Posted in NEWS
September 20, 2020

Update: District Court Judge Issues Preliminary Injunction Against WeChat Ban in the U.S.

Update: District Court Judge Issues Preliminary Injunction Against WeChat Ban in the U.S.

Update: Magistrate Judge Laurel Beeler issued a preliminary injunction Sunday morning against banning WeChat. 

The court grants the plaintiffs’ motion for a nationwide injunction against the implementation
of Executive Order 13,943 (limited to the Secretary of Commerce’s Identification of Prohibited
Transactions 1 through 6).

“Nothing in this order prevents the Secretary from reconsidering his decisions or from
identifying “any other transaction that is related to WeChat by any person, or with respect to any
property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd., or any
subsidiary of that entity, as may be identified at a future date under the authority delegated under
Executive Order 13943.”

In the injunction dated Sept. 19, Judge Beeler ruled that banning the app would unduly infringe on users’ First Amendment rights, and that the government failed to provide evidence to the court that WeChat poses a national security threat. From the order:

“Certainly the government’s overarching national-security interest is significant. But on this
record — while the government has established that China’s activities raise significant national security concerns — it has put in scant little evidence that its effective ban of WeChat for all U.S. users addresses those concerns. And, as the plaintiffs point out, 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.”

 Original Story: U.S. District Court Magistrate Judge Laurel Beeler for the Northern District of California – San Francisco heard arguments Saturday afternoon for a preliminary injunction to halt the ban of Tencent’s multi-purpose messaging, social media, and mobile payment app, WeChat, in the U.S.  The order was issued by the Commerce Department on Friday. 

Attorney Michael Bien, representing the U.S. WeChat User Alliance, argued that the government’s ban of the app would do irreparable harm to the plaintiffs’ First Amendment rights, that there is no alternative application that can be used for Chinese Americans to communicate (because many do not speak English), and that no proof has been presented to-date by the government that WeChat poses a threat to national security. Bien also argued that the order from Commerce was too vague in scope.

U.S. Department of Justice attorney Michael Drezner said in his argument that the ban would not make the app unusable for users immediately, but certain features will see “degradation” over time.  He acknowledged that the app would become unavailable to new users, but argued that there were plenty of alternatives to WeChat that could be used – an argument Bien challenged. He also said that the ban was aimed more at “transactions” with Tencent.

Judge Beeler said that she would begin drafting an order, but did not indicate what her decision was at the close of the hearing. An order is likely to be released sometime before the deadline of the ban, which is Sept. 29, at 11:59 p.m. ET.

The request for a preliminary injunction was filed on Friday afternoon on behalf of a group of WeChat users in the U.S. who were concerned that the ban would unreasonably impact their lives.

This is a developing story.

On Friday, the Commerce Department issued an order effectively banning both WeChat and ByteDance’s short-form video app TikTok from app stores on iOS and Android devices. The order from Commerce was at the direction of an executive order issued in August by U.S. President Donald Trump banning transactions with the apps, citing “national security risks.”

WeChat owner Tencent Holdings has deep connective tissue to the video games industry including League of Legends and Valorant developer Riot Games, Fortnite and Rocket League owner Epic Games. On Friday, the U.S. Treasury Department’s Committee on Foreign Investments in the United States (CFIUS) sent letters to Riot, Epic, and other video game makers with financial ties to Tencent asking for information on security protocols that protect users in the United States.   

The Administration’s look into WeChat appears to have opened the door to taking a closer look at companies that have investments from Tencent Holdings and signals that wholly-owned Chinese game companies and companies with investments from China-based entities could face greater regulatory scrutiny in the future. Tencent has investments in a number of companies running esports leagues and games (many of which run competitions in North America) including Rainbow Six Siege owner Ubisoft, Overwatch League and Call of Duty League owner Activision Blizzard, PUBG and PUBG Mobile owner Bluehole, and Free Fire owner SEA Limited (which owns Garena). It also fully owns mobile developer Supercell, makers of Clash Royale and Brawl Stars.

