American President Donald Trump signed an order banning US transactions with eight Chinese software apps including Ant Group’s Alipay in 45 days, when he’ll no longer be in office.
The order is the outgoing administration’s latest bid to use national security powers against China’s largest technology companies, but it will be up to President-elect Joe Biden to decide whether to enforce the policy. It also deals another blow to Ant co-founder Jack Ma, who hasn’t been seen in public since Chinese regulators halted Ant’s $35 billion IPO and launched an antitrust probe into Alibaba Group Holding.
The executive order, which directed the US Commerce Department to draft rules outlining which payments and transactions will be outlawed, will impact Tencent Holdings Ltd.’s QQ Wallet and WeChat Pay, as well as CamScanner, SHAREit, VMate and WPS Office.
The order is likely to face legal challenges similar to those mounted against the president’s prior efforts to force the sale of TikTok from China’s ByteDance and ban the WeChat messaging app. But Mr. Biden could also pause or erase the policy upon taking office.
The immediate impact is likely to be limited. Apps like WeChat and Alipay have their biggest customer base in greater China and the number of users in the US is relatively small. It’s not clear whether the order could be applied to transactions outside the US, for instance, Starbucks allows customers to pay with WeChat Pay in China.
Highly popular apps
Of the groups named in Mr. Trump’s order, document-scanning app CamScanner was the most downloaded in 2020 with 4.4 million installs, according to data. That surpassed Tencent’s WeChat, the social media service used by over 1 billion Chinese, which gathered 1.6 million downloads last year. The order targeted WeChat and QQ Wallet, the digital wallets built into Tencent’s two largest platforms of the same name.
Alipay managed just over 207,000 downloads in 2020. Ant’s signature app has mainly focused in the US on places where Chinese consumers visit and shop, such as luxury stores in New York or tourist destinations in California. But in 2019, Alipay inked deals with retailers like drugstore chain Walgreens, placing the app’s logo in front of millions more US consumers.
Similar to the move against TikTok?
“The new Executive Order is similar to, but appears to be more broadly worded, than last year’s Executive Orders targeting transactions in respect of WeChat and TikTok,” said analysts. “The ultimate scope of the restrictions and the entities that will be targeted is hard to predict. Presumably, the impact will be focused on transactions in the United States, although that is not guaranteed.”
Yet, Mr. Trump’s order, which cites concerns that the platforms threaten national security, has the potential to significantly disrupt international commerce. Senior administration from Trump administration officials said they believe the move could help stop the encroachment of Chinese data collection and prevent personal information like texts, calls, and photos from being gathered by a rival.
But they didn’t identify specific instances of data theft using the applications. Instead, they pointed to the size of the payment platforms, saying their scope made them likely targets for Chinese data collection efforts.
The 45-day timeline mirrored a similar period in the WeChat and TikTok executive orders, according to one of the officials, and there was no consideration of accelerating the implementation before the end of the administration.