Corporate America escalates concerns surrounding potential WeChat ban

Yahoo Finance Video
Updated

Corporate America is raising concerns surrounding the potential ban of WeChat. Yahoo Finance's Akiko Fujita joins the On the Move panel to discuss.

Video Transcript

ADAM SHAPIRO: But we want to talk about this issue of companies pushing back against the White House's threats with WeChat and TikTok. Akiko Fujita joins us with the latest on that.

AKIKO FUJITA: Yeah, Adam, anybody who has visited China, done business out of China will tell you that you cannot communicate or operate as a business there without using the WeChat app. This is an app with 1.2 billion users and not only allow users to message, but pay their bills, do banking, get your groceries, even buy a car. And so it's the thread that is essential for any business that wants to tap into that lucrative consumer market.

Now, US businesses are saying that any ban on its usage would have serious implications on their ability to be competitive in the market. And "The Wall Street Journal" reports that more than a dozen companies-- including Apple, Ford, and Walmart-- expressed those concerns about the ban on a call with the White House-- White House officials on Tuesday.

Now, the official ban won't take effect until September 15, but you're seeing intense lobbying behind the scenes largely because that executive order the president signed banning WeChat doesn't really specify the scope of the ban. It does say that that will be determined by Commerce Secretary Wilbur Ross once that ban takes effect. And the expectation right now is that this will largely be limited to US jurisdiction.

But if the ban extends to markets like China, Apple, for example, could be asked to remove the WeChat app from their app store. And that could have real implications for their bottom line. We had an analyst from-- for Apple saying that if the app is banned, that could mean a 30% decline in iPhone shipments, if the ban goes into effect, essentially saying that in China, WeChat is more important than the iPhone. And so if you can't put WeChat on the iPhone, then it's essentially a useless device.

Now, we should point out this weekend, Chinese Vice Premier Liu He is meeting with trade advisor Robert Lighthizer. This is a meeting that's set up to discuss the phase one part of the trade deal to see how much progress has been made. But you can bet that will be raised. The issue of the ban not just on TikTok, but on WeChat will certainly be raised there.