(Bloomberg) – The Trump administration is seeking to include private U.S. companies including Apple Inc. that they can still do business with the WeChat messaging app in China, according to several people familiar with the matter, two weeks after President Donald Trump ordered a U.S. ban on Chinese service.
In recent days, senior administration officials have reached out to some companies, realizing that the impact of a sweeping ban on the popular app, owned by China’s Tencent Holdings Ltd., could be devastating for U.S. technology, retail, gaming, telecommunications and others. sectors, said people familiar with the talks.
Apple is one of the companies that can stand to lose the most from the WeChat ban, as China accounts for a fifth of its sales. Apple also relies on China for a large chunk of its manufacturing, which could be affected if the Chinese government decides to take revenge.
Representatives of Apple, Treasury and the White House declined to comment. A spokesman for Tencent, one of China’s largest companies, did not respond to a request for comment.
The administration is still working through the technical implications of how to enforce a partial ban on the app, and a major question is whether the White House will Google and Apple and Alphabet Inc. the app in worldwide app stores outside the US, and if so, where, according to the people, who spoke on condition of anonymity.
Senior administration officials are discussing the scope of the ban ordered by Trump, one of the people said, and the president could eventually pass on anything they decide.
The administration cited the national security risk of exposing Americans’ personal data to China in the announcement of the ban earlier this month.
Officials expect WeChat not to disappear completely into the U.S., but its goal is to ban app downloads or updates in the country, according to three of the people.
For example, travelers coming to the US and having WeChat on their phones will probably be able to use the app, but they will not be able to update it. This means that the WeChat version of a non-US resident for a longer period of time in the country is likely to become obsolete, people said.
Trump escalates his fight with Beijing three months before the November presidential election and has blamed China for the Covid-19 pandemic.
In addition to Trump’s ban on WeChat and a related order exchange company with the popular Chinese-owned TikTok video app, the administration has taken other steps to pressure Beijing. These include sanctions on top officials in Hong Kong and recommendations that US stock markets introduce new rules that could delay the delisting of Chinese companies.
A partial WeChat ban could mean companies like Apple could offer it in their China app stores and companies like Starbucks Corp. could sell coffee or accept payment through the app in China. The intention is to ban downloads or updates of the WeChat app from US app stores, two of the people said.
High-ranking officials, including Treasury Secretary Steven Mnuchin, economic adviser Larry Kudlow, White House adviser Pat Cipollone and deputy National Security Adviser Matt Pottinger met Tuesday to discuss the WeChat ban, two people familiar with the matter said.
The talks follow Trump’s executive order on August 6 that bans American people and businesses from doing business with WeChat from mid-September, which sets alarm bells over U.S. companies with operations in China. WeChat is an indispensable part of doing business in the country and selling products to consumers there, who use the app for everything from buying coffee to airline tickets.
In recent weeks, U.S. companies and their lobbyists have gone into overdrive, asking staff in the White House and the Commerce Department about the logistics and intent of WeChat’s executive order, according to people familiar with the matter.
“We talk to everyone who will listen to us,” said Craig Allen, president of the US-China Business Council, whose group represents companies including Walmart and General Motors Co. “WeChat is a bit like electricity. You use it everywhere,” Allen said in China.
He did not confirm any talks with the administration, but said his group was trying to “illustrate the disadvantages” after an extended interpretation of the order.
Among the questions posed include whether the order would allow U.S. companies that have a presence in China as Chinese subsidiaries of those companies to accept payment for their products through WeChat, the people said. The lobbyists also wanted a better definition of what the administration would consider a ‘transaction’ under the order, the people said.
Representatives from the National Retail Federation and the Retail Industry Leaders Association, representing companies such as Best Buy Co., Target Corp. and Lowe’s Cos., are among the lobbyists who have asked questions, the people said.
WeChat is the most popular messaging app in the world, with more than a billion users. Banning the app, even just in the US, could close personal communications between America and China. It would also disrupt operations of international companies relying on the app for cross-border business.
“If the business community can not use WeChat in China, from advertising to payment processing, it’s a shortcut to disconnecting the two economies,” said Samm Sacks, a fellow at the New America think tank in Washington. Sacks said exposing the ability to use WeChat in the U.S. will drive Americans working with Chinese colleagues and businesses to thwart the comprehensive solutions that Chinese use to access the Internet from outside. “It makes the American version of the Great Firewall.”
Shares of Tencent fell as much as 10% after Trump’s executive order of August 6. Cleared nearly $ 35 billion in market value when investors worried that the tech conglomerate’s gaming operations and other business interests in the US would be threatened. Tencent has a major stake in Fortnite maker Epic Games Inc., owns League of Legends developer Riot Games Inc., and has invested in Uber Technologies Inc. and Snap Inc.
The next day, the company hired its first lobbyist in Washington, former Treasury Department attorney Roberto Gonzalez, according to a federal arrest warrant.
A narrower ban would be a relief for Apple, whose iPhone sales would have taken a hit in China. The company’s investors also worried that Trump’s mandate could prompt China’s revenge by restricting manufacturing in the country, where Apple makes a large chunk of its products.
(Updates with the administration’s thinking on how ban could work from eighth member)
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