UPDATE: According to LA Times reporter Sam Dean, the White House has confirmed that the executive order will only affect WeChat, not other Tencent-owned companies such as Riot Games.
President Trump has signed a new executive order targeting Tencent that could have wide-ranging effects on the games industry. Tencent is a Chinese tech company that’s rapidly become one of the biggest players in gaming worldwide over the past few years, thanks to deals with many big developers.
Along with its investments in the games industry, Tencent also owns the popular messaging app WeChat. While WeChat isn’t very popular in the U.S., it has massive reach around the world, particularly in China, and even more so for people traveling or living outside of their home countries. Of particular importance is that WeChat allows users to communicate with other users in China even when they’re not in the country themselves.
It’s Tencent’s ownership of WeChat, not its many holdings among game developers, that made it the target of the president’s latest executive order. The president has taken aim at WeChat before, claiming that it collects data to disseminate to China’s government. That’s also what’s behind the new executive order, with the president calling WeChat a national security threat, according to the text of the order shared by reporter Andrew Feinberg and widely covered elsewhere. A separate executive order was issued against ByteDance, owner of TikTok, for largely the same reasons. Both executive orders specifically ban “transactions” - a not particularly well defined term - with either of the companies or their subsidiaries, and are set to go into effect in 45 days, which would be September 20th, 2020.
The effects that this executive order could have on the games industry are immense, but also unclear. The order specifically targets WeChat, not Tencent’s many partners and subsidiaries in gaming, but the language is broad enough that it could affect any deal with the company. Tencent owns 100 percent of Riot Games, 40 percent of Epic Games, and small amounts of shares in Activision Blizzard and Ubisoft. If gaming transactions with Tencent were to be banned, that could easily mean no purchases would be allowed in League of Legends or Valorant, though how it would affect other companies affiliated with Tencent is far less clear. The executive order is also highly likely to be challenged in court, both because of its far-reaching implications and because of the questionable assertion that the targeted apps’ very existence in the U.S. constitutes a national security threat.
President Trump has taken aim at China throughout his presidency, frequently lashing out at the country and using national security as an excuse. While there’s ample reason to doubt the legality and enforceability of these latest executive orders, that’s no guarantee that they won’t go into effect anyway. In any case, an outright ban on Tencent would have devastating effects on portions of the games industry, but at this point there are more questions than answers about the order’s future.
Source: Andrew Feinberg/Twitter, Sam Dean/Twitter