On August 6, the President of the United States of America, Donald Trump signed two executive orders which ban all transactions with ByteDance and WeChat, two very popular Chinese social media companies. The tech experts speculate that the ban on WeChat, in particular, can have devastating implications for Apple with a possible 30% decline in iPhone sales, globally.
Renowned tech analyst, Ming-Chi Kuo explains in a recent report that WeChat integration in the lives of Chinese is a lot bigger than TikTok. Therefore, if Apple is forced to remove the app from its digital ecosystem that might result in the fall of iPhone sales in China.
On the pretext of concern over Americans’ privacy and security, President Trump has vowed to ban both apps from the country by September 15, this year.
The popular messaging app, WeChat by Tencent is a major part of virtual communication and activities for Chinese users. As a strong alternative for Facebook, Instagram and WhatsApp, 1.2 billion monthly active Chinese users are on WeChat for a range of purposes like social networking, online shopping, making payments, read the news, and much more. Therefore, the app’s non-availability on any smartphone is bound to affect the device’s demand in the Chinese market.
Kuo writes that,
“Since WeChat is very critical to Chinese users, integrating communications, payments, e-Commerce, social software, news reading, and productivity functions, we believe that the move will tank iPhone shipments in the Chinese market. We estimate that global iPhone shipments will decline by 25–30%. Global shipments of other Apple hardware products, including AirPods, iPad, Apple Watch, and Mac, will decline by 15–25%.”
Having said that, Kuo clarifies that if President Trump’s order is only to remove the app from U.S. App Store, then Apple would only experience an estimated decline of 3% to 6% in iPhone sales.
Chinese smartphone sales were a major part of Apple’s profits in 2020 third quarter due to the popularity of the iPhone 11 series and promotional discounts. It is also anticipated that the demand for smartphones with 5G network support, Apple’s upcoming 5G iPhone 12 models are likely to do well in the Chinese market.
President’s August 6, executive orders read;
“I took action to address the threat posed by one mobile application, TikTok. Further action is needed to address a similar threat posed by another mobile application, WeChat.”
Claiming that sensitive American information is misused by the Communist Chinese government, the Trump administration has given 45 days to all parties involved to cut all transactional ties with both apps.
— Andrew Feinberg (@AndrewFeinberg) August 7, 2020
In the politically motivated decision, President Trump is also the reason for forceful American acquisition of the TikTok app for which Microsoft is the only bidder. For now, WeChat is available in the App Store.