President Trump wants to ban WeChat, one of the most important digital platforms in the world. It is part of the pieces for the control of the new data age. I have called it the Data World War in which China and the United States are just entering the early phases. The data of nations would define the prosperity of nations because at the end of everything, data connects us back to that old century postulation by Pythagoras: the world is made up of numbers. The more you understand data, the better you can fix frictions in markets and nations. Indeed, data is the gunpowder of the knowledge economy. Anyone who controls and dominates on it will win the castles of wealth.
President Trump has signed an executive order to ban U.S. transactions with ByteDance, the parent company of TikTok, as well as WeChat owner Tencent. The move was issued under the International Emergency Economic Powers Act and comes into effect in 45 days, following growing tensions with China over security concerns. Microsoft (LinkedIn’s parent company) is currently in talks to acquire the U.S. operations of video-sharing app TikTok, which has up to 80 million active monthly users in America (LinkedIn)
Interestingly, like I noted, if China wants to retaliate and ban Microsoft Windows, it would score an own-goal: “Ban Microsoft Windows or Apple iPhone? Not really because those would be own-goals to China. For every Windows sold, China makes money because the machines which power Windows are largely assembled in China for Dell, HP, Lenovo and others”.
In association football, an own goal occurs when a player causes the ball to go into their own team’s goal, resulting in a goal being scored for the opposition
But it is not only China that could score an own-goal; America could also score own-goals. Indeed, if the U.S. bans WeChat, many Chinese iPhone users will have no other option than to drop iPhones and pick another phone brand where they could easily use WeChat. Without WeChat, no one could function normally in China, unlike the iPhone which has clear substitutes. According to Bloomberg, “A survey on the twitter-like Weibo service asking consumers to choose between WeChat and their iPhones has drawn more than 1.2 million responses so far, with roughly 95% of participants saying they would rather give up their devices.”
iPhone loyalists across China are now reconsidering their attachment to the device after Donald Trump issued an executive order last week barring US companies from doing business with WeChat […]
A survey on the twitter-like Weibo service asking consumers to choose between WeChat and their iPhones has drawn more than 1.2 million responses so far, with roughly 95% of participants saying they would rather give up their devices. ‘The ban will force a lot of Chinese users to switch from Apple to other brands because WeChat is really important for us,’ said Sky Ding, who works in fintech in Hong Kong and originally hails from Xi’an […]
The ban threatens to turn iPhones into expensive ‘electronic trash,’ said Hong Kong resident Kenny Ou, who sees WeChat as one of the most essential software on his handset
Banning WeChat will have marginal impacts in China because the nation has no alternative and will stick with WeChat, but it could cause massive dislocation for Apple and American hardware makers. The implication is simple: devices made by American companies which cannot possibly install WeChat would simply disappear in China as they would have no material value without WeChat. If President Trump goes ahead and bans WeChat, call it an own-goal as we say in football (yes, soccer). Apple needs better pastors to pray against WeChat ban!
Where China has to pay attention is its companies traded in the U.S. If Trump wins re-election, the risk of some of these companies being delisted will rise. I noted that in a piece where I wrote, “I think China will just chill – it has met an unpredictable American leader that cannot be modeled by any communist party algorithm. That would be wisdom because any nonsense move, Trump can delist all Chinese companies in Wall Street!”. That seems to be on the fly.
U.S. Treasury Secretary Steven Mnuchin on Monday said companies from China and other countries that do not comply with accounting standards will be delisted from U.S. stock exchanges as of the end of 2021.
Mnuchin and other officials recommended the move to the U.S. Securities and Exchange Commission last week to ensure that Chinese firms are held to the same standards as U.S. companies, prompting China to call for frank dialogue.