The Trump administration has continued to widen the eastern front in its offensive against Chinese tech companies, adding Tencent’s WeChat messaging service to its targets and signalling it would make it tougher for Chinese companies who want to be listed in the US.
The White House has issued executive orders that give US companies 45 days to halt all dealings with WeChat and ByteDance, owner of the TikTok video app, over what it says is a threat to US economic and national security.
Although the wording was vague, Tencent’s gaming interests (it owns the League of Legends publisher and has a stake in Fortnite’s Epic) appear to have escaped censure and WeChat only has around 3m users in the US, or less than 1 per cent of its members.
Yet Tencent could suffer longer lasting damage than ByteDance, says Lex, with WeChat’s integration of payment services, corporate solutions and ecommerce also being hit and nearly two-thirds of group sales coming from related revenues — which include social networks, ads and fintech.
Chinese tech stocks lost more than $75bn in value on Friday on the news, with Tencent’s stock down as much as 10 per cent in Hong Kong.
For those listed in the US or planning to do so, there was further pressure, with proposals being advanced that would force Chinese companies to delist from US stock exchanges unless regulators were given access to their audits. Delisting is recommended by January 1, 2022 for quoted companies that don’t co-operate, and a ban on non-compliant new listings would kick in immediately.
Meanwhile, BuzzFeed reports Mark Zuckerberg told a staff meeting that a TikTok ban would set “a really bad long-term precedent”. He added: “I am really worried . . . it could very well have long-term consequences in other countries around the world,” suggesting he feared a Facebook product could become a target for another country.
ByteDance founder Zhang Yiming is FT Weekend’s Person in the News, while Tom Braithwaite writes that the revenues in China of many US tech companies are at risk, not least Apple’s, with the iPhone maker relying on China for its manufacturing base and, including Taiwan, almost a fifth of its $270bn annual sales.
The Internet of (Five) Things
1. Uber rides are down 75%
A surge in Uber’s food delivery business was unable to counteract a 75 per cent drop in global ride-sharing, dragging the company’s overall revenues down 29 per cent as it counts the cost of the coronavirus crisis. Lex notes food delivery has gone from a footnote to well over half of Uber’s business, with second-quarter bookings and revenues in the Uber Eats division more than doubling year over year to $7bn and $1.2bn respectively. Unfortunately, the economics remain questionable.
2. Wirecard barbarians inside the gate
German prosecutors suspect Wirecard was looted before its spectacular collapse in June, with $1bn funnelled to opaque partner companies even as the payments group fought allegations of accounting fraud. The embezzlement is suspected to have taken the form of unsecured loans, which Wirecard claimed were for advance payments to merchants.
3. France excluded from EU’s Covid app effort
France’s Covid-19 contact tracing app will not be included in a co-ordinated EU exercise of cross-border information sharing after Paris snubbed a standard created by Apple and Google that has been taken up by most European member states.
4. Apple’s App Store advantage
Facebook has condemned Apple’s App Store policies, reports The Verge, after it was forced to strip the gameplaying feature from its Facebook Gaming app for iOS. Meanwhile, strict App Store guidelines are making cloud gaming services like Microsoft’s xCloud and its competitor, Google Stadia, effectively impossible to operate on the iPhone. Richard Waters writes about the challenges Apple’s rivals face in competing with its ecosystem.
5. Voodoo leads hyper-casual’s ‘clones of crap’
At the other end of the gaming spectrum, “hyper-casual” is the fastest growing category on mobile. Tim Bradshaw has an in-depth look at a shallow trend where French start-up Voodoo dominates, with more than 1bn players to date having downloaded more than 3.7bn of its games.
Tech tools — mmhmm
Zoom continued to pimp its video conferencing offering this week, announcing new filters, presenting tools, background noise suppression, reactions and lighting options. If you want even more of a Hollywood production from home, mmhmm, which works with Zoom, promises beautiful virtual rooms and backdrops, as well as allowing you to show content “over your shoulder”. Former Evernote chief Phil Libin is a founder and has this video demo of its capabilities.