On Friday, Commerce Secretary Wilbur Ross told Fox Business Network said that “for all practical purposes” WeChat would be shut down in the U.S. when the order officially takes effect Sunday, though an unnamed Commerce Dept. official told Reuters that the app would still work for existing U.S. users but might experience intermittent outages and a degradation in some services. The app will not be available for new users on Android or iOS device stores once the order is in place.

Also on Friday, downloads of TikTok and WeChat saw modest increases. TikTok downloads rose approximately 12% in the U.S. on Friday compared to Thursday, while WeChat saw an increase of 150% from Thursday, according to early estimates from Sensor Tower. 

Published at Sun, 20 Sep 2020 13:22:59 +0000

Update: TikTok Deal With Oracle, Walmart Delays U.S. Ban to Sept. 27

The U.S. Treasury Department issued a statement Saturday evening to officially highlight that President Donald Trump has reviewed a deal between TikTok, Oracle, and Walmart, and appears to approve of it. 

“The President has reviewed a deal among Oracle, Walmart, and TikTok Global to address the national security threat posed by TikTok’s operations,” the statement from Treasury spokesperson Minica Crowley reads. “Oracle will be responsible for key technology and security responsibilities to protect all U.S. user data. Approval of the transaction is subject to a closing with Oracle and Walmart and necessary documentation and conditions to be approved by CFIUS.”

Thanks to this deal, and the Administration’s approval, the TikTok ban has been delayed until Sept. 27. If approved by the Treasury’s Committee on Foreign Investments in the United States (CFIUS), TikTok’s U.S. operations will remain mostly intact and operational. The tie-up with Oracle and Walmart may require approval from the Chinese government.

The ban was the result of a Commerce Department order Friday, precipitated by an executive order from President Donald Trump in August.

The announcement from Treasury comes on the heels of a statement issued by TikTok announcing a proposal with Oracle and Walmart to resolve any security concerns the U.S. government might have. Under the terms of this deal, Oracle would become a “trusted technology provider,” would host all U.S. user data, and secure “associated computer systems to ensure national security requirements are fully satisfied.”

Oracle also issued a statement Saturday evening noting that it would buy a 12.5% stake in TikTok Global. 

Oracle confirms Secretary Mnuchin’s statement that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle will serve as the trusted technology provider,” the company said. “Oracle has a 40-year track record providing secure, highly performant technology solutions.”

Finally, Walmart issued a statement noting that it would take up to a 7.5% stake in TikTik Global, that CEO  Doug McMillon would join the board, and that it would provide its “ecommerce, fulfillment, payments, and other omnichannel services to TikTok Global.”

Bloomberg is also reporting that Trump wants $5B USD from the deal to go towards an education project that will “educate people as to real history of our country — the real history, not the fake history.” He told reporters at the White House Saturday that the companies agreed to contribute $5B to an “education foundation.”

While TikTok’s connection to esports might seem tangential, prior to Trump’s executive order the short-form video platform was starting to make strides with influencers and esports organizations. Many were beginning to evaluate the value of the platform for promotion, and in recent months brands such as Louis Vitton, Dior, Fendi, and Puma have utilized it despite concerns about it being banned in the U.S. 

Esports does have a presence on the platform, though it pales in comparison to live streaming platforms such as Twitch and YouTube. The #esports hashtag has over 800M views, and influencers such as TSM player Ali “Myth” Kabbani (884.3K followers, 5.3M likes), FaZe Clan’s Frazier Khattri (1.9M followers, 13.8M likes), YouTube star Jimmy “MrBeast” Donaldson (12.1M followers, 135M likes), YouTuber Lannan “LazerBeam” Eacott (5.5M followers 41.7M likes), and many others have managed to garner respectable followings.

Published at Sun, 20 Sep 2020 00:51:07 +0000

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