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Did President Donald Trump just blow up the U.S. videogame industry?
That was the question on a lot of minds after Trump issued executive orders Thursday night banning “transactions” with the Chinese owners of the TikTok and WeChat apps starting Sept. 20. While the move against TikTok’s owner — Beijing-based Bytedance — was not a huge surprise, action against WeChat’s owner — Shenzhen-based tech giant Tencent Holdings Inc. — was.
That’s because Tencent is one of the world’s largest and most valuable companies, with ownership stakes in a number of U.S. videogame companies, including Riot Games, which makes “League of Legends”; Epic Games, which makes “Fortnite”; and Activision Blizzard ATVI, +2.98% , which makes “World of Warcraft.”
Tencent also has significant stakes in Tesla Inc. TSLA, +0.30% and Snap Inc. SNAP, -1.61% , the maker of Snapchat, and the Chinese company has streaming deals in place with the NBA, the NFL and Major League Baseball. The order could potentially also affect Apple Inc. AAPL, +3.48% and Alphabet’s GOOGL, +1.74% GOOG, +1.79% Google app stores, which feature Tencent-owned apps.
The executive order took aim directly at WeChat, which has more than 1 billion users worldwide, and whose “data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,” the order said.
But the wording of the order made it unclear if the ban affected just WeChat or all of Tencent’s holdings, saying: “any 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. … Shenzhen, China, or any subsidiary of that entity.”
Either way, the order is likely to be challenged in court.
Tencent shares 700, -6.75% in Hong Kong sank in Friday trading after the announcement. The news broke after the extended trading session in the U.S. closed, but traders will likely keep a close eye on how shares of Tesla, Activision Blizzard and others fare in the morning.
Banning all business by U.S. companies with WeChat’s parent — if that is the case — could prove to have much farther-reaching effects than Trump may have anticipated.
“Likely he had no idea,” tech journalist Kara Swisher tweeted Thursday night.
Many on social media Thursday night expressed surprise and alarm:
