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Judge Blocks Trump Ban on WeChat Over First Amendment Issues

While President Trump may have given his "blessing" to an agreement to keep video-sharing app TikTok operational in the U.S., there was no similar deal made for the Chinese mobile-texting app WeChat, owned by Tencent (OTC: TCEHY).

There are concerns about the massive amount of user data collected by the app, including on Chinese nationals in the U.S., which it was feared could be given to Beijing to target individuals and exact reprisals against them. So Trump banned WeChat from being hosted on Apple's (NASDAQ: AAPL) App Store, Google's Play store, and other similar channels in the U.S.

WeChat screens on smartphone

Screen shots from WeChat. Image source: WeChat.

The ban was to go into effect at midnight Sunday, but a U.S. judge in California issued a preliminary injunction in favor of WeChat users that blocks implementation of the ban. U.S. Magistrate Judge Laurel Beeler said in her ruling that because the arguments against the ban raise "serious questions going to the merits of the First Amendment claim, the balance of hardships tips in the plaintiff's favor."

Her ruling also prohibits the Commerce Department from implementing a ban on transactions on the texting app.

The injunction is probably a cause for relief for Apple. The company faced the possibility of being placed on an "unreliable entities list" by the Chinese government, which would have prohibited it from investing in China or trading with the Chinese market.

Although no companies involved have been officially identified as an "unreliable entity," government-controlled media has threatened Apple and Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google with retaliation. While Google has limited exposure to China, Apple does some $44 billion in annual sales there, almost 20% of its annual global revenue.

There are reportedly 3.3 million active WeChat users in the U.S. as of August. The ruling will likely be appealed since Commerce officials told reporters on Friday they were anticipating an extended legal fight.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Tencent Holdings. The Motley Fool has a disclosure policy.

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