WeChat suspends new user registrations as China cracks down on tech

By Eric Cheung and Hanna Ziady, CNN Business

WeChat is suspending all new user registrations until early August, the popular social messaging app announced on Tuesday.

In a brief post on social media, WeChat, known as Weixin in China, said the suspension relates to an upgrade of security technology “according to relevant laws and regulations.”

“In the meantime, the registration of new WeChat personal accounts and public accounts will be temporarily suspended,” the app, which is owned by Chinese tech giant Tencent, added. New registrations will resume after the upgrade is completed, which is expected in early August, the company said.

Weixin is a daily necessity for hundreds of millions of people in China, who use the app to message friends, share photos, hail rides, pay for stuff, book restaurants, order food and a host of other services. Together, Weixin and WeChat, used by the Chinese diaspora including in the United States, have around 1.2 billion monthly active users.

It was not immediately clear which laws WeChat was referring to in its announcement, but the development comes amid a widening crackdown on technology and now education companies by Chinese regulators that has spooked investors. Tencent’s stock in Hong Kong closed down nearly 9% on Tuesday, its worst day in a decade.

Several tech companies, including e-commerce giant Alibaba, have faced investigations for alleged monopolistic behavior or breaches of customer rights, leading to record fines and massive overhauls. Chinese President Xi Jinping has endorsed the probes, calling on regulators to scrutinize tech companies as the country tightens data privacy and security policies.

The share prices of Chinese tech companies, including Alibaba, Tencent and food delivery platform Meituan have all taken a hammering this week. Meituan closed nearly 18% lower in Hong Kong on Tuesday — eclipsing Monday’s 14% loss — after Chinese regulators issued new guidelines calling for improved standards for food delivery workers.

Earlier this month, China’s Cyberspace Administration suspended the registration of new users from ride-hailing app Didi, torpedoing the company’s stock just two days after its blockbuster New York IPO, which was the biggest US share offering by a Chinese company since Alibaba debuted in 2014.

The regulator said it put the suspension in place to “prevent the expansion of risk” during a “cybersecurity review,” but provided no details on why the probe was launched.

Days later, the internet watchdog proposed that any company with data on more than 1 million users must seek the agency’s approval before listing its shares overseas. It also proposed that companies submit IPO materials to the agency for review ahead of listing.

The clampdown on private businesses could further dent foreign investors’ confidence in China stocks, analysts at Nomura wrote in a research note on Monday. “Bruised and shaken investors are now likely to ponder which other areas could potentially become the next target of expanded state control,” they said.

— Laura He, Michelle Toh and Sherisse Pham contributed reporting.

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