Ant Group’s Alipay mobile payment app, owned by Alibaba (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report and controlled by Alibaba founder Jack Ma, as well as Tencent's QQ Wallet and WeChat Pay are among eight apps that have been banned from being used to make payments in the United States.
President Donald Trump on Tuesday signed an executive order banning transactions with the eight Chinese software applications, escalating tensions with Beijing two weeks before President-elect Joe Biden takes office.
Ant is China's dominant mobile payments company, offering loans, payments, insurance and asset management services via mobile apps. It is 33% owned by Alibaba.
Trump's move is purportedly aimed at curbing the threat to Americans posed by Chinese software applications, which have large user bases and access to sensitive data.
"By accessing personal electronic devices such as smartphones, tablets, and computers, Chinese connected software applications can access and capture vast swaths of information from users, including sensitive personally identifiable information and private information," the executive order stated.
Such data collection "would permit China to track the locations of federal employees and contractors, and build dossiers of personal information," the order added.
The surprise move, occurring just 13 days before Trump leaves the White House, deals another blow to relations between the world’s two largest economies, which have clashed over everything from trade and tariffs to the coronavirus pandemic to Hong Kong’s independence.
The executive order, which directed the Commerce Department to draft rules outlining which payments and transactions will be outlawed, will hit Tencent’s QQ, QQ Wallet and WeChat Pay as well as lesser-known apps CamScanner, SHAREit, VMate and WPS Office.
It tasks the Commerce Department with defining which transactions will be banned under the directive within 45 days, though the Commerce Department plans to act before Jan. 20 to identify prohibited transactions, a U.S. official told Reuters.
While Biden could pause or erase the policy upon taking office Jan. 20, the order is still likely to face legal challenges similar to those mounted against the president’s prior efforts to force the sale of TikTok from China’s ByteDance and ban the WeChat messaging app.
It wasn't immediately clear whether the order could be applied to transactions outside the U.S. - Starbucks (SBUX) - Get Starbucks Corporation Report, for example, allows customers to pay with WeChat Pay in China.
Alibaba's American depositary receipts were down 1.67% at $236.46 in trading in New York.