TCEHY Tencent Holdings Ltd (PK)

By Sebastian Herrera 

A California federal judge will hear additional arguments Saturday as part of an emergency push to delay enforcement of an executive order placing restrictions on the app WeChat.

U.S. Magistrate Judge Laurel Beeler initially ruled Friday that an existing motion seeking a preliminary injunction on President Trump's Aug. 6 executive order was moot because the Commerce Department detailed what transactions would be restricted on WeChat. But she left the door open for a new ruling to happen before Sunday, when the restrictions are scheduled to go into effect.

The group that sued the Trump administration over the executive order, called the U.S. WeChat Users Alliance, continued to press its case at a hastily scheduled Friday hearing, describing the government's moves as an infringement on the constitutional rights of WeChat users.

"This is nothing else than a ban," Michael Bien, an attorney representing the U.S. WeChat Users Alliance, said during the Friday hearing. "What matters is our clients' rights to use the app will end on Sunday."

Lawyers representing the U.S. government have argued other apps could provide users with features and services similar to WeChat, so the ban doesn't infringe on their First Amendment rights.

The Trump administration said Friday it would ban U.S. downloads of Chinese-owned apps WeChat and TikTok after Sunday night, meaning the apps may have to be removed from marketplaces like Apple Inc.'s App Store and Google Play. The administration is also barring money transfers in the U.S. through WeChat.

It sets the stage for an escalation in a battle between the world's two-largest economies over the future of technology. American companies whose fortunes are linked to China had also pushed back against the administration's plans, saying it could undermine their competitiveness.

Tencent Holdings Co., the parent of WeChat and one of Asia's largest technology companies, has played down the threat of a U.S. ban on WeChat, asserting that a potential U.S. ban would apply only to the international version of the app. Tencent said Friday that the restrictions were unfortunate and pledged to continue discussions with the government and stakeholders on being able to provide services to U.S. users.

WeChat and its domestic sister app Weixin have about 1.21 billion monthly active users combined. On an earnings call in August, Tencent executives sought to distinguish the two apps and allay investors' fears. The company generates less than 2% of revenue from the U.S., a Tencent executive said at the time.

Administration officials have cited concerns that data the app collects from U.S. users could be shared with the Chinese government.

Justice Department lawyers have said that the government wouldn't pursue legal action against individuals who use WeChat "to convey personal or business information."

Mr. Trump last month issued a similar executive order focused on the popular video app TikTok. Oracle Corp. is part of a group that struck a deal with TikTok parent ByteDance Ltd. to revamp the app's U.S. operations. Discussions between U.S. officials and TikTok's suitors are ongoing, though ByteDance has said the Chinese government also has to approve the sale.

WeChat bundles social media, text messages, mobile payments, corporate marketing and other functions into one app. While WeChat's users are primarily in China, the app is important among the Chinese diaspora in the U.S. and is widely used by foreigners with professional or personal ties in China.

As with the order against TikTok, the order involving WeChat says the company collects vast amounts of data that could potentially expose the personal information of Americans and Chinese nationals living in the U.S. to the Chinese government. TikTok and WeChat have said they protect the privacy of their users.

Apple, Ford Motor Co., Walmart Inc., Walt Disney Co. and other multinational companies with strong business ties to China previously raised concerns to White House officials about the potential ban, arguing that it could affect their competitiveness and restrict them from forming deals in the country.

TikTok also filed a lawsuit in August against the U.S. government potentially banning the app.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com

(END) Dow Jones Newswires

September 18, 2020 19:11 ET (23:11 GMT)

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