Companies like TenCent, who have become a massive force in the gaming industry despite widespread mistrust with the corporation, may now be in the crosshairs to be banned from the United States thanks to an executive order by President Donald Trump.
This evening, President Trump has apparently signed a new Executive Order - his 173rd since becoming president in 2016 - targeting Tencent by way of WeChat by banning them in 45 days. Similar to another Executive Order released this evening targeting TikTok and it's parent company ByteDance, President Trump is invoking the International Emergency Economic Powers Act (IEEPA) to facilitate the ban in 45 days. the language of the order itself includes provisions to go after the government of China and other Chinese subsidiaries deemed by the Secretary of Commerce to be a threat:
Section 1. (a) The following actions shall be prohibited beginning 45 days after the date of this order, to the extent permitted under applicable law: 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. (a.k.a. Téngxùn Kònggǔ Yǒuxiàn Gōngsī), Shenzhen, China, or any subsidiary of that entity, as identified by the Secretary of Commerce (Secretary) under section 1(c) of this order.
This comes off the heels of the U.S State Department suddenly pushing harder to crack down against Chinese tech companies. Yesterday, the State Department issued their Expansion of the Clean Network to Safeguard America’s Assets, stating that the Trump Administration will begin to guard the privacy of American citizens and corporations from "malign actors", naming the Chinese Communist Party by name as a specific example, with Huawei, Alibaba, and Tencent named as possible violators of the Clean Network Program.
Much of the efforts against Chinese companies comes after last week's sudden threat to ban TikTok in the United States by the President, which has lead to possible negotiations between Microsoft and ByteDance. The executive order, thanks to the relative vagueness however, changes this landscape further.
Who Will be Affected?
Simply put, major gaming and other multimedia companies may be affected by the executive order, though to what extent is speculation at this point.
Tencent alone has majority or minority holdings in multiple game developers and publishers, including Riot Games, Epic Games, Activision Blizzard, Platinum Games, and Paradox Interactive. Tencent also has ownership and minority stakes in non-gaming properties and multimedia franchises, including Discord, Reddit, Lyft, Spotify, Warner Music, as well as the production of movies such as Wonder Woman,Terminator: Dark Fate, and more.
First, Tencent will likely no longer invest in American companies or products, a practice they have been doing for the past few years to steadily grow to the size they are now. While they may continue to buy minority or majority stakes in European companies, depending on the enforcement of the Executive Order may depend on whether or not those European companies will do business with the U.S.
Subsequently, WeChat, the primary target of the Executive Order, will be banned in the United States.
The worst case scenario is the vagueness of the language opens the doors for other companies owned by Tencent to see bans. Transactions between U.S customers and games like League of Legends can be at risk due to developer Riot Games being a subsidiary by Tencent. The same can apply to majority stakes in developers like Supercell, and games like Clash of Clans and Brawl Stars.
Companies with a minority stake, such as Ubisoft and Epic Games, may be unaffected, but the wording of the executive order is up to the discretion of the U.S Secretary of Commerce. Games such as Fortnite and PUBG may likely see a reduction or removal of features for U.S markets, however, if they do not pass the standards of the Clean Network Program.
It should be noted that the above is not confirmed, but possible outcomes. Tech reporter Sam Dean of the L.A Times has stated on Twitter that video game companies owned by Tencent will not be affected by the executive order, based on the confirmation of a White House official.
Still, the Executive Order provides enough wiggle room in its language to further affect companies like Tencent, which may still see ramifications in the long run.
