A late-breaking injunction by a federal judge in California early Sunday hit the pause button on the federal government’s plan to ban WeChat.
A complaint filed by a group of WeChat users in the U.S. led to the court blocking the order, which was set to prohibit downloads of the app starting Sunday night. Judge Laurel Beeler wrote that the plaintiffs “have shown serious questions going to the merits of the First Amendment claim, the balance of hardships tips in the plaintiffs’ favor.“
Beeler noted that for many WeChat users, the app is their sole means of communication. That’s not merely because China’s restrictions bar many other apps, but also due to limited English proficiency drastically limiting their choices. In other words, banning the app effectively cuts off their ability to communicate. The justice also questioned whether an outright ban was warranted to address the U.S. government’s national security concerns.
The judge wrote that “there are obvious alternatives to a complete ban, such as barring WeChat from government devices, as Australia has done, or taking other steps to address data security.”
The net effect of the preliminary injunction is that new users should still be able to download the app. For existing users, the court order also froze the prohibition on transactions with the app in the U.S. that may degrade its usability.
The U.S. Department of Commerce issued an order on Friday to remove Tencent Holdings’ WeChat and ByteDance’s TikTok from app stores by 11:59 p.m. Sunday night, preventing users from obtaining or updating the apps. On Saturday, TikTok received a stay of one week, as the likelihood of a deal with Oracle and Walmart seems more likely now that it has received President Trump’s blessing.
White House officials have cast Chinese technology in the U.S. as national security threats tantamount to “Trojan horses” seeded by Chinese intelligence. Using this justification, officials have taken aim at Chinese tech giants ZTE and especially Huawei. The company has been hit hard by the administration’s ban on commercial trade with certain foreign telecom providers, which was extended in May for another year.
The effort appeared to set up leverage in a looming U.S.-China trade war. But the aggressive moves, now aimed at WeChat and TikTok, have the tech sector scratching its head. Numerous Chinese tech companies do business in the U.S. and cater to American consumers, making it appear that U.S. officials are cherry-picking targets.
When it comes to TikTok, the Oracle-Walmart deal appears to allow owner ByteDance to retain as much as 80 percent. Reportedly, some officials didn’t like this structure, but Trump still approved it “in concept” on Saturday, teeing up an official approval in the days to come. Currently, his Treasury Department is reviewing the details.
Still, the framework of ownership casts doubt on whether the deal actually accomplishes anything — other than benefiting major Trump donor Safra Catz, Oracle’s co-chief executive officer, with stakes in social media’s fastest-growing app business, which is estimated to be worth some $50 billion.
New reports indicate that ByteDance is now seeking a $60 billion valuation, of which Oracle and Walmart would hold 12.5 and 7.5 percent, respectively.
TikTok’s U.S. user base tops 100 million people, a majority of which are Gen Z consumers, with 50 million daily active U.S. users. On average, WeChat serves 19 million U.S. daily active users.
U.S. officials have yet to respond to Sunday’s court order regarding WeChat.