence much more aggressively than other Western countries,” Shvets said. “So it doesn’t just have surveillance applications. It also has privacy implications. “