In another attempt to impose restrictions on Chinese technology companies in the final days of his presidency, on January 5, 2021, Trump issued a new Executive Order (EO) “Addressing the Threat Posed By Applications and Other Software Developed or Controlled By Chinese Companies.” The EO, which was issued pursuant to the International Emergency Economic Powers Act, authorizes the imposition of restrictions, on or after February 19, 2021, against eight popular Chinese connected software applications.
The new EO declares 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 [EO 13873].” The new EO alleges that “a number of Chinese connected software applications automatically capture vast amounts of information from millions of users in the United States,” including sensitive “personally identifiable information.” It cites to “the continuing activity” of China and the Chinese Communist Party “to steal or otherwise obtain United States persons’ data” as “mak[ing] clear that there is an intent to use bulk data collection to advance China’s economic and national security agenda.” The new EO states that the United States “must take aggressive action against those who develop or control Chinese connected software applications to protect our national security.”
In relevant part, Section 1(a) of the new EO prohibits certain transactions “by any person, or with respect to any property, subject to the jurisdiction of the United States” with: (i) persons that develop or control listed Chinese connected software applications; or (ii) with subsidiaries of such persons. The EO lists the following Chinese connected software applications: Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office.
The new EO does not identify specific transactions to be prohibited, nor do any prohibitions take place immediately. Instead, Section 1(e) requires the Secretary of Commerce to identify the scope of prohibited transactions not earlier than 45 days after the date of the new EO, i.e., not earlier than February 19, 2021, which will be after the change in administration to President-Elect Biden.
As was the case with EOs 13942 and 13943 of August 6, 2020 targeting TikTok and WeChat and noted in our prior blog post, the Commerce Department will play the key role in defining the scope and coverage of the prohibitions in this EO.