By Emma Nitzsche
Tencent’s WeChat (Weixin) social media platform has temporarily suspended the registration of new users in China as it upgrades “to align with relevant laws and regulations,” the social media platform announced on Tuesday.
In a statement given to Reuters, the company told users that “during this time, registration of new Weixin personal and official accounts has been temporarily suspended. Registration services will be restored after the upgrade is complete, which is expected in early August.” The move adds uncertainty for the technology sector that is currently amid a two-day selloff.
China is currently tightening its policies regarding privacy and data security. A new Personal Information Protection Law calls for tech platforms to impose stricter measures to secure user data storage. Over the past nine months, Chinese President Xi Jinping’s government has enforced a series of regulations on China’s most influential private companies. The crackdowns highlight issues ranging from antitrust to data security to limit Tencent’s influence over most of everyday life. President Jinping endorsed the probes and called on regulators to scrutinize tech companies as the country tightens the security policies.
Hundreds of millions of people in China use the Weixin platform for daily activities such as messaging friends, sharing photos, hailing rides, paying for goods, booking restaurants, and ordering food. Weixin and WeChat have around 1.2 billion monthly active users.
In addition to Tencent, several other tech companies, including e-commerce giant Alibaba, have faced investigations for allegedly monopolistic behavior or breaches of customer rights, leading to record fines and massive overhauls.
Earlier in July, China’s Cyberspace Administration suspended the registration of new users on the ride-sharing app Didi. The suspension torpedoed the company’s stock just after its blockbuster New York IPO, which was the most prominent U.S. share offering by a Chinese company since 2014.
Investors have fled Tencent and other technology companies since China announced the regulations on online activity. On Tuesday, shares in Tencent dropped 9%, resulting in a loss of over $100 billion in market value over the past two days. Zhou Zhanggui, a Beijing-based tech consultant, said investors were overreacting to the new regulations. Zhanggui added that “the suspension of new user registration on WeChat has no substantial impact on Tencent in the short term.”
Matthew Kanterman, a senior analyst for Bloomberg Intelligence, agreed in part with Zhanggui. He commented on the move, assuring concerned users that Tencent’s announcement “may not have a big impact on user and sales growth.”
“With 1.24 billion monthly active users across WeChat and Weixin, most people who were going to have the app already do. Monthly active users had been projected to expand 3.9% in 3Q21 and 3.1% for 2021, based on consensus,” he added.
