WeChat users facing a U.S. ban of the social media app starting Sept. 20 got an 11th-hour reprieve from a California judge, who ruled the edict may violate their First Amendment rights.
In a ruling Sunday, Judge Laurel Beeler granted an injunction against President Trump’s executive order banning WeChat from operating in the U.S. In the ruling, she said there were serious questions about whether the ban is constitutional.
The Trump administration has said WeChat, which is owned by the Chinese company Tencent Holdings, poses a national security threat by collecting data from users. The president signed an executive order banning WeChat, as well as the popular app TikTok, on Aug. 6.
On Monday, the U.S. Department of Commerce said it would challenge Beeler’s injunction.
Trade experts and others said the bans could have a chilling impact across several industries, including real estate.
WeChat is a key way for Chinese individuals to find and invest in U.S. property.
“A lot of people cannot fanqiang using a VPN,” Daniel Chang, an agent at Sotheby’s International Realty, told The Real Deal last month, using the term for scaling the “Great Firewall” of China. “If you’ve lost WeChat, you’ve lost everything.”
Experts said the move may also dampen interest in U.S. property among Chinese institutional lenders and investors, who have pumped billions of dollars of debt and equity into the market over the past decade.
The U.S.-China trade war has already taken a toll on commercial real estate. Beijing’s strict capital controls, enacted last year, put an end to record deals here. Chinese investment in U.S. property plunged to $827 million last year, compared to $19.5 billion in 2016, according to Real Capital Analytics. In 2019, Chinese investors sold more than $20 billion worth of real estate, RCA data show.
The U.S. WeChat Users Alliance, which opposed the Trump administration’s ban and filed a motion for preliminary injunction Aug. 27, called Sunday’s ruling an “important and hard-fought” victory.
“Never before has a president sought to ban an entire social media platform — used by a minority community to communicate — with such discriminatory animus and haste,” Thomas R. Burke, the group’s lawyer, told the New York Times. Since 2014, WeChat has been downloaded 22 million times in the U.S.
The injunction was the latest move in a standoff between the U.S. government and the makers of WeChat and TikTok. As of Friday, the Commerce Department was set to ban both apps from American app stores starting Sunday. But on Saturday, President Trump approved a deal by Oracle and Walmart to buy a minority stake in TikTok.