Oct 28, 2020 04:21 AM

Tencent Shares Surge After U.S. Court Upholds Stay on WeChat Ban

The WeChat app in the App Store on a smartphone.
The WeChat app in the App Store on a smartphone.

(Bloomberg) — The Trump administration lost a bid to enforce its prohibitions against the Chinese-owned “super app” WeChat in the U.S. after appealing a judge’s ruling that the ban probably violates the free-speech rights of users.

Upholding a trial judge, the U.S. Court of Appeals in San Francisco rejected the administration’s request Monday for a stay of the preliminary injunction that prevents the administration from enforcing a wide range of measures, including barring the app from Apple and Google’s app stores for U.S. downloads, over purported national security concerns.

Shares of WeChat owner Tencent Holdings Ltd. jumped as much as 3.1% Tuesday, the most in two weeks, to an intraday record in Hong Kong trading.

The Trump administration asserted that WeChat is a threat because Tencent is intertwined with the Chinese Communist Party, which could use the app to disseminate propaganda, track users and steal their private and proprietary data. It’s a similar argument to one the administration used to target the TikTok short-video app, owned by ByteDance Ltd., while also seeking to force a sale of TikTok’s U.S. operations.

U.S. Magistrate Judge Laurel Beeler in San Francisco issued a preliminary injunction Sept. 19 — the day before the WeChat ban was to go into effect — at the request of a group of U.S. WeChat users. They argued the prohibitions would violate the free-speech rights of millions of Chinese-speaking Americans who rely on it. The app has 19 million regular users in the U.S. and 1 billion worldwide.

In Monday’s order, a three-judge panel said the administration hasn’t shown it will suffer “an imminent, irreparable injury” while the litigation plays out.

Even as Tencent gets a reprieve from the broader WeChat ban, the company may still face restrictions against the app’s payment services. U.S. officials have stepped up behind-the scenes talks about measures against WeChat Pay and Ant Group’s Alipay, people with knowledge of the matters said earlier this month.

The case is U.S. WeChat Users Alliance v. Trump, 20-16908, U.S. Court of Appeals for the Ninth Circuit (San Francisco).

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