On August 6, 2020, President Donald Trump issued two executive orders which will ban certain transactions with China-based mobile applications TikTok and WeChat. Both orders note that additional steps must be taken to deal with the national emergency with respect to the information and communications technology and services supply chain declared in Executive Order 13873 (the “Telecom Supply Chain E.O.”; see Update of May 16, 2019). Specifically, the president determined that the “spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States.” This appears to be the administration’s first use of the authority declared in the Telecom Supply Chain E.O. The prohibitions will be effective September 20, 2020.
The Executive Order related to TikTok, a video-sharing mobile application owned by the Chinese company ByteDance Ltd. (a.k.a. Zìjié Tiàodòng), notes concerns about the gathering of personal and proprietary personal data, thus possibly allowing the Chinese Communist Party to “track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.” Further, the order notes the censoring of certain content, and the use of the mobile application for disinformation campaigns. It also highlights that the Department of Homeland Security, Transportation Security Administration and the United States Armed Forces have already banned the use of TikTok on federal government phones. The order will prohibit, 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, related to TikTok with ByteDance and any of its subsidiaries. (The E.O. does not prohibit transactions with ByteDance unrelated to TikTok.)
The Executive Order related to WeChat, a messaging, social media, and electronic payment application owned by the Chinese company Tencent Holdings Ltd. (a.k.a. Téngxùn Kònggǔ Yǒuxiàn Gōngsī), notes concerns about the gathering of personal and proprietary information of Chinese nationals visiting the United States, thus allowing the Chinese Communist Party of “keeping tabs on Chinese citizens who may be enjoying the benefits of a free society for the first time in their lives.” It also notes that censoring of content deemed politically sensitive and the possible use of the application for disinformation campaigns, and that the governments of Australia and India have begun to restrict or ban the use of WeChat. The order will prohibit, 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, related to WeChat with Tencent Holdings or and any of its subsidiaries. (The E.O. does not prohibit transactions with Tencent Holdings unrelated to WeChat.)
Neither executive order defines the term “transaction.” The Secretary of Commerce is to identify transactions subject to these prohibitions no later than September 20, 2020. It is likely that the scope will prevent TikTok and WeChat from being offered in Apple and Google’s app stores. It is also possible that users who have already downloaded the apps will be prevented from receiving software updates, which would eventually prevent the apps from being functional. There is no indication that, once identified, U.S. businesses will be allowed any “wind down” period in which to cease any defined transactions.
Meanwhile, Microsoft has indicated that it is moving quickly to arrange to acquire the TikTok service in United States, Canada, Australia, and New Zealand and to address the administration’s security concerns.