President Trump recently signed an executive order aimed at limiting American companies from engaging in business with two Chinese-based social media apps. This effort is part of the administration’s continued efforts to limit the economic influence of the Chinese government.
On August 6th, President Trump signed both an “Executive Order on Addressing the Threat Posed by WeChat” and an “Executive Order on Addressing the Threat Posed by TikTok.”
The pair of orders, signed after President Trump found “that additional steps must be taken to deal with the national emergency with respect to the information and communications technology and services supply chain.”
They are also set to prohibit “any transaction that is related to [the respective application]by any person, or with respect to any property, subject to the jurisdiction of the United States” with Tencent Holdings and ByteDance, respectively.”
Section 1 of the WeChat Executive Order reads, “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.”
Section 1 of the TikTok order also states, “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 by any person, or with respect to any property, subject to the jurisdiction of the United States, with ByteDance Ltd. (a.k.a. Zìjié Tiàodòng), Beijing, China, or its subsidiaries, in which any such company has any interest, as identified by the Secretary of Commerce (Secretary) under section 1(c) of this order.”
While the President’s executive order currently only targets business dealings related to WeChat and TikTok, the direct action taken against Tencent could hold ramifications for the gaming industry.
Tencent currently holds the listed percentage of stakes in a wide range of video game companies, including:
- 100% ownership of Riot Games (League of Legends)
- 84% stake in Supercell (Clash of Clans)
- 80% stake in Grinding Gear Games (Path of Exile)
- 40% stake in Epic Games (Fortnite, Unreal Engine)
- 20% stake in Marvelous (Senran Kagura, Fate/Extra)
- 17.66% stake in Netmarble (Marvel: Future Fight)
- 5% stake in Activision Blizzard (Call of Duty, World of Warcraft)
- 5% stake in Paradox Interactive Games (Crusader Kings, Europa Universalis)
- 5% stake in Ubisoft (Assassin’s Creed, Far Cry)
- Capital investment in PlatinumGames (Metal Gear Rising: Revengeance, Nier: Automatta)
American holdings and partnerships such as those with Epic Games or Activision Blizzard could be seriously affected. If President Trump were to expand his executive order to include the entirety of Tencent’s business dealings, they could see limited to lowered sales and a loss of investment capital.
Trump’s pushback against TikTok and WeChat is the latest in a series of actions made by US politicians to combat the expansion of and continual intellectual property theft by the Chinese Communist Party.
Last month, Attorney General Bill Barr stated that “The People’s Republic of China is now engaged in an economic blitzkrieg—an aggressive, orchestrated, whole-of-government (indeed, whole-of-society) campaign to seize the commanding heights of the global economy” which aimed to “raid the United States”.
In May, Texas Senator Ted Cruz introduced a bill titled the “SCRIPT ACT,” which would “prohibit the use of Department of Defense funds for the production of films by United States companies that alter content for screening in the People’s Republic of China, and for other purposes.”
He argued that the act was necessary to combat how “the Chinese Communist Party spends billions and billions of dollars to mislead Americans about China and shape what our citizens see, hear, and think”.
Will these orders have far-reaching implications for the gaming industry as a whole?